Projektengagemang Sweden AB (publ)

Good morning and a warm welcome to this quarter's presentation for Project Engagement Q1 2024. Vi gör ett bra kvartal, en bra start på året och våra åtgärder biter. Vi har också skapat en bra grund för ökad potential i lönsamheten framöver och vi har fortsatt att positionera oss för att vara redo när marknaden vänder. Jag heter Liselotte Haglind och jag är tillförordnad vd och koncernchef. As usual, we will start by taking a look at the market. The market has been still weak in the quarter. We see it both in housing, commercial properties, social properties and new production. Despite the rising optimism that the top of the interest rate is now reached and that the interest rate will be lowered here in May and June, it will take time before the market is in the lead. But, and what is important, is that when there is an increased predictability of where the economy is headed, it usually becomes a positive belief in the future. With the macro-trend areas, our customers are affected by both energy transition, industry and security issues, and competence and specialists are needed to solve these complex and challenging problems. Therefore, in the long run, the demand for our services is growing. We need constructors, installers, project managers, environmental experts and architects to solve the problems of tomorrow. We see an increased need, but also a requirement, to take care of the buildings that we have already built and instead of tearing and building new ones, make sure that we take advantage of the buildings we have. We also see with the geopolitical increased tensions that we need to increase our security and our resistance power, both around buildings and close to the environment and society in general. And with Sweden's entry into NATO, we need to invest in society's resilience. Vi ser att industrin fortsätter sin omställning till fossilfritt och här behöver vi snabbt hitta lösningar på bland annat vindkraft, solkraft, vattenkraft för att möjliggöra näringslivets satsningar. Det här är många och stora komplexa utmaningar som vi står inför och för det så behövs det experter på byggnader och deras närmiljö. Det var en kort inledning utåt och vi tittar in i projektengagemangskvartal 1. Det är ett bra kvartal lönsamhetsmässigt och våra åtgärder biter. Vi gör en ebitda marginal på 8,3% och det beror främst på att vi har lyckats med våra kostnadseffektiviseringar kopplat till lokaler som ska vara hälften så stora och dubbelt så värdeskapande. Ebitda-resultatet är 18,2 miljoner kronor. The turnover has decreased. It is 218 million kronor. This is mainly due to the measures that we have communicated about already this autumn, that we have reduced staff in those markets and areas where we see that the demand has been weaker. We also have a quarterly effect in the quarter at minus eight hours. The FTEs that we have included this year are reduced and therefore the growth will not continue to be as strong under 2024. It will take time before the growth gets faster. At the same time, we have invested a lot in increasing, growing and taking market share within the areas that we see that demand is increasing. Energy, industry and security. And here we have won several orders in the quarter and we are also growing personally. We have recruited 45 people into project engagement during the first quarter. We also see that the strategy we have around pricing works and we continue to increase our prices and I am very pleased with the level we are at today. The degree of debiting is affected by the market, but it is also affected by the fact that we have off-boarded a number of people out of the company during the quarter, a 30-thousand, linked to this transition that we are doing and it affects the efficiency. 71.4% is the debiting rate, and here there is a potential. 1% increased debiting rate makes an effect of 11 million kronor on the EBITDA range. And that we now have a more efficient cost structure and a better base for increased profitability, there is a potential forward when the market turns. If we look at our segments and start with architecture and management, the willingness to invest here is still low in commercial properties and housing, but there is a large underlying need. In architecture, and especially in interior architecture, which is exciting, we see a careful, careful lightening in the quarter. The turnover is affected by a lower rate of debiting and fewer employees. The hourly rates continue to increase, as I said, which we put a lot of focus on. The EBITDA margin in the quarter ended at 5.9%. One of our tasks this quarter is Re-Energy Frövi, which has been called Sweden's greenest industrial project. It is the Swedish company Varm that has built a very similar greenhouse in Frövi, where from May 2024, 8,000 tons of tomatoes will be grown annually. This greenhouse covers 100,000 square meters and uses waste heat from Billerud's carton factory, which is just inside. This is a unique solution in Sweden. Here, PE has contributed with construction laws, the design of premises that are in the area and VVS planning. Then we go to our largest segment, construction and environment, and here we find our constructors and environmental specialists. The market for this segment during the quarter has been still challenging in services related to new production, with a lower rate of debiting as a result. We still have an EBITDA margin in the quarter that lands at 9.8%. Vi ser en fortsatt god marknad inom industri och utveckling av redan byggd miljö och där breddar vi fortsatt vårt tjänsteerbjudande. Vi ser fortsatt behov av rådgivning inom bland annat tillståndsfrågor, förorenade områden och naturvärdesinventeringar där vi stärker vårt erbjudande och rekryterar miljöspecialister. I kvartalet så fick vi förtroende av Svea Solar att ta fram just naturvärdesinventeringar och miljökonsekvensbeskrivningar inför ett flertal solparksprojekt som de ska starta. And then installation, our third segment. They continue to strengthen their result development and show for the sixth quarter in a row a better margin than the previous year's quarter. The EBITDA margin lands at 8.2% for the quarter. Really happy. And the improvements are mainly linked to the transfer that he has made within the security facilities, as well as that we have managed to increase the revenue and debiting rate. At the same time, the turnover has been affected by the fact that we have fewer employees, and this is linked to this earlier adjustment. We see a continued shift here, from new construction projects to reconstruction projects, and there we have a broad competence. Due to this, there is an increasing emphasis on various factors such as energy efficiency and digitization, which this segment contributes a lot to. I kvartalet har vi fått förtroende i ett ramavtal med Stockholm Vatten och Avfall med fokus på att säkra god kvalitet för vattenförsörjning som omfattar i stort sett hela bredden på PS-kompetens. Then we move on to the financial statement. The result per share was 0.51 kronor versus 0.26 kronor the previous year, that is, a doubling. The cash flow from the running business was 42 million kronor. Net debt was 2.5 times versus 2.3 the previous year. Net debt exclusive IFRS 16 was 133 and the entire net debt was 227, that is, decreasing. So till sist, vårt första kvartal 2024 var ett bra kvartal lönsamhetsmässigt. Våra åtgärder byter. Vi gör 8,3% i rörelsemarginal främst kopplat till att vi har tagit de här åtgärderna kring kostnadseffektiviseringar. Samtidigt har vi jobbat med att ställa om och positionera oss och vara redo när marknaden vänder och vi visar med de här siffrorna också på potentialen för den ökade lönsamheten framöver. Every hour, every day is important for us and it will continue to be very important that we continue to work with price, efficiency and cost control. But above all, it is to continue the market focus that we have really had in quarter one. To grow in the areas that we see are beneficial and continue sales and growth in those areas and deliver high customer value. Vår tillgång är just våra experter och jag vill tacka er alla för ett otroligt fint första kvartal. Stort tack också till våra kunder och till våra partners. Och med det så ska vi se om vi har några personer med oss på tråden.

Good morning, this is Niklas Färn from SEB Equities. Nice to hear from you, Niklas. Hi. Hi, and I have to congratulate you on a very positive surprise today, especially when it comes to profit development. But we can start by talking a little bit about the top row. I wonder a little bit. Can you develop some thoughts about the market and the demand? You mentioned an expected rate peak, which is probably in the expected picture, and perhaps that you could come back in the form of an increased demand for you during 2024. What is it that may have changed in the market now that we are writing slutet på Q1 en bit innan i april jämfört med när ni gick in i det kvartalet som ni redan visade idag. Tack!

Yes, good question. And this is what is extra exciting right now to understand. We notice, as I said, that the market is still weak and that there are not enough investments on the market. But as soon as you start to understand how it will develop, it is still the case that there are investments. So we notice a little cautious movement. And I also think that many start to position themselves before autumn when we hope that it actually starts to move even more and do not really have the opportunity or time to wait. And that's what we see a little bit right now. Then it is so that It always takes time before we are back in the reliance that was before the conjecture went down. So it will certainly slow down and I think we will probably have to wait for the biggest effect by 2025. Thank you very much.

Yes, absolutely. I was going to continue a little on the same topic. If you look at the organic decline in sales today, it is close to 11% of the round. And if I calculate a little quickly here, it looks like you have an increase in price in the quarter by at least a couple of 3%. Is it true that the volumes are perhaps less than 14-15% in that case? Is that a correct description of the development in the quarter?

The challenge is that we enter the quarter with lower FTEs than we went out, because we have still looted, not only these 60 in quarter 4, but also people, another 30 in quarter 1. And as soon as you have this movement when people are going out to hand over their projects, it burdens the efficiency. So we have an effect on the degree of debiting that makes the turnover decrease. I have talked about this before, that we work hard to try to compensate and make sure to get over the degree of debiting on the people who stay in the company. And then, as you say, we have a good price development and we are continuously working with good processes so that we can increase the prices at the level and cover the margin linked to wage increases. Something that the entire industry works with and I am very pleased with that development.

Thank you, Liselotte. If we continue to look a little further down in the result, can you just remind us what guidance when it comes to the savings program for property optimization and possibly how much that process actually affected the results with the first quarter. Thank you.

Vi ligger väldigt bra i fas och fortsätter enligt plan och vi hittar också saker att skruva på hela tiden. Vi taktar, vi har ju sagt att vi ska nå den här nivån att ligga och takta på 20 miljoner kronor från 2025 och det kommer vi att kunna göra. Så jag tycker, jag är inte orolig för det som vi håller på med där utan det kommer att fortsätta i en bra takt.

And do you have the opportunity to help to say how much of this job that affected the movement result in the first quarter?

Yes, most of the effect you see there under the descriptions and the DIF there points quite well at how the development will continue. And then we are about to reach about 16 million there right now.

Fantastic. Can I also ask a question like this, if you look at the development year over year per division or business unit or segment, it is quite clear that in the two slightly larger business units, the profit and margin falls back compared to the first quarter of 2023. And in that way, it is actually the last third division that delivers the increase in results. That's right. Can you help me understand what is happening in systems?

Yes, I think I have talked about it earlier. The move that we have started for many quarters ago has been to move us towards the markets that are more growing, for example safety facilities. And that is mainly what we have succeeded in doing. There is a lot happening in the development of services connected to installation. Here I believe that we will see a growing market and we have the ambition to take market shares here as well. This segment is one segment with the greatest potential in growth. If you only comment on construction and the environment, you have historically been at very high levels, and we are going back to them. What we have done here, and I can start there, it also depends a little on the psyche in the market about this with new buildings. And that is why, as I also say, with the measures we take, we position ourselves to buildings that need to be rebuilt, for example. We employ environmental experts and specialists who will be needed when starting new production. So we have worked more with that segment to be ready when the market turns. I think we still deliver a nice margin in that segment. That was the answer to the question, I hope. Thank you Niclas.

One last question from me, maybe I have taken too much time. I just wanted to hear, this is actually the case for the first time, at least in our model since 2018, there are no commercial related items in this report. And given a very strong and nice balance calculation position, I still want to ask the question how you, Liselotte, see to complete with acquisitions also in 2024 or 2025 and forward for that part?

We are currently working to strengthen profitability and to change and be ready when the market turns. And I see that we are doing the right thing. The figures show that we deliver on what we do. We have a great ability to transform. We will continue to grow in the areas where we see that the market is good. We have an ambition to deliver on our financial goals, so it is still stuck even in the coming years when the market looks better. Right now, under 24, we will focus on organic growth. But then it is always interesting to complete the business in different areas.

Fantastic. Thank you very much for all the answers to all the questions.

Thank you so much. Let's see if we have any more with us.

Yes, Stefan Knutsson here from ABG.

Hi Stefan.

Good morning. I follow up a little on Niklas' eminent questions here. You talked about the market in the beginning. I have a follow-up question. Are you confident with the measures you have taken? I'm thinking more about you going in with a lower number of employees this year. And that we might see a trend shift, that you start focusing on having positive net revenue from here. Or is it still too early to say anything about that?

Ja, jag känner mig trygg med de åtgärder vi har tagit och det visar också siffrorna på. Vi fungerar ju så, apropå att vi är snabba och omställningsbara, att vi hela tiden We are aware that services are being developed in the direction they are supposed to and that we have the right employees for that. So we take measures all the time, as all other consulting companies do, where we are supposed to. So we will continue to be fast. But the biggest focus now is to focus on to be where the market is good and continue to grow there. So we work very hard with that. What we are against right now is that the market is still weak, so we are really ready when it turns. Then we go into the quarter with very small FTEs, so it's a little uphill. We will have this with us for the whole 24, but we are still working to grow and become bigger.

Okay, but do you still see that the investments are decreasing, or is it more of a stabilization? Because when I look at some forward-looking expectations, I think that you may have a slightly more positive picture lately.

Yes, that's exactly what I'm trying to describe, that we see a careful lightening. But it hasn't started to move much yet. But it is, as I say... a number of investments that are made because you actually don't want to wait any longer. There will be a lot going on at the same time when the market turns well. And I think that's the light we're seeing right now.

Thank you very much for that. Then I thought I'd just follow up a little bit on the results, which in any case surprised me. Even though you had a negative calendar effect from the Easter, and the degree of debuting came in quite clearly during your time in Fiol. If you can just develop a little more there, and if there were any one-time effects that you should not expect in the future in the result?

Part of this is that we have managed to increase our hourly rates. Part of this is that we have started to move to other markets where demand is better and there we have also managed to increase the rate of debiting and hourly rates. Then I think that And that has to do with the cost savings around the premises. We see that there are a number of other costs that make the costs decrease, for example to office costs and so on. So I think we also get a nice effect there on cost savings. Overall, there are no special effects in the quarter that make the EBITDA change.

Okay, stort tack för förtydligande. Det var de frågorna jag hade.

Stort tack ska ni ha och tack alla som lyssnat. Jag tror inte det finns någon mer på tråden som vill fråga något. Nej. Tack ska ni ha och ha en fin torsdag.