Volati AB

good morning and welcome to today's webcast presentation where we have a lot to presenting with us we have the ceo andrea stenbeck and cfo martin annonson we'll do a q a after the presentation and you can either type in your questioning in the form that is located to the right or if you're calling in and would like to ask a question please press star 9 to raise your hand and star 6 to unmute we will then announce if it's your turn but since in the last four digits of your phone number And with that said, please go ahead with your presentation, Andreas and Martin.

Thank you. Good to see so many of you listening today. Let's dig into today's presentation. Firstly, just a short reminder, Volati, we're a fast-growing and acquisitive group consisting of six well-managed platforms that over time have proven to show strong growth, earnings and cash flows. We consider Sweden, Norway, and Finland as our home markets, but we're also active in large parts of Europe. Two of our platforms, Solix Group and Etikett Group, are also our natural business areas, and the remaining four platforms are within our business area industry. And we will, for example, get into scientific communication a bit more in detail later today. So let's talk about this recent quarter in a bit more detail. Before doing that, firstly, I would like to point out that Volat is best evaluated over time. I made that point about a year ago when we had just recently showed a 55% EBITDA growth in our record quarter last year. And I'm reminding you about the same thing today when we saw a sharp decline compared to last year. I also understand that our quarters are hard to predict. This year, we expected to come in lower than last year. And that was for a couple of reasons. Firstly, 5G rollout pace was at its peak last year. Which led to that we had a very good result, well above our own expectations in platform communication. What has happened since then and more specifically since last summer is that we've seen a sharp decline in the rollout pace, which is also now affecting us in Q1. Secondly, the construction market has been even weaker than a year ago, affecting our platforms in St. Derek's and Salix. The consumer-related part of the construction market hit us and the general market about one and a half year ago. But what happened one year ago, about the same time as this call, but a year ago, was that it also hit the professional part. And so now we see both the construction and the professional related part being a bit weaker. And lastly, we have calendar effects. And that is from the Easter being in Q1 this year. However, even though we expected to come in behind last year's, we also came in slightly behind our own expectations. And what's the reason for that then? That's mainly attributed to an even slower construction market that we saw, and that affected our two platforms, Salix and Saktiarit. Last year, the market in 2023, the market was down a bit more than 15% compared to the last year before, the general construction market that we're serving. And we see a similar development in the beginning of this year. Having said all this, I'm a bit more positive about the quarter to come. We have a number of reasons for that. We do not expect any dramatic shift in the market short term, but we still see that we are over the year going to meet easier comparables. We also see that we will continue to see effects from our cost saving measures, which will help us then to mitigate tough market. And lastly, we will have support from the acquisitions that we have already done, which will drive some of the growth going forward. Under these tough market conditions, it's very important, and I'm especially thinking about my colleagues in Solix, Sankt Eriksson Communication, it's very important to keep the energy up, to continue every day making the right decision with the long term in mind. We're getting closer to a shift in the market. And at one point in time, we will go from having a fierce market-related headwind in the face every day we go to work to meet somewhat of a breeze. And then suddenly we will have the wind in our backs. And when that day comes, and that's on our next slide, we will be in a very good position. I believe that we have successfully balanced the short-term profits to drive that, but still keeping the long-term value creation in mind. We have really focused on the structural measures, and these measures we will have with us once the market returns. I said this already last quarter, that currently we're not operating where I think we should be in a normal market. And I say normal market, not peak market. We will see the effects from this once we have the construction market coming with us again. So once we have that market starting growing, and that will lead to accelerated organic growth for us. We are also very well positioned to continue being active doing acquisitions. We finalized two acquisitions in the first quarter. One of them was signed in 2023 in Q4. And these two are adding about SEK 500 millions of yearly revenue. I also see a positive outlook for a maintained good acquisition pace, but we will never prioritize growth to the expense of poor returns. We're currently at 2.6 net debt to EBITDA. So that's in the middle of our financial goal, but we're also confident to be there to drive further acquisitions. And we will get back to that a bit later on. So with all that, let's get into our numbers. And on this next slide, you can see, let's see, I'm just gonna start. On this next slide, you can see that our sales in Q1 were down 8%, and EBITDA came in at 90 million compared to 159 last year. And the main reasons for that I already touched upon. It's market related, it's not structural, and it's mainly attributable to solid sanctuaries and communication. We are also more volume sensitive in a small quarter like Q1, where the lower sales have a larger impact on our margins. The cash flow in the quarter, I'm okay with. It's lower than last year, but then we had a situation with high net working capital release in our platforms. So looking at the last 12 months, our cash conversion is at 96%. So that's a level which I'm happy with. The net debt to EBITDA, as stated earlier, it's in the middle of our financial goal. We are comfortable being there. Q1 is usually a negative cash flow quarter, and this year we also finalized two acquisitions, and we have the strong cash flow quarters ahead of us. Looking at this next slide, I will just briefly comment on it. But I said earlier that it's hard to predict individual quarters of Volati. And I think that this is a good way of illustrating that. I can see two things on this slide. Firstly, predicting 2023 Q1 was really hard because it's a positive outlier looking at the history. But it also provides a perspective why we were expecting lower results in Q1 this year. So we will have those negative and positive outliers also going forward. And when we have that, it's very important to return to the long-term perspective. Talking about then the long-term perspective, the last five years, if we looked at full year, a rolling 12-month figures, we have shown a CAGR, so an average growth rate on EBITDA of 20%. So despite the recent year's lower growth rates, on average, we're still above our financial goal. Having said that, once the market returns, we will compensate for the last year's slower growth rates in relation to our financial goals, which Martin will now tell you a bit more about.

Yes, thank you, Andreas. So let's look at our performance in relation to our three financial targets. And let's start with our growth in EBITDA per ordinary share. And as Andreas mentioned, we have right now a bit of a headwind in a few of our platforms affecting the growth negatively. And we are now at the EBITDA growth per ordinary share of roughly 13%. And that should be compared to our target of 15%. It is worth noting, though, that our target is measured over business cycles and If you take a longer-term perspective, our five-year average EBITDA growth per ordinary share is 23%. And over time, that means that we are comfortable with our long-term financial EBITDA growth target. And our second financial target is our return on adjusted equity, which came in at 18% versus our financial target of roughly 20%. So that is below and that is driven by a lower EBITDA growth during this quarter. Taking a longer term perspective, however, during the past five years, we have delivered an average return on adjusted equity of roughly 29%. Our last financial target is our capital structure, which is our net debt to EDA ratio, which came in at 2.6 times in the end of the quarter. which is in the middle range of our financial target of a ratio between two and three times net EBITDA. And that means that we still have a financial capacity left to act on when we find the right acquisition opportunity. So let's look at our three business areas and let's Let's start with our business area, Salix Group. Salix Group saw sales decline with 5% in the quarter, and EBITDA declined with roughly 9 million SEK in the quarter. And the demand continues to be hampered for Salix Group, driven by the headwind in the construction industry. But despite this, the sales decline, the EBITDA margin only decreased with 1 percentage point. And why do I say only? Well, it's because the first quarter structure is the smallest quarter with the lowest margin. And that also makes it more sensitive to volume reductions. That means that the margins actually held up quite well. And that is due to successfully working with cost savings initiatives in the business area. And that is increasingly also yielding effects as we go along. And they have also successfully worked with the realizing synergies and working with coordination initiatives within the group. And all in all, we believe that that really makes Sarlix Group to be in a good shape when the demand recovers. Moving over to our next business area, Etiquetta Group, who concludes a solid quarter in the quarter one. They had a slight sales decline, but the order intake in the quarter is very healthy, especially in the Swedish part of the business, which is the largest part of Etiketter Group. And to meet this increased demand, the Swedish part of the business is ramping up capacity through adding shifts to the machines that they have. However, as we mentioned already in the last quarter, we still have lower volumes in Norway. If it day in the quarter increase with with the 3 million and the mortgage increase with two percentage points, and that means that now. Fully emergency is that the 18.8% and that means that we're now getting close to the historical monuments of roughly 20%. And that is possible through to get the group working very systematically with extracting synergies from the positions that they have completed, but also working with operation improvements throughout the business. Historically, Etikett Group has grown substantially through acquisitions, and they are actively looking for new acquisition targets. And that is both in the Nordics, but also across Europe. So moving to our last business area, which is business area industry. They conclude a tough quarter with a sales decline of roughly 12%, and they're going from 81 million to 24 million SEK in the quarter. As Andreas mentioned, the industry consists of four platforms. And for the platform St. Eriks, the construction market continues to be challenging. And that is affecting the construction related part of St. Eriks negatively. Also the Easter, as Andreas mentioned, and also the cold weather had a negative impact on sales for St. Eriks. Jone Peter Reistadler, For the platform communications, we continue to see a market headwind for for that platform, and that is predominantly due to the slow down the five year rollout that we already saw in in during last year. Jone Peter Reistadler, They are also meeting strong compared to us from from a quarter 123. Jone Peter Reistadler, During the past nine to 12 months, we have really taken actions to that to the current market situation, both in St Eric's and communications. Jone Peter Reistadler, And then, on a more positive note, the year has started very well for our platform Corventa and that is driven by the aftermath of the late storms in 2023, which is resulting in a good demand for Corventa's products for water damage remediation. Our last platform, Tone Group, is also performing well and they are increasing the fully margins compared to one year back. And they are also seeing a positive contribution from the newly acquired companies in Mesa. However, if we summarize, all in all, this concludes a tough quarter for industry, where two out of our four platforms are performing well below what we expect in a normalized market. But as also mentioned, we have taken the necessary actions in communications and secretaries and And we are really confident that we are well positioned when the market returns. So with that, I leave the word to you, Andreas.