Volati AB

Good morning, everyone, and welcome to today's webcast presentation with Volati. With us presenting today, we have the CEO of Volati, Andreas Stenbäck, and CFO of Solix Group, Martin Hansson. We'll open up for a Q&A after the presentation. You can either type in your question, or if you're calling in, please press star nine to raise your hand and star six to mute yourself when you get the word. And with that said, please go ahead with your presentation.

Thank you. Thank you for listening in to our quarterly presentation. We're happy to have Martin Holsson with us today as well. He's the CEO of Solix Group, and he will tell you a bit more about that platform or business area once we get there. So let's start with our presentation and I'll go directly into page three and talk a bit about the most recent quarter. So I'm very happy to see that we're back to organic growth, even though it's a small number. It's thanks to a very strong organic growth in Salix, which shows a positive and strong number. And it leaves us with an overall sales growth of 9%. The EBITDA growth of 11% is good. It's much thanks to Salix, which shows a very strong year-over-year growth of 50%. which Martin will tell you a bit about more later on. Etiketto had a decline, a small decline in the quarter and that's mainly because of a disappointing slow start in the quarter. We have however seen that the development has gradually improved in the course of the third quarter. In industry, three out of four platforms showed EBITDA in line with or back to the last year, while we have Corventa that showed a decline because of the lack of floodings. We'll get into that a bit more later on in the presentation. Looking at the numbers, sales and EBITDA, I already commented on that, but we're at the 2 billion in sales and 200 million in EBITDA. The operating cash flow increased by 11%, roughly 200 million, which was very much in line with what we expected. And that has also left us with a lower net debt EBITDA compared to last quarter. So we're now at 2.8, which then leaves us with room for acquisition. Specifically, if you take into account that we have a strong Q4 ahead of us, that's typically a strong cash flow quarter. Taking a step back, looking at the last 12 numbers and the yearly numbers, we're now at 8.4 billion SEK of turnover and 720 million of EBITDA. As I usually comment, Volati is best evaluated over time. And the average yearly EBITDA growth since 2019 has been 16%. But what one could also see on this side is that since 2021, we haven't lived up to our financial growth goal of growth of at least 15% per year. That basically means that we should double every fifth year. And since 2021, we've seen a slowdown, and that is, I would say, solely because we've had challenging market conditions in the majority of our platforms. That also means that we have created a growth gap that we need to close in order to live up to our financial goal. And on this next slide I have a way of illustrating that growth gap. So this basically means that if we are to close that by the end of 2027, we need to show an EBITDA of between 1.1 and 1.5 billion of EBITDA. In recent years, when we've been meeting lower demand, we are taking long-term structure measures within the platforms. I've spoken a lot about that in recent quarterly calls. These will then benefit us when the market returns. What does that then mean? That means that we will show accelerated organic development, and that is what will help us to close this growth gap. At the same time, we will need to maintain the same acquisition pace that we've done in the last years. So we need to both work with the organic development and maintain the acquisition driven growth. So this was to touch a bit upon our financial growth target. And again, we should grow of at least 15%, 1.5% per average annual growth. And what we've seen now in this quarter is that we're at 10%. And we've actually now have five consecutive quarters where we have improved that number. But in order to close the growth gap, we need to surpass that financial goal for some time. So we need to be beyond 15% for quite some time in order to close the growth gap. Also, what can be seen is once we start showing growth, which we have now done, the return on equity is starting to improve. So we've had quite a few quarters now of improvement also on return on equity. And we're now at 19%. We should be of at least 20%. So we're clearly getting there. And when it comes to the net debt to EBITDA, we are in line with last year. And that means rooms for acquisition. So next part of this presentation is to dig in a bit more into the three business area. And then very happy to introduce Martin Hansson, which will start by telling you a bit more about Solix Group.

Thank you, Andreas. My name is Martin Hansson and I've been the CEO of Solix Group for just over four years and it's a very exciting opportunity for me to be here and say a few words about Solix today. So I would like to start with the last point here and tell you that our headquarter is in Malmö and we're altogether some 700 employees in Salix. A proud, engaged and a competent team, which is the core of our business. I'm very, very happy to be here and tell a little bit more about what we do. And what we do is that we are a proud trading company that primarily provides products for the building trade and the building industry. That is roughly 80% of our business. There is also a strong offering of products for agriculture and forestry and home and garden. So as you can see on this chart, we have a long history. We were established back in 2006 as a group, but we have roots back to the 19th century. So we have a number of companies with a long experience in the market and in the trade. So we have done some 14 acquisitions since 2019. So the combination of operational excellence and acquisitions is how we would like to grow and develop our business. Our main market is the Nordic region with a focus on Sweden. We have some two thirds of our business in Sweden today. And we are, of course, curious to further explore opportunities in the Nordics and even outside the Nordic region. So I would like to tell you a little bit on the right hand side of the chart as well. So we have three business areas in Salix. As you can see, we have great and strong businesses and some very strong brands and we combine that with an excellent reach in the trade in the Nordic region. So this is how we believe that we best can create value is the combination of strong business, strong brands and an exceptional reach into the Nordic region in terms of the building trade and the building industry in particular. So if we move on to the result for the quarter, we deliver 19% growth in the quarter. You heard Andrea saying that we would like to close the gap. We leave I hope, three to four years behind us where the market has not been so easy. The building market in the Nordics has been challenging and we see that we have maybe lost volume in the region of 25, even 30% in this period. This is a quarter behind us where we see organic growth of around 8%. And we see this growth coming from, in particular, the DIY segment. So home improvement and DIY segment is where we see the indications of growth and that impacts us in a positive way. So the DIY segment in the way we measure it is around 20% of our total exposure. So an 8% organic growth and overall 19% growth for the quarter. If we move on and look at the EBITDA, the EBITDA ends up a little bit above 50% growth. And as you can see, 12% EBITDA margin. So this comes from that we over a period of time, as Andreas also said, have done structural meshes. We have worked with supply chain efficiencies, purchase improvements. And also, if you look back here over the last couple of years with the volume loss. We have corrected our prices, price increases, price corrections, as well as a more normalized Swedish krona. The freight cost for us is more normalized, meaning that we have now a platform for both internal measures that we have done over the period and more normalized outside environment that we believe that we are in strong position for further growth in solids. So when demand recovers, we believe, together with great people, engaged employees and managers, that we have a good position to grow both organically as well as through acquisitions.