Troax Group AB (publ)

Okay, hi everyone and welcome to the interim report for Troax Group. My name is Martin Nyström and I am the president and CEO of the Troax Group and together here with me I have our new CFO Robert Booning who joined the company on the 1st of October and together with me Robert will go through the quarterly results of the third quarter. I'll start by sharing my

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Great. So here we have the presentation as well. So we'll do as always, I'll try to summarize the quarter, then we'll walk through the key events, we'll go through the financial numbers, and then we'd end up the call with the Q&A. So without further ado, let's dive into the quarter. If I summarize the third quarter, I think we had a good quarter from a top line point of view. So we had a continued strong growth on order intake as well as improved sales. So we almost got to the 100 million mark in the quarter as well. So our order intake grew by 60%. In total of that, we had our We also saw a sales increase of 51% in total, close to 97 million euros. And we also had a positive book to bill also in this quarter. Our acquisition continued to deliver very well. So the recent acquisitions added 65% to the total to order intake while we were more flattish on the organic order intake side. The deliveries and the sales journey quarter grew by 5% year on year. And here we also have our order book consisting of more orders, which are mid-sized and large, which means that the usual order to sales conversion cycle is a little bit longer. So on the back of our second quarter, we had a growth of 5%. So very strong and even record high numbers both on order intake as well as sales during the quarter, which is positive. If I then look to demand, demand continued on the pattern from the second quarter and the first half of the year. So we see a scattered picture both across regions as well as the different market segments. Here, I think it's good to see that our warehousing portfolio continue to grow, particularly in Europe, we continue to see good demand. Also continuation of the second quarter, which followed into the third quarter is that we do see our data center products and the segment growing strongly, mainly so in North America, but also partly in Europe. So segments are continuing to grow strongly. At the same time, we do see the automotive sector in Europe, as well as in Asia and China in particular, struggling also in the third quarter. And we also see the construction segment for us remaining at the low level, even though we believe that we have seen the bottom from our end. If I then move over to the profitability side, I think it was good to see a sequential profitability improvement in this quarter. We ended up at an adjusted EBITDA margin of 15.6 in the quarter, which was a mixed bag of outcomes. I think the first part is that our gross margin fell to 36.1 from 38.0 last year. Main reasons for this is that we do now have a less favorable sales mix from a gross margin point of view. We also continue to see cost pressure on raw materials and components in Europe. We started to see that in the second quarter which has now also become reality more in the third quarter and we continue to see high transportation costs in Europe. So this puts a bit of pressure on our gross margin in the quarter our North American volumes grew they started to grow already in the second quarter but we are now also seeing additional growth in the third quarter here we are on a journey ramping up our new Tennessee facility from our old Chicago facility here we've done good job I think with just delivering more volumes and satisfying our customers but we're still having a a journey to make when it comes to our margin in North America, and I'll come back to that during the call as well. On the SDNA side, we are having a good cost control during the quarter. I think our organic costs are now declining off the back of what investments and initiatives that we've taken in previous quarters, and the increase of our sales and admin costs in overall stems from both our acquisitions, which we've added, but also our IT investments. The quarter also includes an adjusted EBITDA of 2.1 due to the relocation in North America. We've had more costs than we initially anticipated connected to a ramp up. On the net debt side, we continue to be on the high side to be Troax, but we're seeing a sequential decrease. And of course, this is then a consequence of the recent acquisitions. And during the quarter, we've also re-evaluated our earn-out liabilities and earn-out setups. And as a consequence, we've also added 5.3 million euros to our net debt. So overall, a very strong quarter from a top line point of view. Our margin is sequentially improving, but there's more work to be done on the margin. If I then look, start to do a few deep dives as we usually do, I'd start with North America, where we have now completed the relocation from Chicago to Portland. We did that already during the second quarter, and now we're fully operational and running out of our Tennessee facility. I think it's great to know that our capacity, our facility definitely adds capacity and efficiency to this, to our group. But at the same time, I realized before we are at the same level and in the same position as we are both in APAC as well as in Europe, there is more work to be done until we realize and utilize and leverage that full potential and our investment. It's pleasing to see that our deliveries during the quarter increased at the same time we've done that at the cost of of our gross margin. So in the quarter, we had roughly 100 bps relating to additional costs for ramp up and outsourcing to satisfy our customers. And this effect has gradually come down now during the third quarter and we'll start to see that declining even further in the coming quarters. and our focus has been through the third quarter as well as into the coming quarters to make sure we run this as a fully stable and also fully optimized facility just like the rest inside the Trovax Group. Also, after the quarter, we have now launched what we call Beyond Safety, which is our commercial platform and the commercial platform that we have for long-term growth. And this is, I think, super exciting because now we start to bring in all the different ingredients and the broader portfolio under the same umbrella. Of course, this is great if we can, in a consistent and competitive way, explain what our solutions bring to our customers in terms of customer value, bringing their safety up, bringing their productivity up, and also bringing their performance up. So I think this is a great way for us and a great tool for us to continue on our sustainable growth journey. And I think one of the things you'd see today out of this is our new logotype and new graphic profile that we're utilizing also during this call. Thirdly, I'd like to show that we are also strengthening the capabilities as well as the leadership team. So Robert, our new CEO, is also on the call. So he joined on the first of October to strengthen our finance function. We have promoted Maria Pettersson to the responsibility for both sourcing as well as sustainability, full in line with our strategy. And I'm also very happy to welcome Linus Carlesson as our new chief of digitalization as VP IT. And I think these are all key individuals and key contributors on our journey as the Troax Group. So warm welcome to all of you into the management team. Then I'd slip to the market development in the quarter. And in this picture, we look at the organic order intake. We look at it year on year, and we look at it excluding currency effects. And in total, we ended the quarter with a flattish number, so zero in total. And as usual, we would look at this through the geographical lens as well as through the segment lens. So if we start with Northern Europe, which had a good quarter and also continuation of the second quarter, we had a growth of 14% in all in all in Northern Europe. Here we do see the warehousing segment being stronger. And we also see actually a small uptick in the construction segment as well. The other segment is also improving in Northern Europe and this is mainly driven by the data center sub-segment. So all in all a solid and good development in Northern Europe. If I move over to Southern Europe where we came in at minus four, it's a bit of a mixed picture. We continue also here to see the warehousing segment being positive for us. while we see the other segments being more hesitant and I think here we in the quarter we have also had an effect of the automotive segment in particular driving down the total to the minus four. If we move over to Americas where we had a very very strong first half of the year we now see the third quarter the market has slowed down a little bit so we came in at minus 22 also here the automotive sector contributes to that decline while we see the other segments being in the quarter fairly flat or even declining in some sub-segments. I think here we've probably been a little bit, let's say, unlucky in the quarter with the orders. If we look at the warehousing segment in particular, that is still a segment where we have a lot of activities and a strong activity outlook, even though we were flat in this quarter. Last but not least, we have APAC, which fell with 34% during the quarter, and here I'd say all segments are down, particularly here we see a decline in the automotive sector, driven by China and Japan, and we also have a similar picture in the process industry, where we have a pretty strong foothold in the market in APAC. So all in all, we came in organically at 0%, but it's at the same time a pretty scattered picture. With that, I'll leave over to Robert to walk you through the numbers in a bit more detail. So Robert, please.