Svedbergs i Dalstorp AB (publ)

Good morning and welcome to this presentation of the Svedberg Group's quarter report for Q1. We will present here today me, Per-Ono Andersson, who is the CEO of the Svedberg Group, and Mr. Sofie Davidsson, CEO of OFÖ Svedberg Group. Before we go into the results for the first quarter, a few words about Svedberg Group. We are a company that owns and develops strong consumer goods companies in Europe. Our companies design and sell products for the bathroom. In some cases we also produce these products. At the moment we operate on the Nordic, British and Dutch markets, and our ambition is to grow organically. It is important for us to have growth and develop existing companies and the expansion and acquisition of well-established companies. The brain entrepreneurs who complicate our business geographically, product-wise and deliver competence. Our ambition is to contribute to consolidating the Northern European market for bathroom furniture and shower solutions. In this geography, it is possible to develop our concern for an even better group of strong local brands. Today we have a number of brand companies that have strong positions on respective markets, such as Rice, Macro Design, Kasse, RopeRoads and Tebalux. The total number of the concern in the last year of 2020-23 was 1.8 billion SEK, but in the previous year it was .2% more than that. In these numbers, Tebalux was one month under pressure. If we had had Tebalux for the whole year 2023, the turnover would have gone up to 2.8 billion SEK and could be divided by almost 320 million SEK. If we look at the distribution and earnings during Q1, RopeRoads is the largest segment with 58% in the total turnover, followed by Svedbergs at 20%, Tebalux at 18%, Macro 7% and Kasse 4%. Now some highlights from Q1. We have started 2024 strong both in terms of turnover and results. Our latest turnover, Tebalux, presented well and RopeRoads continues to perform well with continued turnover increase, strong margin and good results on a level that is considered a weakening of the British market. In addition to this, there is a strong and unwavering focus on product development with new product launches in combination with an organisational ability to develop the business with new income streams. We have had a weakening of the business development in the Swedish and Finnish markets, which we consider to be the weaker than the other markets in the Nordic region and this primarily in the Svedbergs segment. Macro design and Kasse perform in line with the previous quarter of the year and we continue to work with improved effectiveness, which among other things shows in improved brutto margin, while we continuously adjust our costs to the right and current situation. A contribution to this is of course Tebalux, which acts with a higher margin. We continue to focus on working with sustainability in all our businesses and we see that we get an effect on our climate impact slowly in the dark. Our turnover in the quarter increased by 20% to 572 million compared to 476 million in the previous year's Q1. This means organic growth of minus 4%, a large part of the contribution is of course to Tebalux and RopeRoads. We managed to achieve an enhanced share of 84 million compared to 64 million and a share of 14.6%, which means that we are approaching our financial goal of 15% in the share. Our operating cash flow during the quarter was negative, 49 million, weaker than the previous year and the free cash flow was minus 58 million in the quarter compared to the previous year, minus 11 million. Our net profit in the quarter of DBA is .7% compared to .3% in the previous year, this also includes coming earnouts. If we exclude the earnout in RopeRoads to Tebalux, our net profit in the quarter of DBA will be 2.1%. Let's look at the sales per segment in the geography. Our sales per country in Q1 looks like the top circle diagram, where the UK stands for 48%, Sweden for 20%, the Netherlands for 18%, Denmark and Norway for every 4% and Finland for 2% and the rest of the markets for 4%, the segments mentioned in previous pictures are the distribution of the different segments. Svedbergs is experiencing a strong demand in all sales channels compared to the previous year. This is a turnover in the quarter of 113 million compared to 146 million in the previous year, which is an income of 78 million. The result of Svedbergs is a profit of 8 million compared to the previous year, which is 24 million in the quarter. The distribution of sales in the quarter of 113 million compared to 146 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 113 million in the quarter of 49 million or 17 percent. Our assessment is, as I mentioned earlier, that we take the market as a part of the British market by maintaining customer relations and continuing to develop the market sentiment together with the future-rich sales efforts. The UK is the largest market, 95 percent of the total sales and the registered part of the sales goes to Ireland. Tebalux, which is used for sales, came into existence at the end of November last year. There we have explained the reasons for the comparison of numbers. Tebalux is a well-established producer and supplier of bathing equipment on the Dutch market with some export to the nearby countries. Through Tebalux we have added two strong brands, PrimaBath and Tebalux to our concern. In the quarter, sales have increased to 105 million, with a bit of 26 and a bit of 24.8 percent. We have worked together for a while with the Dutch organization and it has gone very well. Naturally, it is a change for them to go from a family-owned company to enter the stock market into their concern. I now hand over the floor to Anne-Sophie.

Thank you very much. If we

start looking at sales and growth, we see a fine development in the quarter. We see a growth that is consumed by 22 percent and we have a negative organic growth of minus 4 percent. The value affects sales positively by about 2 percent. If we compare with the quarter one previous year, which was a relatively strong quarter for all our segments, it is a more mixed year. The consumption of Tebalux and the strong development of Rope and Roads affects the net turnover positively, while the demand on the Nordic markets is negatively affected by the general supply situation. This picture shows the sales development since quarter one 2020. If we follow the curve of the rolling 12, we see a significant increase during 2021-2022. The strong demand on the supply of Rope and Roads has affected sales positively at that time. And thereafter, sales have been down to a rate of about 1.8 billion kronor. Now we see that the curve goes up again to get closer to a whole-house turnover of over 2 billion kronor. As mentioned earlier, the supply of Tebalux has the strong development of Rope and Roads and the value has affected

sales positively. If we look at the gross profit result in the quarter,

it is still at a high and stable level. Compared to the same quarter previous year, the gross margin was increased by 3.2 percent. The rolling 12, we see a gross margin of about 44.5 percent, which is an improvement compared to the previous quarter with about 1 percent. We still have a good balance between the price and increased costs for purchase materials. At the same time, we have a fine cost control. As a result of a strong gross margin, EBITDA increased the result by about 20 million kronor compared to the same period previous year and was summed up to about 84 million kronor. This corresponds to an EBITDA margin of 14.6 percent and an increase in rolling 12 with some points.

In the quarter, the gross margin

of the running activity was negative. Increased customer feedings and payment of customer bonuses meant a negative change in the movement capital, which was summed up to minus 49 million kronor compared to the previous year at minus 3 million kronor. The year's investments were summed up to 9 million kronor, which was a level with the previous year. The investments are mainly related to investments in production equipment and product development. When the investments were included, the free cash flow of minus 58 million kronor was compared to the same period previous year at about 11 million kronor. If we look at the key figures, the solidity went up to about 49 percent compared to about 43 percent of the same period previous year. The positive development is primarily related to increased own capital in relation to the production emissions in the beginning of the quarter. The discharge of the capital was increased to about 14 percent, which was a level with the previous year. The discharge of the capital was somewhat lower compared to the previous year and was summed up to 11.7 percent. The result after tax rolling 12 has decreased somewhat compared to the same period previous year, mainly due to increased costs for rents and higher tax in the UK and the Netherlands. In addition, the own capital has increased in relation to the production emissions,

which reduces the discharge. What does the financial situation look like?

The debt has decreased since the transition. In relation to the production emissions, some of the concern's debt was regulated in relation to the acquisition of Tebalux. The net debt on 31 March went up to 855 million kronor this year compared to the previous year at about 654 million kronor. The increase is then primarily comparable to the acquisition of Tebalux. The net debt includes the estimated profit margin for RoperRoads and Tebalux at about 196 million kronor compared to the same period previous year at about 160 million kronor. As .E.A. said earlier, net debt in relation to EBITDA rose by the end of the quarter to 2.7. The same period prior to the year was net debt in relation to EBITDA 2.3.

I leave the floor to Paham.

Thank you, Anne-Sophie. We start 2024 with a strong quarter and we put it as a basis for the rest of 2024. To summarize the quarter and look forward, we continue the close cooperation with Tebalux to get them into the concern in the best way possible. We have the quarter and will continue to strive to strengthen our market position by proactively focusing on product innovation and proactively selling in the best possible Our focus and work with sustainability continues with great engagement in the whole concern. We have launched a number of new environmental declarations in the quarter called EPD. We continue our search for potential companies and acquire good assets in our concern and our structure. We will now answer questions and to participate in the Q&A now at 10.20, follow the link in the press release from April 15. Thank you for taking the time to listen.

How is it, despite the fact that the market might

do that?

Yes, it is difficult to look forward to leaving no prognosis. There is so much happening in our environment that something can happen in the next hour. But what is obvious and what we know now is that we want strong, good companies that have a strong position in the market and drive that development with product innovation. They are also good at that. Then there is nothing that is so good that it can't get better.

No, exactly. And on that point, maybe 25% in marginals also looks strong. That is mostly what they did with LTM when they first introduced this acquisition. Now they are spending some time on integration, which may take away some focus from driving the business, but still they perform 25%. Can we get some more flavor on that? Is it seasonally a very strong quarter or something like that?

I think they follow the seasonal variation, like we do in the other areas. There is not much difference in the Dutch market. Then of course there is a lot of integration time. There are a lot of things that we take, so it can be that we take on some extra costs, a little more costs down, because we want to get some parts in the business, maybe strengthen some parts of the organization. But somewhere it should also generate an upside in some way. We calculate that they should be somewhere there, 25%. That is what we have acquired from them, and that is where we want them to defend.

Of course. I have a few more, but I think I can let in someone else if there is someone who wants to give me a little break from talking.

Hi, Marcus Sandrud here. Yes, can you hear me?

Yes, yes.

I also have a few questions. I could perhaps continue with Tebalux and start there. I can talk a little about the seasonality, but if you say that they were somewhere around 3, just under 400 in turnover for the whole year 23, and now it is 105 million in turnover. Do you have visibility on the quarterly basis behind it as well? How is it distributed between the quarterly, does it grow in a turnover-wise way? Is it with that trend, or if you could discuss a little around it without giving any direct figures?

No, they have it like this. Yes, we can look at the market, and our opinion is that, I have usually related to the fact that the Swedish market is perhaps twice as hard or as affected as the other markets in Europe. And then we can say that keeping in line with the English market, that it is down by 10% somewhere. And then our opinion is that they are better than that, so they do not lose 10% in that case. Then we have a few different segments and how it goes in different parts, but they are ... My opinion is that when I make the judgment, it is of course difficult to compare, because we do not have a clear market statistic, but my judgment is that we definitely hold our market position in the Dutch market. Possibly we are a little stronger, but to be careful, we hold our market position.

Yes, okay. If you look at the Swedish and Finnish markets, then minus 22% in Svedberg. If you look sequentially, you can see what happens with the markets in terms of direction. Is it a deterioration from what we have seen in recent years, if you look only sequentially, questioningly? Or are we at the same level and that we have a -on-year level?

If you look at the history behind it, we meet the absolute strongest quarter in the Svedberg segment ever, Q1-23. So of course in comparison, you have a very strong one, but we have to judge that it is not worse now than it has been before. We have come to the bottom of it, and this is the big part in the Svedberg segment, the project market, the new buildings and so on. That is where we have got the biggest loss, if you put it that way. It is due to the fact that no housing is built.

It is fair to say that if we compare, for example, with the second half of the year, Q3, then it has not been worse at the bottom of the mountain.

Yes, that I can say. In that case, and what is the idea, if we look, we say that we usually have, I have related to some time ago, the project index and the construction start index from the forecast center. And there we have a delay when you start a project, so to speak, construction start. So there is a delay somewhere, maybe in some cases up to 12 months, even before we get it in. And of course, here I can only follow that it has gone down for quite a long time, many months ago. So it may have been there for 23, but now it has been on a very low level for more than 12 months, so to speak, maybe up to 18 months. So there is no, I do not see any drama in it. It is a challenging market, but it is not worse than it has been the second half of the year, 23.

Yes, perfect. And then the debt, I thought, it is four months of Tebalux in this. So can you say something about what we are, what level we are on the net, to be able to perform? Especially if Tebalux would be part of the whole year.

But we have said earlier that it is somewhere just under two, and to get that forecast, that assessment of the performance we have done since then, it still holds.

Yes, perfect. Thank you very much.

Thank you, I will continue. It is difficult to say especially about the future, is a moving quote. We thought a little bit about the project leg there. I understand that you cannot say when the construction market is in full swing, but maybe we can talk about the present time, do you get any comments from builders, do you get any incoming calls on that type of project now?

Yes, there is what is coming. For example, the Stammerer, the government comes in in the housing rights association and some larger houses, there are also some smaller projects that are being built, so it is not that it is completely zero in that part. But of course, it is a safe relationship, if it is full speed and it is 100 km, then maybe it is 10 now.

Again, it is also constant compared to H2-23.

Yes, that is where we are. Then we can say that if we look, as I have mentioned earlier, we have a certain project sales, it will be indirect in Europe roads UK, and there when we follow according to the CPA statistics over there and how much is being built and how much the market has developed, Europe roads has also been more successful there than the market in general. So there you can say that looking at it from a concern perspective, we are keeping our positions well there, but what we ended up is in the Sweden and Swedenberg segment.

I would like to remind you that you have once communicated a project exposure figure for the group of about 15%. Can you say something about how much of the Swedenbergs commodity market is a project?

You wish you could have had a clear distribution of the market there, because that is the first definition of what a project is, in terms of new construction. But say that we can say that -40% if you would say something like that, that is the impact. Then you see that, and that is how the market works, that we can in certain situations take a project via a trade. It can be a smaller project, but it can still be a big, say that there are 150 apartments, it can go through a trade that works with an installer of that part. And it can just as well go directly through us, so there are different ways to reach out. And there it is difficult for us to see how much it is exactly, but it is our assessment that it is affected in that way.

That is understood. This is perhaps a more detailed question, but non-recurring items, 400 000, 0.4 million, what is that? Is it Temelux related or something else?

It is Favavs related.

Thank you. And then the last question for me, cash flows, you talk about customer bonuses, among other things, in the case of the warehouse. Can you say something about what customers this is and for what period they get a bonus? Is it 2023 related or is it Q1?

No, it is like this, that when you finish the previous year, you know what the bonus is, so it is mostly 2023. Yes,

I understand. And then I guess maybe it is the UK

as well. Yes, it is the whole consumer.

Okay, well, great. That was probably the questions I had today. Thank

you. Thank you. Do we have any more questions?

I would like to follow up with a question about the cash flow. The movement change, you build movement change, is that really reversible or is it because of the high volumes in certain markets, for example in the UK? No, but we

will be able to reverse that. This is now nicked for Q1 2024.

Yes, so normalization during the year is what I can count on. Perfect, thank you very

much. Thank you. Any more questions?

I may perhaps ask a last question related to the purchase tax. You have these, I think it was 196 million that are left now in the long term, but my perception has been that certain of those parts will be paid out now in 2024. Is there any reason why they are not allocated in the short term or how do you see this distribution in the balance?

No, but nothing will be paid out during 2024. Okay,

so then the part that is left in Ropper Road, it will be paid out in 2025 and the remaining part for T-Ballux 2026 or 2027, because the period stretches to 2026, if I remember correctly.

Correct.

Okay, thank you.

And the largest part of that will be in 2025. Again, just bookkeeping.

Yes, yes. Any more questions?

If there are no more questions, we thank you for showing interest and wish you all a good day. Thank you very

much. Thank you very much.

Thank you. We

have

also received a question from Markus Ramström. We read in your Q1 and saw a writing that the tax in Q1 is affected by high tax in the UK. Is there any one-time effect here or is this tax method reasonable to count on in the future? And then the answer is no, there are no one-time effects here, but that there is a level difference. In Q1 2023, the tax rate was 19% in the UK and Q1 2024, the tax rate was 25%.