3/6/2025

speaker
Thomas Dahlstedt
CEO and Founder

Välkommen till Nordwest Bokslutskommuniqué 2024. Jag som pratar heter Thomas Dahlstedt. Förutom att jag är vd och koncernchef för bolaget så är jag också grundare av bolaget. Jag startade bolaget för ungefär elva år sedan, lite drygt i dagsläget. Åren går ju. Jag har tagit bolaget nu sen förra året, i maj förra året, till First North Growth.

speaker
Name not provided (Co-CFO alongside Mattias Ekehlet)
CFO

Mattias Ekehlet and I are CFOs at the company, and have been back for almost 30 years.

speaker
Thomas Dahlstedt
CEO and Founder

Today's agenda is a short presentation about Nordrest. Even though we have talked about it so many times, it is good for those of you who have not been with us before to listen to how we describe Nordrest. We will go through the financial information for the period, quarter and the whole year. Important highlights during the quarter and also a little bit for the period. The plan or the board's proposal for allocation and then there will be time for questions. There are usually about 7-8 minutes and they send you in and then we pick them up and read as we can. Let's get started! The reason why we went to the Stock Exchange in May was to create credibility, especially when we want to continue this journey outside of Sweden. Until the change of year, we have only been in Sweden and have built a business mainly based on Swedish sales. We have one that is MRE, Meals Ready to Eat, which we will also describe a little more in more detail later on. where we sell to NATO's purchasing organization, NSPA. But in general, our business is based in Sweden. We want to be a challenger. Now we are relatively big ourselves, so it is difficult to define ourselves as a challenger. But the DNA and the feeling that should be in the company is that we want to be a little hungrier and a little better than our competitors. And that is also that we win businesses that our competitors are not hungry enough for in the current situation. When it comes to customer groups, we have very long agreements and or rental agreements with ownership protection. And our primary limitation on the meal market, because we work with ready meals for guests. It can be a hospital, elderly, school, company restaurants, personnel or defence forces, hospital I mentioned. Arlanda and Dinners, it is important that we have a natural flow of guests. With a natural flow of guests, it is like a monopoly or oligopoly in the area. This means that when we are in a business complex, it is mainly us who are the suppliers, or when we are on the road, or if we take Arlanda, there are a few suppliers. It is in that competition that we compete. Vi har inte verksamheter mitt i stan där vi konkurrerar med allting annat. Det är inte säkert att just gästerna kommer till oss eller inte. If we look at our business idea, it is to serve a nice meal experience. And here are some things that we emphasize, and we also communicate that as a part of what we stand for. And nice is for us to be a little more uplifting, the term as such. It also sets the level of ambition a little bit. We define nice as a four. We want to be a little better than medium. But we don't want to be a five either, because that's not what our employers and customers want to pay for, but we think it's a good level, and then we're a little hungrier and a little better. We also work with a meal experience, not food, but an experience. And in the experience itself, we have a model called MSM, where we have the meal that is primary, but also the service and the environment. And the environment is divided into two parts. One is the sustainable part, and the other is the meal experience itself. And where we talk a lot about Du kan gå till en hur bra restaurang som helst som har fantastisk mat, men är if the staff is unpleasant or smells bad at the restaurant, you will still not think that it was a nice meal experience. And in the same way, even if the food on the other side may not be 100 percent, you can with a fantastic service and a fantastic meal environment actually think that it was quite nice anyway. And what we are trying to strive for is to make all these parts as good as possible, and in this way we increase the experience and become nice. We have a business model. And that is how we work. And there we work to maintain a systematic entrepreneurship. And what is a systematic entrepreneurship? When we started to grow, we were in the middle of an hourglass. Our market looks like an hourglass with maybe 25,000 restaurants at the bottom and a few large multinational actors at the top. At the top, you deliver a very systematic solution. You have a management system, you have GDPR policies, you have purchasing policies, you have IT policies, but you also have a very centralized lunch delivery, where you may have controlled menus, you have a concept that tells exactly how things should be. While entrepreneurship is out in the city, where the local restaurateurs every day get to do a little better job and fight a little harder to actually get the guests to come out of the natural guest flow Because in the natural guest flows, for example companies or hospitals, you will not get in if you have this systematization. And there the entrepreneur must do an even better job to get the employee or guest to step out of the hospital area or the company area and actually choose to pay a little more. Because they don't have the scale and size divisions that we have when we get up to these volumes. And what we have tried to do is to combine this by having a local delivery, but also having a framework where we deliver everything that our customers want in the form of systematization. For example, IT policy or HR policy, HR manuals and so on, management systems. But we work with very strong local managers and we call them a bit of entrepreneurs. They are employed and they do not have any financial incentives, but they have a passion and a sense of being able to stand and be responsible for what you want every day. And you should remember that in this industry, many of the people who work here are more in the art sector. You are driven by what you actually get perform in the form of what the guests like about the plate and not just go to work and open a box or flatten together or bake or boil or what you now get for central menu recommendations that you should do. If we look at the strategy, it is the natural guest flow. But what we also have, given that we are as large as we are in the current situation, centralized solutions for marketing, IT platforms, cash systems, which then gives scale divisions. And we also have large volume of purchase, which means that we can press our purchase prices and end up in the end price at the same levels as our competitors who work cleanly systematized. Guest flows are these customer groups that we also report in connection to quarters and periods. And if we go a little short in the different ones, I think I'll start from the bottom this time, and then it's travel. It consists of two parts. One is the business that we have at Arland. At the time, there were five restaurants, or four restaurants and one café. The last one opened just a few months ago. What we have submitted an offer for a few years ago is now open. We are now working to trim the business and get the profitability we want. We can also comment that we have a higher expectation of rejection in this segment, precisely because we have to invest in these businesses. In all the other businesses, you actually step into kitchens and restaurants where contractors, for example the hospital or the security forces or Volvo Cars, stands for the infrastructure itself. But in Arlanda we have been forced to invest. This also includes dinners and road restaurants that we acquired the last part of during the spring of 2024. Vi har sjukhus och äldreomsorg, där vi bland annat är leverantör till region Gävleborg, Gävle, Hudik, Bollnäs, Sandviken. Vi har ett antal äldreboende, bland annat Stockholms sjukhem, enskild eventör och några privata. Här är det väldigt långa avtal och väldigt förutsägbar volym i form av att You have a number of care facilities and you fill them out mainly every day, a little less in the summer, a little less in the weekends, but in general it is full. In the elderly, it is almost always full. If you have 100 places, it is 100 meals, breakfast, lunch and dinner. In terms of volume, it is the same at school. If you have 1,000 students as the next customer group, then you have 1,000 meals or 1,000 ordered lunches. However, the volume is not the same on a yearly basis, since you only eat 178 days a year. Then there is some free time and so on, and there are some additional volumes. And it's just lunch, but it's a very predictable volume. We have a university, And there we are at 11 places, I think, or 12 in the current situation. And that is a subscription of high school restaurants that we did in 2019. We see that we have had a little drop after Covid here, but we have worked it up now with working with catering and external volume. So we see how that business still grows, both in the number of sites that we take, but also in the business as such, or at least stabilizes. In the main, all other businesses have We haven't lost much after Covid, just a little bit on the company side. Mattias will comment on that as well, in the form that we have made some changes after the budget. But on the campus side, or university and university, we have very long hiring contracts, mainly, and protection. On the company side, I was talking about Volvo Cars, Ericsson, for example. There we are in some form of monopole as long as you are within the scope of protection. We have long contracts. We don't have guaranteed volumes, but we count on key numbers and see how much we can reach from the employees who work at a certain workplace. And we think we have a good penetration there. And since we have a nice time experience, we also tend to have a better penetration than our competitors. And there we can count the business home sometimes a little easier. Finally, defense. It is a customer group that consists of two parts. The first is the operation of half of the Swedish defense's military and camp restaurants. They are in the south of Mälardalen. There we have long agreements. It is a volume that is constantly growing over time due to the changed security situation against Russia and what is happening in Ukraine. I will comment on it a little later. And then we have the MRE business, which is Meals Ready to Eat. And these are ready-to-eat solutions in the field that we produce in a facility in Varberg, where we have a framework agreement with NATO's purchasing organization, the NSBA. One of our customers is the Swedish Defence Force, but there are also several European Defence Forces that buy from us. And for us, it is also a nice time experience in the field.

speaker
Name not provided (Co-CFO alongside Mattias Ekehlet)
CFO

Thank you, Thomas. I'll take a few minutes here. The company has set up four financial goals in the medium and long term. And that is that we should have growth, organic growth that is greater than 10%. We will have a dividend between 8-10%. We will also have a dividend of more than 50% of the profit after tax. We will also have a debt rate of less than two times. As we usually say, we feel very comfortable in these financial goals. If we look at the quarter and the period of the same year, we end up with a net turnover of 534 million, which is stronger than the previous year's average quarter. This means that we had an increase of 8.6% and the growth is mainly driven by new businesses. This is how it looks in our business. When we grow, it is mainly with new businesses. EBITDA ended up at 51 million, which is also stronger than the previous quarter, which ended up at 42 million last year. This resulted in an EBITDA margin of 9.5%. And the reinforcement here is partly explained by the fact that we have a better gross margin, but also that we have chosen to cancel certain unlawful contracts within a company. And as you can see on the graph below, we have, during the year 2024, a strong EBITDA margin every quarter, which is positive. In terms of the period, we ended up with a net turnover of approximately 1.9 billion. This is also stronger than the previous year, and it is equivalent to an increase of 7.7%. And even here, this is also driven during the period of new businesses, mainly. In Vita, we also ended up with 169 million SEK more than the previous year, compared to 164 million SEK. However, the Vita margin was slightly lower, and this is mainly due to the fact that we have had a lot of re-establishments, new investments, new businesses during 2024, which then means a lot of deductions. So that's according to the plan. We have also made investments in machines and inventories to strengthen the capacity in storage and production, connected to the MRE business, as Thomas described, which we then have in Varberg. And even then, accumulated, we see that the margin rises after each quarter. Among the debt set as a tip was minus 0.6. This means that we have more cash than net debt, which is strong. And then he landed a cash generation of 89.3%. A little more about the customer groups that Thomas described. What I can say is that in general, all customer groups have a positive growth. During the quarter, we have a few new customers. For example, we have won the Natural History National Museum in Stockholm, Värmlands Museum, and then we have also opened up Little Italy in Arlanda Airport, which has been the fifth and last planned business out on Arlanda. The group that does not have a positive growth in the quarter is the customer group companies, and it is affected by the fact that we have proactively cancelled unnecessary agreements, quite simply.

speaker
Thomas Dahlstedt
CEO and Founder

There was, among other things, a small article in a newspaper in connection with the stock market, and it was the DNH. After Covid, it hasn't really recovered in terms of volume. We had very red numbers, and we didn't see it changing. We have also focused on ensuring that our businesses are profitable. We also see that it affects the entire company, Nordrest as a whole, that we have closed them down. There are a few more that have been lost over a longer period.

speaker
Name not provided (Co-CFO alongside Mattias Ekehlet)
CFO

But if you exclude all growth targets in a company, the total growth for all customer groups would be about 11% instead of 8.6% per quarter. If we look at the period, we have also gained new businesses, and this is beyond, as I have just mentioned, in the fourth quarter to the left. During the period, we have opened up La Giraffe in Arlanda, Café Wake up in Arlanda. We have also opened up a dinners in Ällerud, Stockholms sjukhem, Malmö universitet, Sundsvall sjukhus, and several English schools. And would you also see here that you excluded the KG in the opposite order as you did in the quarter, then the total growth would be 10% roughly instead of 7.7%. This is then a defense that is still a little lower than the previous year, but it is linked to the previous quarter when we met a very strong quarter the previous year.

speaker
Thomas Dahlstedt
CEO and Founder

I will comment on the defense a little bit later when we get into the summary here, we can continue.

speaker
Name not provided (Co-CFO alongside Mattias Ekehlet)
CFO

We have a very low need for moving capital. We fluctuate up and down. It can vary from quarter to quarter. We ended up at 0.4% positive in 2024-2031. CAPEX, as Thomas mentioned, we have a very low need for CAPEX as well. We have a little higher than in 2024-2023, but it is linked to all new investments and new establishments that we work with, and it ended up at 2.2%. And this together generates a strong cash generation.

speaker
Thomas Dahlstedt
CEO and Founder

If we go into the important highlights, Mattias has actually commented on them in the customer group guidance. We have a good momentum in several of our customer groups and where we have been a little weak. We have also said that all customer groups will not grow by more than 10% all the time, but they will shift here a little over mid-term and that is how we We have always seen that the market has evolved historically, and we sometimes focus on this part, because we need to focus on increasing profitability and reaching the goals we set out to achieve. So it will change a bit. But what can be interesting to comment on, and what Mattias was talking about, is companies. We have also received a question about how we see companies over time. We are convinced, based on what we have said before, that on the company side, we have a relatively small proportion if we compare with our other larger multinationals in the current situation. And we see that we will grow by more than 10% from a mid-term perspective. Now we have chosen to make some changes. We have to remember that Covid has changed the behavior in this market. We have managed to pair it very well, I think. We have increased our profitability. We have reorganized a little bit on this side and we can start to grow again. But Covid meant that we lost some volume, mainly on Mondays and Fridays. Vissa ställen har ju tappat fullständigt. Vi läste en artikel här, både jag och Mattias, om att Kista till exempel, det är ju inte riktigt kanske där man skulle vara i dagsläget. Nu har vi Eriksson som i sig är ett bra kontrakt, för där är vi ju innanför skalskyddet. But I would like to comment on the defense. We have also had some questions about that. We see that the defense, it has been communicated every time, if we take the military restaurants as such, the supply volume will increase. We go from a defense supply of around 1.2% of BNP, where we have said that we are going up to 2.5%, where we are now in the discussions that are taking place between the EU, the USA and Ukraine, talking about 3.5%. So it is a There is a lot of growth, but it won't happen if we take a time-related approach. Next year we won't have twice as many volunteers. Volunteer volumes are ordered a couple of years in advance. The volunteers we have next year, they were ordered a year or two ago. That's when you measure them, somewhere around the 17-18-year-old age, and move into around the 19-20-year-old age. So they will not grow with more than what has already been ordered, and there it is more than 10%. It is also the individual business where we see that we grow in each respective unit. Otherwise, when we get a unit, we do not grow much in the specific restaurant. If we look at the MRE business, it is the same thing there. We had a slightly weaker quarter Q3 compared to previous years, but we see, and I will see that also in the mid-term perspective, that this is a market that will grow We say more than 10%, but we feel very safe with communicating those speeches. We just need to do our background calculation on how it looks in Europe. We can also note that even peace... First of all, my assessment is that Europe will have to pay more and shoot in more. It's not just about war material, it's also about food and all kinds of necessities. But we can also state that peace in Ukraine does not mean that the Ukrainian troops withdraw from the line. You will never dare, they will have to have in the front, the only difference is that they do not have to shoot at each other. An X number of hundreds of thousands of men, plus that Europe will probably also have to put in an X number of 100,000, like in Bosnia once upon a time, for example, who are there to protect the border and make sure that the Russians, since they would shoot European soldiers, risk a great war on the European continent. So we see that defense as such is very strong and positive. Then we have a little short about the Finnish market where we bought into a company that accounts for a little over 3 million euros. And this is an initial acquisition. We don't see that much going to happen with this volume acquisition during 2025 at all. We have actually rebuilt the first restaurant in Finland here last week. What we are doing now is trying to get this company to become a Nordrest company, or not just trying, but it should become a Nordrest company. And by being a Nordrest company and standing for what we want in terms of values, business models and so on, we can then continue to build this company. We have also chosen to buy a slightly smaller company because it is also the first time that we step outside the Swedish market that we know very well. Vi har kommunicerat i vissa forum att vi inte förväntar oss att det kommer hända särskilt mycket volym på det här kontraktet under 2025. Då ska vi nämna lite kort om utdelningen.

speaker
Name not provided (Co-CFO alongside Mattias Ekehlet)
CFO

Yes, we went through our financial goals and we still feel very safe and comfortable with them. So we have as a proposal a share for 2024 of SEK 5 per share. This corresponds to a share agreement that is larger than 50% which is also in line with our financial goals.

speaker
Thomas Dahlstedt
CEO and Founder

Then we have time for some questions. I will try to answer some questions during the presentation. How are the prospects for 2025? We have not changed our goals and we believe strongly in the market. We have also put a lot of time in 2024 on both noting the company and moving to Varberg with the e-business. We are losing momentum here, but we are very positive. We do not communicate any other goals than we have done before. On the corporate side, we talked about the A-land investment. There is a lot to do about it. The main challenge right now is that the number of passengers has decreased a bit. Then there have been some restaurants that still should have been closed. Max, for example, at Gate 2, would have been closed a few months ago. But now it's closed, so it also affects the two units that we have in that tarp. Marie and Finland have talked about this. Have you observed an increase in demand from the defence sector? Yes, we get a lot of demand, especially in the MRE business. But it's not a business that is made on a daily basis, and it's not ordered that way either. There is one volume that is ordered in the ordinary exercise business that comes in running. It can come in an order of 5 million with delivery next month, but the larger individual orders that we sometimes get, Vi kommunicerade igen bland annat förra året. De är både lite mer oförutsägbara och lite svängige i när de kommer och inte kommer. And that was a short-term outlook on the defense segment. But in the short term, there is still growth in it. More than 10% that we communicate. But you don't have to be rocket science to realize that all other defense sectors right now have boomed completely. And we have a big sales on the defense side. How does the pipeline look like to win new contracts? We have always done that in a number of discussions, and we have things that will happen that we feel safe with. In and of itself, we also feel safe with our communicated goals. Can you tell us about how the additional purchase difference works, regardless of which copy? I can't go into that in detail, because I haven't read it in detail yet. What are your prospects in the next one to three years? It's happening right now, and it's been going on for a long time. We've already communicated this in the stock market notes. These are discussions that... It's not like there are a lot of acquisition opportunities, and then you buy them six months later. This is an ongoing discussion that is quite lengthy. There are a number of companies that are interested in selling, and there are a number of companies that we are interested in buying. But it is important to find the level where the price tag becomes reasonable for you and us as shareholders. Do you need more CapEx in the retail business? No, we don't need it. What do you prioritize between profitability and growth? We have actually chosen to prioritize growth for a long time. Now we have grown a lot and there we saw that we had a lag, especially in parts of the restaurant business. And that is what we have worked with now to get back to profitability. Given that we manage to keep the profitability we want, it is growth. But if we end up in a situation where we lose growth or loss of profitability, then I would like to claim that we will probably slow down growth to make sure that we have profitability with us all the time.

speaker
Name not provided (Co-CFO alongside Mattias Ekehlet)
CFO

We can mention that. We have done it in many other contexts. We follow each individual place and follow them on KPIs. So we have a running dialogue with each unit and when we see deviations, we simply dive into them.

speaker
Thomas Dahlstedt
CEO and Founder

Kan du kommentera hur kommuner och regioner tittar på beredskap, lagets situation nationellt och annat? Kan det komma direktivkrav nationellt som gynnar det? Det har ju redan kommit, vill jag kommentera. Det finns en totalförsvarspropp som säger att enligt ansvarsprincipen så ansvarar regioner och kommuner för försörjningen i 90 dagar. Då ska man komma ihåg att det är till de som har responsible for according to the responsibility principle, which means in a hospital the patients, and in a municipality it primarily means elderly residents and schools. But we see how there is a framework agreement via ADDA, which is SKR's maintenance organization, and where we actually deliver and grow in the current situation. Och med det sagt så börjar vi närma oss 9.30 och vi tänker att vi avrundar den här presentationen. Vi tackar för de frågor som vi har fått in och på återseende. Tack så mycket.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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