Hello, welcome to the Balco Audiocast Teleconference Q2 2021. Throughout the call, all participants will be in a listen-only mode, and afterwards, there will be a question and answer session. Today, I'm pleased to present CEO Kenneth Lundahl. Please begin your meeting. Thank you. Welcome to the Q2 reporting of Balco. It's me, Kenneth Lundahl, CEO here, and the CFO Michael Grindborn. We will start with some introduction music. Please listen to the text. The translation of that song is, "it's over now," [Non-English content]. What we mean by that the boring period is over. Balco's sales model is unique. No one else is working like us, but we are dependent on physical meetings with the board and with all the end customers. Even though we have developed digital tools that improves this, physical meeting is important for us. We can see really that this boring period is over. Before the restriction period, we had a 17% growth seven years in a row, before the restriction period. We believe that from Q4 this year, we will get into good growth path turnover-wise and EBIT-wise. During these restriction years, there are some things that we have developed and that we will bring with us. The tent shows, they are physically, and they shall be that in the future also, but we will still continue the digital tent shows, meetings, showing our products, because in some cases, people are sick or are old and can't attend physically. Also, the cultural change that has happened during the restriction period, where the customers have allowed us to start early with the building permission process, that we will really continue even after this period. Also, the different kind of voting processes we have developed during that boring period, that toolkit we will continue to give the customers, because in some cases, they are actually better with the mail voting. During this boring period, Balco has not been lazy. We have done a lot of big movements in the sustainability work that we step by step inform to the market. During this period, everyone knows that material prices have increased heavily. We have increased our prices this year with 3 x. During the boring period, we have improved the financing in all Nordic countries, and this has given the effect that today, after the boring period, even though that the cost increase is perhaps 7%, 8% of our product. From material costs. From material cost increases, the monthly cost that the customer gets on the monthly invoice is today lower for our products than it was before the COVID-19 period. That's due to that we have improved the financing in all Nordic countries during the boring period. If you look at the existing situation, Q2 order take was good. We believe that with the visibility we see today, Q3, Q4, Q1 next year, order intake will be really good. We believe that from Q4 this year, turnover and profit will really be nice and good. We also believe that from Q1 2022, we will be back on the original business plan that we had before the COVID-19 period. That was little bit the introduction. We start with page three. Q2, best order intake so far in a quarter. The relief in COVID-19 restriction during latter part of the second quarter has started the order intake. Order intake 66% higher than sales and 82% higher than Q2 last year. Order backlog increased to SEK 367 million in the quarter. Net sales and EBIT still affected by COVID-19. Net sales SEK 304 million and operating profit SEK 34 million. This low turnover and low profit is explained by the weak order take that we had during the boring period. We have a strong financial position. Equity assets ratio 51%. Net debt to EBITDA 1.3. We've done two acquisitions this year, Stora Fasad and RK Teknik. These two companies, really good competence, strong organization, good product. Actually, it looks more positive than we believed before we bought the companies. We can say that when we see the effect we get of two companies like this with the organization in the Balco Group, it gives us even more taste to do more acquisitions. Michael? Yeah. Page four. Page four, look little bit at our financial highlights in the second quarter. As Kenneth mentioned, the net sales was SEK 304 million compared to last year's SEK 352 million. We should know that the second quarter last year was so far our best quarter ever in both sales and profit. It's tough figures to compare to. Renovation segment accounted for 88% of our sales and renewable segment 12%. Our order intake was very strong, 66% higher than the net sales, it was an increase of 82% compared to last year, up to SEK 505 million. Order intake is the best ever in the quarter so far. The renovation segment accounted for 94% of the order intake in the quarter. Our order backlog is almost back on the same level as we had last year, SEK 1.4 billion, with an increase of SEK 267 million in the quarter. Operating profit of SEK 32 million or 11.3% in profit margin. Our operating cash flow was negative in the quarter of SEK 41 million. Going to page five, a little bit summary of the financial figures. Order intake increased 82%, up to SEK 505 million. Order backlog almost back on track, SEK 1.4 billion. Revenue down 14% to SEK 304 million, and operating profit SEK 34 million or 11.3% in profit margins. Now we'll have a look at the two business segments, going to page six, and start with the renovation segment. Here we had a really strong order intake in the quarter. It increased by 75%, up to SEK 476 million. The order backlog also here is almost back on the same level as last year, SEK 1.2 billion. Revenue for the renovation segment was SEK 267 million in the quarter, with a margin of 11.5%. The profit was SEK 31 million. Look at the new build segment at page seven. Also here, the order intake increase was high, but from a very low level. We had SEK 29 million in order intake. Order backlog is a little bit higher than compared to last year, SEK 233 million. The revenue had an increase of 38%, up to SEK 36 million, and it's coming mainly from maritime segment and also the acquisition of Stora Fasad. Operating profit was SEK 4 million with a stable operating margin of 10%. Now look at the six-month period, the first half year at page eight. Our net sales in the first half year have been SEK 554 million. Renovation segment has accounted for 84% of the sales and the new build segment 16%. Order intake has been 39% higher than the net sales and has increased by 24% compared to last year, up to SEK 768 million. The renovation segment has accounted for 94% of this order intake. Our operating profit first six months has been SEK 56 million, with a profit margin of 10.2%. The cash flow has been negative so far by SEK 54 million, and it's coming from the lower profit and also increase the working capital. Turning to page nine, quick summary of these six month figures. Order intake increased 24% or 39% higher than the revenue, up to SEK 768 million. Revenue down 18% to SEK 554 million. Operating profit also down to SEK 56 million or 10.2%. Earning per share also down to the same level to 1.93 SEK per share. Now going back to page 10 and the two segments in the first half year. Renovation segment has been affected mostly and has gone down in sales by 23% to SEK 466 million. The order intake for the renovation segment has increased 34% up to SEK 722 million. Our operating profit for the renovation segment has been SEK 49 million or 10.5% in the profit margin. New build segment has had a strong revenue increase, SEK 34 million plus up to SEK 88 million in net sales. Order intake for the new build segment has been SEK 46 million so far, 6% of the total order intake, and the operating profit with a stable margin of 8.5%, has been SEK 7 million so far. Going to page 11 and have a look at our balance sheet and financial position. We have still a very strong balance sheet with the equity to asset ratio of 51%. The net debt to EBITDA has increased due to the two acquisitions of RK Teknik and Stora Fasad, and it's now at 1.3 compared to 0.5 last year. If we exclude leasing debt, it's now just 1.0. Our profit after tax first six months, SEK 42 million, corresponding to an earning per share of SEK 1.93. We are prepared for further acquisitions. We still have an unused acquisition credit of SEK 100 million, and we are also authorized to issue shares for finance acquisitions. We also have a current banking agreement that is till September 2022, but we are right now looking to prolong the banking agreement. We would have quite surely a new agreement ready in September this year. Turning to page 12 and have a look at our financial targets of the Balco Group. We have a group target of 10% per year. As Kenneth mentioned, normally we have very strong growth, but now the last 12 months due to COVID-19 and the restrictions from that, we have had negative growth of 17%. We have a profit target of 13% in operating profit margin. For the last 12 months we have had 9.9%. Our capital structure, we should have a net debt EBITDA not exceeding 2.5 more than occasionally. We are right now at 1.3 and excluding leasing debt, just 1.0. We also have a dividend policy that we should distribute half of our profit after tax to our shareholders. Due to that we have had furlough during the first half year, we are not able due to the rules in Sweden to have the dividends. Therefore the annual general meeting decided not to give any dividend for the year 2020. It will be no dividend this year. Now turning to page 14 and a little bit have a look at the sustainability initiatives we have in the group. Firstly, we have a product with our glazed balcony with material and construction that lasts for at least 90 years and are fully recyclable after this period. During these 90 years it also just needs two minor services, and this has been checked and documented by external parties. Our open City balconies also have a long lifetime of 70 years. Our glazed balconies gives energy savings of 15%-30% depending on the product you choose and also the conditions where the house is situated. It also gave reduced maintenance of both facade and windows. This combined gives that we are climate positive after 30-50 years with our glazed balconies. We have set a new goal that will be reached during this year to reduce this period of five to 10 years. At the end of this year we'll be climate positive after 25 to 40 years instead. We have also during this, as Kenneth mentioned, boring period really focused and increased our sustainability work and focus. One thing is that we decided all purchases should be made from suppliers in Europe. We have also improved our information to the market and our customers on our website about our sustainability initiatives and our goals, and also from this year a standalone sustainability report. We have seen that we have also from this get better sustainability ratings from different institutes. I will hand it back to you, Kenneth. Excellent, Michael. Any questions? If you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. We have a question from the line of Julius Rapeli from SEB. Please go ahead. Hey, good morning, guys, thanks for the presentation and congrats on a good Q2 report. I would like to start off with a question regarding the strong order intake figure you had in the quarter and quite a bit compared to at least our estimates. Maybe to understand better the figure, could you maybe describe a bit of what this impact of pent-up demand from previous quarters or did you have some extraordinary large orders during the quarter that contributed to the figure? Thanks. No extraordinary large orders. During the reporting period, we have offered more than ever, we have had problems in the last meetings and voting process and so on. I would say that this is not an extraordinary order intake. We believe that order intake Q3, Q4, Q1 will be really good. This was not just a ketchup thing, one blip. No. The need and demand during the next three quarters looks really promising order intake wise. The order intake just came in May, June, more or less. Yeah. We saw as soon as the restrictions was a little bit less, it started in May in Sweden and June in Norway. Now it looks very promising. All right. Thanks. That's very helpful. Maybe to follow up on you mentioned that you have been working on getting building permits before the actual order closes, and you aim to continue this work also going forward. What is your estimate of how will this impact your lead time that has historically been north of one year or so? I will say that order stoc k, I think it was SEK 1.2 now. Yeah. It will go down perhaps 1.1. It will shorten the lead time, we'd say one month average. All right. Thank you. This country change that was good. There were actually some good things happening during the boring period that went quicker than it should have done usually. Okay, great. That's all questions from my side at this stage. Okay. Thank you. Thank you. We have one more question from Kenneth Toll from Carnegie. Please go ahead. Yeah, thank you. Just to discuss the order intake a little bit more. In terms of segments, was it mainly housing cooperatives or was it more broad-based on customer segments? I would say broad-based. Quite broad-based, but still of course, tenants-owned associated- Yes, because it's our main business. is our main business. Yes. Great. Kenneth, some markets like Norway was dead. Six months dead. Of course, and that's a tenant-owned market. Okay. Also the orders you got now in Q2, do you think you will be able to deliver that in Q4 or will it stretch more into 2022? Some of them will start in Q4, most of them will be in, of course, next year. From everything we see, we have had a very low turnover during, say, one year. We see that from Q4, it will be really good turnover in all our companies. Already now we have not fired people before. Yeah Now we are starting to recruit product leaders, engineers, technicians. Yeah Production, already now to cope the need we have from Q4. I would say for Q4, we will be back on track with really good growth turnover profit. Okay. Sounds good. A question that I probably asked the last quarter as well. We see a lot of increases in prices for steel and other raw materials, and also transport costs are moving up and so on. How do you feel when you compare your own pricing and your ability to price and change prices versus your input costs in Q2 and also in coming quarters? We have changed the prices, I'll say already now this year, so I think it's average 8%. As I mentioned in the introduction that due to that we have improved the financing in all Nordic countries, the real monthly cost they get is today lower than before the restriction period. I would say that if you look at the invoicing that the people get due to our product, that's lower, perhaps between 0%-20% lower. End user? The end user. They get that invoice that is 0%-20% lower due to our financing, that we connect the financing to the lifetime of our product, even though that we have increased the pricing with the average 8%. Say it like this, we have increased the prices a lot, but we have a good order take and we will continue with the good order take going forward. Yeah. The positive thing for us, Kenneth, is that we have a project business, so each project is new prices, and you can't compare one project to another because we have no standard products. We also have material index in our prices to customers. Yeah. Great. There's little chance or little risk that you are being squeezed in the levels of. You can say that. We are very quick regarding new offering. Yeah. Also when you look at the order stock, we are not so afraid of the order stock because we have in our majority of all the orders in our stock, we have this index regulation. Great. Yeah. You talked a lot about now Sweden and Norway and those countries, but have you had any progress or something happening in Germany, U.K., or the Netherlands during this time, or had that been slower and restarts now? Little bit slower because it's very short period that the restrictions have been held back. In Q2, little slower, but it looks good going forward. As we see that the new sales model in Germany that we mentioned before, which we call Eschenbrenner sales master, that it's pretty similar to the sales model we have in the Nordic countries. That is working. That's really promising. Effect of that is that you get bigger projects, perhaps one that's twice as big size on each project, and you get a higher margin. Great. Yeah. Good. That's all for me. Thank you. Good. Thank you. As there are no further questions, I'll hand it back to the speakers. Excellent. Thank you everyone for listening to us and our music. Yeah. Thank you. Thank you. This concludes our conference call. Thank you all for attending. You may now disconnect your lines.