Lifco AB (publ)

Good morning, everyone, and welcome to the LIFCO Q4 presentation. We can, as usually, go into page number two in our investor presentation and start with a quick review of the overall performance for LIFCO as a group in the last quarter and also some comments on the full year. And if we start by the quarter specifically, we end 2024 with a strong quarter where we have organic growth of nearly 4%. in the group in sales. And then we also have contribution from acquisition of 6.4% and some positive foreign exchange effect. In total, that leads to 11% growth in sales for the quarter. We also go EBITDA, we run 9%. We come back to more details around that. And profit for tax increases with 12.5%. Operating cash flow is on a high solid level. We also had strong cash flow in last quarter, 2023. We also grow earnings per share with around 8%. And then if we looked at the whole year, it's been a relatively more difficult year for LIFCO given the difficult or more difficult market conditions, especially in our demolition tools division or business area where we have exposure to the construction market. So overall, we grow sales 6.9% for the full year and EBITDA grows with 4.5%. And in the full year numbers, we actually have a slight organic decline in sales of negative 0.5%. And acquisition is then contributing with around 8% in sales and pretty flat for an exchange effect for the full year. You'll also like to mention that the LIFCO board has also proposed a dividend of 2.4 Swedish kronor per share, which is an increase of about 14% compared to the dividend in 2024 that was paid out. And then we can go in a little bit more into details on the next slide, page number three. If we then go into the dental business area first, Maybe we should start on the full year numbers and it's been, I would say, a quite stable and normal year for dental. We are growing low single digit organically and also profits with stable margins and a little bit extra growth coming from a few acquisitions also in this year. If you look specifically for the quarter, it's a little bit weaker than the previous quarters. I would say that In margins, we are almost one percentage point down there. This is more what I would say normal quarterly variation, some extra costs in certain companies. I wouldn't extrapolate that too much. More variations between quarters is our view on that. If we go further into the next business area, demolition tools, we can just I know it sounds like we're repeating ourselves here, but it's actually how the market is. It's still relatively weak market conditions out there. We are still facing negative organic decline or negative numbers organically, which, of course, given the high margin characteristics of this business, it's difficult to keep the profit levels. But in relative terms, we still have very solid margins. Just worth highlighting on the last quarter, the last quarter of 2003, we had actually extraordinary good margin due to a very strong business mix effect and also some extra deliveries of special characters that helped up that mortgage. So in 2024, we did not have anything of that. And if you look at the full year numbers, you can see here it's been really, you know, throughout the year, weak market conditions, and therefore that leads to decline. But I can already hear mentioned that our companies have done a really good job in protecting our margins. There's been substantial volume decline from very high levels in 2022, but throughout this last, I would say, 18-24 months, really good job in making sure we do everything we can to protect our margins. Of course, also maintaining a good focus on the long-term future development of the business, meaning that we also want to continue to invest in the right people development to make sure we maintain very strong when the market picks up at some point. And then if we go further down to system solutions, it's a very strong quarter and also a very strong year. We are growing in the quarter 22% sales and Evita 26% and margin is actually increasing here. And this is of course in general, very strong development. We also have some effects which we also had in Q3 from strong deliveries in contract manufacturing that continues. And so that's basically something that is going very well the last six months. In the last quarter we had one special effect which we have mentioned in our report that impacts profitability positively. We had one completion of a project. We don't have many of those products anymore, but in the Q4 we had a sort of release of the final calculation of that project that impacted profit only positively. It's not an enormous amount, but it's worth mentioning that has some positive impact to SysSolutions. And then also, maybe also worth mentioning here, we have also in SysSolutions one part, which is a division called Infrastructure Products, and they are similar to definition tools facing the weaker construction markets to some extent. So they have been in the fourth quarter and also throughout the year suffering from that. But there are many other areas in the solution that are developing very strongly. So the organic growth as a whole is very solid in this division. Sorry, this business area, I should say. And then also, just by rounding off, When it comes to the construction of the role, we are not seeing any improvement in Q4. We don't see any worsening. So the message is very much the same as previous quarters. So we're still waiting for hopefully improvements in the future, but we don't know when. If we go down further to page number four, and then we will take a step back, because once per year, we actually do present a little bit more detailed numbers around our EBITDA development. In this table, you can see every year how much LIFCO has grown from acquisitions in profits and also how much we've grown from organically every year. And if you look at 2024, I guess this is not a big surprise to anyone. We have actually a negative development in EBITDA in the group, and this has entirely to do with the demolition tools division. The weaker market condition has had a major impact in that division, in that business area. And if you look at acquisitions for 2024, we are growing at 9%, which is not the best year in this group, but it's still okay, we would say. We have done, as always, working very hard to find the best possible companies to buy, and this is the outcome, 9%. And the average for the whole period since we were listed, the annual average has been around 12%. And for the organic EBITDA growth, it's been 7%, also now including one week a year. This is the first time it's a listing that we actually have a weak market condition here throughout. And if you go further down on slide space number four, we also have listed out some data on the average organic EBITDA growth in the listing, so from 2015 to 2024. And there you see that The 7% that we have as a total average for this period, which is now the annual average of growth, has actually been coming from quite slow growth in the dental part, which partly has to do that we have over this last 10-year period had some challenges in our distribution markets. I think this is not so dramatic in any given year, but accumulated over this period of time, we had more difficult parts of distribution, and then we have been growing more in the manufacturing and prosthetics and software part. And as we see today, and you can look further down at the presentation later on, we will not present that slide specifically, LIFCO now in dental is the dental distribution part is now a quite small part of our profits making. So that effect of sort of keeping the growth lower for LIFCO was more an effect up until I would say, you know, 2021, 22, and it's less of an effect nowadays. If you look down at demolition tools, an area that is volatile, and we're coming out of a fairly weak year here in 2024. On average, however, this division, this area, once again, has grown by 9% per year, including a week 2024. And this shows that this is a business area with a very strong growth profile, and many companies have opportunity to develop new products, get into new markets, and also have some positive effect from the efficiency measures and the safety measures that they offer their customers. If we then go all the way down to our system solutions area, here we have on average been growing 12% organically per year since the listing in 2014. And this number is, I think, a good indication of how many strong companies in these niches that we are developing and how good of a job the management of these companies are doing to actually grow this business. And we have many companies with strong potential in this area. This doesn't mean that we know that for the next 10 years we will have the same growth rates, but it's an indication of how LIFCO has developed the last 10 years. And once again, I'd like to mention that this is not happening just like that. It's a lot of great work from very good management and management teams in our LIFCO companies and make sure that this profit development has been taking place. And then we can go further to page number five, and this is also a long-term slide, and now we have added another year in 2024. And there you can then, we can then conclude that our average growth, the CAGR, this, I will just, before I go further, the previous slide was not the CAGR, it was more, you know, the flat average of growth, because that's how we can do with the organic side. When you look at this slide, we have the CAGR numbers. EBITDA has been growing 20% since 2015. Earnings per share, 70%. We have grown our interest-bearing debt to 70%, which basically means that we grow profits more than debt, and therefore our interest-bearing net debt has gone down since we were listed 10 years ago. Operating cash flow has been growing 90% on average, and dividend, we have now grown 17% throughout this period. If you go further down this slide, you can also afterwards also present on this slide how much we have spent on acquisition and the enterprise value of the acquisition we made and also the full year effect, estimated full year effect, I should say, because it's an estimation of first year in the beginning when we make an acquisition of what we have bought in every year. And there you can see we were not able to get the same effect from acquisitions in 2024 as 2023. But I think I mentioned it in the past that this is a more volatile. We cannot have it exactly linear every year, and it should not be exactly linear because we should only buy the best companies when they are readily available for us to acquire them. If we then go to page number six, a very important measure for us is, of course, the cash flow. And the way we measure cash flow here is that we look at the free cash flow per share after basically everything, but before dividends and acquisitions, which we basically say that we control from the central level of NISCO. And then we have been growing that since 2014 with around 23% on average. In this year, we have only a moderate growth, but we had a very good comeback year in cash flow in 2023. And the problem we measure in cash flow is that it's a very good indication for long-term development, but short-term, there's always some turbulence in exactly when cash flow coming. And it's, of course, an extremely important measure for the long-term success of a company. And then just going into page number seven, we will only then comment once again that our, you know, our financial position remains very strong despite quite a number of acquisitions in last year. We still sit at an interest-bearing net depth of 1.2, which was only slightly up from 1.1 times EBITDA one year ago. So we have plenty of room to continue looking for great companies to acquire. But once again, we are very selective and with very high ambition, of course, to continue this journey, but also making sure we don't acquire the wrong companies. And then just to round everything off on page number eight, we have reached our target also in 2024 to improve our profits. It was a difficult year. We had weak market conditions throughout the years in demolition tools. But we are still satisfied with being able to grow profits, even though with slightly lower margins due to the negative operational leverage in demolition tools, we end up with 22.6%. but still a quite satisfying level given the circumstances. So with that, I'd like to open up for questions.

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 Carl Ragnastam from Nordea. Please go ahead.

Good morning. It's Carl here from Nordea. A few questions from my side. Firstly, you mentioned the margin drop in dental 110 basis points. You also talked about extra cost. And you said that we should not extrapolate them. So I'm a bit curious now what these extra costs are. Yeah, you start there.