Nordrest Holding AB (publ)

Thomas Dahlstedt here. And Mattias Ekel. From Nordrex. Thomas Dahlstedt, I am the founder of the company and we have been here for about 10 years. We celebrated the 10th anniversary here right after the summer. And from May onwards, we are a noted company. Yes. This is our agenda. We are going to talk a little bit about the company first. And then we will leave financial information that has been released shortly after 8 o'clock. We will comment on both the quarter and the period. And then we have some time for questions afterwards that you can send in via this broadcast. About Nordrex. As I mentioned, Nordrex was founded in 2014 through a acquisition of a number of companies. About a couple of hundred million. And then we have managed to grow this acquired volume during these 10 years. From 200 million to the proximity of 2 billion at the moment. We can not leave any exact figures but what we leave in the reports themselves. We are located at over 200 sales locations in Sweden with a heavy point around Mälardalen, Gothenburg and southern Sweden. We have a few units north of Uppsala. Among other regions, Gävleborg. And we run a restaurant at Sundsvall Hospital. But we are relatively weak north of Uppsala. We are located within the businesses Skolmat, Äldremat, Patientmat, personal restaurants. Both smaller models and more exclusive personal restaurants. We run half of the military and camp restaurants in the south of Mälardalen. We have universities and universities at about 11 places in Sweden. We have a couple of years back, a business out in Arlanda where we now run four units and open 50 units, little by little by Pontus Fritschow here during the November month. And then a year back, a little dry, we have acquired dinners, road restaurants and have six units around the country. We work with the brand. The majority are our own. Not particularly well known, but it's more to keep the thread together around a certain provider. For example, Taste by Nordre, which is a lunch buffet. We have Pockut, which is an ala carte. Previously a Pontus brand, but now it has only become a purely Nordic brand. We also have a number of Pontus brands. Now it's La Geraf by Pontus Fritschow, which is a more exclusive restaurant out in Arlanda. And then there's a Smart Casual Dining, Little Italy by Pontus Fritschow, which we are running here during the November month. We also run a hotel, AC Marriott in Ulrikstad, also under the brand Pontus Fritschow. And the unit is called Dickepock by Pontus Fritschow. We registered the company here five, six months ago. And the purpose of the stock market registration primarily was that we wanted to create credibility when we intend to continue to build the Nordic concern. We have mostly only been related to Sweden, except for the part that is our framework agreement with NATO, where we sell Meals Ready to Eat via NATO-portalen, NSBA. But when we now want to continue to grow with our other business, that is the traditional, so to speak, meal service business, we need to have a name that you can feel safe around when we want to enter Denmark, Norway and Finland primarily. And therefore we registered the company here during the May month. When we look at our business idea, we are dealing with systematic entrepreneurship. And this is where we stand out from our competitors. We have a framework with systematization that is need to have. It's everything from GDPR policy to purchase routines, economic system, IT system and so on. But we want a very local implementation of our restaurants, where our restaurant managers themselves have to decide how the implementation should be, given that it is within the framework of agreements and regulations, of course. But that means that when our guests come to our restaurants and perhaps do not think that the food and drink is so good, then you can not say, well, the head office has decided the menu here and I have to do this here, because it is someone else who has decided. Then it is our managers who should be strong enough to make the decisions, to actually make the changes that are needed so that we can have satisfied guests. And if we have satisfied guests, we have satisfied customers. We are talking about a good meal experience. And it's a bit of an ambition level that we have. And it's good, as for us, except that it's a bit more prominent in the concept itself, it's a 4.5 degree scale. Why don't you want a 5? It's because our customers and guests don't want to pay for it. And three, it's a bit medium-sized, and we want to stick out a little bit, and that's why we've said we're going to have a good meal experience. We also focus a lot on experience, and not just the food itself, as they say. And in experience, the meal itself, the service, the environment and the sustainability, that is, the environment in the form of sustainability. So that's a model we work with called MSN. We have a strategy, and we are a little different from our competitors. If you look at Zodex and Compass and ISS, they are not on the road network, they are not on airports. And we see that where we have the natural guest flow, where we don't have to invest in to attract the guests to our restaurants, that's where we want to be. In many cases, for example, in a company, you know that so many people work at the workplace, and you can count on the key numbers. If you have 5,000 employees, you should have an X number of 1,000 customers every day. But in the same way, in a natural guest flow, like Arlanda, we know that there are 21 or 22 million passengers, and we can count on the key numbers. Given this day, where we estimate that there will be 82,000 travelers, we will have a penetration that is about this percentage. And there we see a natural business for us, where we don't have to invest in to attract the guests to our restaurants. We will prepare and report here, which we have done before, and this has already been done from the stock market, in customer groups. We don't prepare the whole result, but we prepare the turnover, the turnover development of these customer groups. And as you can see, defense, and that consists of military restaurants, restaurants and this MRE-workshop. We should break out of the MRE-workshop, but we think it is a good idea. Historically, the MRE-workshop has been part of the contract itself. Now it doesn't look like it, but for us it is a flow and a goal-time experience that we handle, either when you are in the dining room, or you get it sent out, or you eat these dinners. So for us, it is a good idea. We have companies that we are involved in, and that is, for example, Ericsson or Volvo Cars. We also have a number of single service units, Vattenfall, where we are on a contract and do not deal with Vattenfall itself. And it is the same thing there, when we were in the natural guest flow. It is for us as self-evident to have a contract as to deal with a company. Today it is not guaranteed that 1,500 people will come, but you have to do as good a job as possible. And based on the fact that there are so many thousands on this workplace, so in the cases where we see that there is a deal, then we can enter a purely owned rental contract. The University of High School is mostly only natural guest flows. There are no guarantees there either. As I mentioned, there are 11 places today. School, it is easier to predict. It is the number of students who are ordered. For example, the International English School, which has 600 in one place, then we deliver 600 lunches that day, times the number of school days, which is 178. Hospital and elderly food, it is a bit like school. Easy to predict, a lot of production is built on it. Also a lot around nutrition and special costs and the like. So there is a complexity in it, which is a little more than in normal activities like school and companies. We have, among other things, the region of Gävleborg. We have Stockholm's hospital and we have a number of smaller elderly people in the Stockholm area. And then we have Reza, and there it is both Arlanda Verksamheten, it is Dynners and it is MTRX, where we talk later in the afternoon.

Good, then we move on to some financial information. This is the company's four financial goals for medium-long term, that is, three to five years. We will have an organic growth that is greater than 10%. We will have an EBITDA that is between 8-10%. And we have a span there, because sometimes it can be a certain customer-sales mix. We will have a distribution that is greater than 50% and then there will be a debt settlement that is less than two times the net debt through EBITDA. Let's look a little at the summary of the quarter period. We take the quarter to the left and the period to the right. We land on net debt settlement of 413 million, which is slightly lower than the previous quarter of 426 million, which resulted in a change of minus 3%. EBITDA rose to 37 million, compared to 52 million, and EBITDA marginals landed on 9%, compared to 12.1%. During the period, we had a growth of 7.4%. We had a net debt settlement of 1.373 billion, compared to 1.279 billion. EBITDA rose to 117 million, in large part in line with the previous year, at 121 million, which resulted in EBITDA marginals at 8.6%, compared to 9.5%. The debt settlement tip landed on minus 0.4 times, and another reason for it to be a minus is because we have a larger cash flow than we have interest-bearing debts. Then we also had an operative cash generation that rose to 66.4%, compared to 74.6%. This picture shows some of the same information as before. You see the quarter to the left, and the period to the right. What we can mention here is that, even if the net debt settlement was somewhat changed by minus 3%, compared to the previous quarter of the year, we had a good growth in the main part of the customer groups. If we exclude the customer group for the defense, which was the one that dropped after, the net debt settlement growth would be 15%. This has reduced the net debt settlement in defense, because the MRE, as Thomas described earlier, has had a very strong quarter in the previous year, the strongest we have had historically. But also, the MRE business fluctuates a lot both over the quarter and year, unlike our other business. EBITDA marginals have increased every quarter this year, and it is also in line with the financial goals. EBITDA marginals are somewhat reduced compared to the previous year, and that has to do with the net debt settlement change in the MRE business. The MRE business also has a higher margin than the other businesses in general.

Together, as we have also communicated with REZA, where we expect a higher margin than what we have in all other businesses. All other businesses expect us to have the same percentage drop. I would also like to mention the MRE business, which I will also come in on a bit. It is a bit difficult to handle in a quarter economy, which we already mentioned in the stock market. It depends on the fact that, first of all, we deliver to ten countries, and both order size and number of orders fluctuate from month to quarter, without it being easy to be on every quarter. However, we feel very safe, which I will also come in on a bit later, because it is a growing market over time, in terms of means and long-term.

If we look at the period to the right, we had a growth of 7.4%. This increased net debt settlement compared to the previous year period has to do with that we grow in all customer groups, exclusively in the defence industry. If we also exclude the customer group in defence, we would have a plus 20% growth. The BITDA margin is also in the period, in line with the financial goal. Here, too, the BITDA margin is affected compared to the previous year in the MRE business.

We

can also mention

that, which we also had as part of the challenges or questions for us, in the context of the stock market, where we felt that we had a low, a low margin in the second business. The reason for this was that we had an incredibly high growth between 2022 and 2023, towards 2024. Here we see that the starting costs we have had in that business have now disappeared, and we are now approaching the level of withdrawal that we want, which means that the margin is actually strengthened in all other businesses. Then, as I said, when we have a one-legged that has a higher withdrawal and does not really come up to that withdrawal, this one-legged quarter, it naturally affects the total. But we feel very safe with our other businesses now actually tacked on, as we have said, that it should do in the context of the stock market.

This image shows the customer groups and the change in the turnover, both in the quarter and period. If we look at the changes to the right, which are in the period, we see that all customer groups have a good growth. It is, so to speak, the defense that does not have the same good growth. It is fun to see that the customer group is growing in the growth of travel and the health and welfare of the elderly is growing. On travel, as Thomas mentioned earlier, it is the opening units at Arlanda Airport that contributes there, above all. On the health and welfare of the elderly, it is, among other things, Stockholm's hospital that opened up this year. If we look at the defense, we can also see that in the quarter we did minus 21 percent, but in the period we only have minus 7.7 percent, and that also shows how it can fluctuate over the year. But as I said, if we were to export the customer group in defense, the growth would be 15 percent in the quarter and 20 percent in the period. If we talk a little bit about the capital, capital capital and cash management, we can generally say that there is very low need for capital. We land at 2.8 percent, somewhat higher than the previous year, and that is due to the fact that we have built up some reserves compared to the previous year. And we do that because we are going to meet orders that come here on the 25th on the MRE-workshop. And it is primarily the MRE-workshop that is mainly building reserves. CAPEX, we have low CAPEX. Generally, we are right in the middle of the built-in kitchen, where the housing world has been built for the inventories and the premises. It is somewhat higher, 24, compared to previous years, and that is also driven by the fact that we are in Arlanda, where the difference is that we build the restaurant and the kitchen from scratch, which we normally don't do. And together, that generates a good cash generation.

Yes, as we were a little bit in, to comment on the different customer groups, it is true that all customer groups are growing, and they are growing very well, except for the customer group defense. And if I comment on defense, which was also said earlier, first of all, the MRE-workshop does not really fit in a quarter economy, but over time, we see that the changed security situation in Europe makes that defense is growing. If we take only Sweden, then the defense and the number of employees, which is still the basis for what generates income in our industry, is growing by about 10% until 2035, the nearest 11 years. And if we look at the European security situation right now, it's the same thing there. Then it is clear that, regardless of whether, which we hope will be peaceful in Ukraine, but regardless of whether you will be peaceful in Ukraine or not, then the defense of the EU and Sweden will need to grow. So we feel safe with that. At the same time, and in parallel with that, we see how all our other customer groups are now growing, and even better than we said they were going to grow. So we feel very safe with the midterm goals that we are going to grow organically with more than 10% that we have communicated, and also the profit margin that we have communicated earlier in the context of the defense. We have prepared for each respective customer group, and which is also commented on the defense. We see a small decrease on the company side, and it is due to the fact that we have decided to actively issue a number of agreements, including the West-Göteborg region. We have issued the agreement on the DN-house, and we have issued a contract in Kista. This is due to the fact that the company is not under a lot of... And in the end, not after Covid, it generated any profit, but rather quite large losses. So it improves the margin in the company, but also decreases the turnover a little for both the quarter and the period. We are generally looking at it. We have received some questions about the contract catering market, so I thought we should take these when we are done with the last slide. And another activity, two comments that we have for you, is that in the MRE-operative we have also made a major move. The MRE-operative is based in Varberg, and there we had a production facility. And as it has grown over a few years, we have been forced to hire ourselves in four different camps out in the city, which has also had very high costs for production, storage and efficiency, which we have now been able to take back by moving into a completely new location. But it has also included a production stop in the activity during the quarter. But we are up and running now, and we have all the lines that we will have in the activity today. And then on October 7, Carolina chose to leave the board, and that was because she had got a new position where her boss assumed that there was conflict of interest in the board with us and with the board job she had got. And we have begun recruiting to lead the board here, and that will happen before the end of the year. And with that I think we will conclude the presentation itself and go into some questions that we have received here. I have received a question here, but let's see here. It was a question from how do you differentiate from other MRE suppliers in NATO? A part of our core values, and one core value, is a fair goal time experience. And it is exactly the same with the MRE industry. We are very good at listening to what the end customer in this case the soldier wants. Pelle, a number of his colleagues, Pelle is the CEO of this company, has worked for the defence force, they are out together with the soldiers in the field, trying the products and taking in the feedback. If we look at the price, we are in a medium-term, there are cheaper suppliers, there are more expensive suppliers, but our assessment is that we are the biggest supplier in the portal in the system today. It is because we deliver a fair goal time experience at a good price. If you want the cheapest, there are cheaper, and globally there are much cheaper, but I don't think you want to eat that food. When do you take the step out to the other Nordic countries? Will there be a demand for the quality of the products? We are looking for companies with the same DNA as entrepreneurship. That was one of the reasons for the money we took in in relation to the stock market. We don't think we can grow organically outside Sweden, we will have to do it through procurement. When we did the stock market, I mentioned that we have a number of ongoing dialogues. These dialogues take a long time, it is also true in Sweden. There are a number of companies that are in the salo, but it takes a few years, or even a little longer before you find the common denominator. In my opinion, we will soon be out of Sweden. What is the marginal goal on the A-land calculation over time? Is it around 15%? We don't answer that, but we answer that we have higher marginal goals than on the other target service service. But in percent, we will not go into exact numbers, but it is higher. If you do a benchmark on our competitors, you can make an assessment of what you should be able to have in your attention, and also to make sure that we invest a large sum. Is the net positive for the A-land in November, given that you have completed four contracts? We will have efficiencies, so far I can say. We have carried out a number of statements by staff. And above all, we believe that the total cost of staff and local will be lower. So the answer is yes. Then we have a number of questions. How do you see the marginal goals in the future? What are your biggest potential for development in the coming three years? If we look at the customer groups, we see that all customer groups will grow at least 10%. We do not see that anyone sticks out over a long time, but some year, some quarter, we saw now, then some customer segment will not grow, or maybe even back, but for some year later, maybe grow a lot. We still see that we have a good momentum within all customer groups at the moment. We do not see anything. If we look at the market margins, we do not go into the margins specifically more than that they have a better margin than our other businesses, except travel. Can you break out growth in some defense between MRE and contract catering? I do not really understand that question, but we do not really break out any growth apart from those we report in the customer groups themselves. How is the market margin developed exclusively MRE during the quarter? We were in on that. It has been strengthened in all areas, which we are looking forward to. This is among other things because we have made a lot of unprofitable contracts, but in the sense that we can now focus on reaching the growth we have said in a lot of our new established businesses. Can you expect a drop in sales within MRE by the fourth quarter, given two weaker quarters? As I said, we do not comment on individual quarters, but as I said, we feel safe with all customer groups that have an organic growth of at least 10% in terms of average and long-term. We will go through that. How has the MRE sales started during the fourth quarter? We do not comment on that. What does COMPS look like for the MRE in the fourth quarter? I do not know what COMPS is actually. We will jump over that. Those who wrote in the question should please clarify what COMPS is. It was a term I had not heard before. You wrote that the views for defence are good in average and long-term. How do you see the views for the 25th quarter of the MRE? We see that they are good in average and long-term for defence, where MRE is involved. Have your largest customers now stopped dual sourcing within MRE? I think I understand that question. As we have been in earlier, we do not know this. We do not know who and how many customers buy the MRE. In some cases, we do not know. It depends on the fact that a lot of this activity is covered by defence secrecy. We know that we sell a lot. However, we are not sure that it is still dual sourcing. Is it dual sourcing? Is it MRE that builds working capital? Yes, it is a part of dual sourcing. And a little bit we have dual sourcing because we have new activity. Do you have any bigger contract profits during the quarter? Quarter 3 is not a quarter where you sign any bigger contracts. We have some EU-reconcerns but they are smaller. As I mentioned, the framework agreement is difficult to define. But overall, quarter 3 is July and in August nothing happens on the agreement. Then you enter in September. The answer is no. How do you see the market in terms of contract? As earlier, average and long-term growth increased by more than 10%. How do you see the possibility to continue to win contracts? That is our answer. What is the status of the investment in Arlanda? Revenue, profitability and how many units are started and what is the rate of the month? We still have one investment left and it opens in November. We think the revenue has been very positive. It is a bit low in the rise of the numbers we get and the food market is not completely changed. We have not reached a matured phase. We see that they will continue to improve the business until the end of the year. We see a positive in 2025. Comp's comparison results? We do not comment on that if we do not go into individual business. I think we have answered all the questions we have received.

I think so. We have come through most of the questions. We have 30 seconds left so we are in good time.

Here we got a question. What segment do you see the best potential in? As I answered earlier, we do not see that it is something that sticks out. We see more than 10% of organic growth in all the king groups. In the medium and long term. Then it will change over the quarter and over the year. But that is what we have seen.

Thank you, Thomas. We have five seconds left.

Thank you so much for today. See you

later when the

next report is

released.