Hello, and welcome to the Balco audiocast for teleconference Q1 2022. 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. Good morning. Welcome to the Balco Q1 reporting. It's Michael Grindborn here, CFO, and Kenneth Lundahl. We start on page two. Please see point in Q1. We expect that much higher order intake in Q1. We expected higher turnover, and we expect higher profit. The reason for this not happening, the first six weeks, January, February, COVID-19 had a negative impact on net sales, order intake, operating profit in January, February, and there were still restrictions in the Nordics, and also many of our employees were sick with COVID. It affected us internally, affects order intake, especially Sweden, Norway, and it also has affected the building permission process the first 6 weeks. Michael will take the figures later. If you look at point three there, investment and resources. We increased the staff within our project organization to cope with a large increase in order intake since May last year. Linked to the investment in green transformation, we are building up a self-employed, flexible assembling and facade organization. Development of Balco Living will be intensified and additional development resources will be invested in this product segment, as well as marketing resources, primarily in Sweden and Norway. Michael, page three. Yeah. I guide you through the financial figures. If we start with the net sales, we saw an increase of 15% up to SEK 288 million. Our renovation segment accounted for 85% of the sales, and the new build segment for 15%. Order intake increased by 11% to SEK 292 million. Renovation segment accounted for 82% of order intake, and the new build segment for 18%. Our order backlog has increased by 39% compared to the same period last year, up to SEK 1,567 million. Our adjusted profit increased by 19% to SEK 26 million, and with an adjusted operating profit margin of 9.1%. The cash flow for the period was similar to the first quarter last year at SEK -14 million. Going to page four and have a look at the renovation segment. Here the order intake was more or less the same as the year before, SEK 239 million. The order backlog, though, has increased by 47% compared to first quarter last year, and is now at close to SEK 1.4 billion, 88% of our total order backlog. Net sales increased by 24% up to SEK 246 million. The operating profit increased by 31% to SEK 24 million with an operating margin of 9.6%, which is an improvement compared to 9.1% last year. Turning to page five and have a look at the new build segment. Here we saw quite a big increase in our order intake, which was SEK 52 million in this quarter, and it's 18% of the total order intake. Order backlog is stable at SEK 189 million. Net sales decreased, though, by 19% to SEK 42 million, and it's mainly a decrease in the maritime segment, which is right now we are building the last boat we have in our order backlog for now. Operating profit was SEK 2 million with an operating margin of 5.7%. Turning to page six, and have a look at our balance sheet. We have a very strong balance sheet with an equity to assets ratio of 56%. Our net debt to EBITDA, if we include leasing debt, is now at 1.2. The main reason why we see increase is that we have a new 10-year lease agreement for our head office in Bengtsfors, which we have also expanded by 800 square meters. So we have a new agreement now in March this year. If we exclude leasing debt, the net debt to EBITDA is just still 0.6. Our profit after tax increased by 18% to SEK 19 million, corresponding to an earnings per share of 87 öre, and it's an improvement compared to 74 öre last year. We are prepared for further acquisition. We have an acquisition headroom. We extended our bank agreement with Danske Bank last year, so we have it now until October 2024. We have also possibility to issue share to finance acquisition, which is a possibility for big ones. Turning to page seven and have a look at our financial target that was updated in January this year. We have a growth target of 10% per year. Looking at the last twelve months, we are right now a growth of 3%. We have a profitability target that our earnings per share should grow by 20% per year. In the last twelve months, the growth has been 34%. We have also growth for our capital structure that our net debt to EBITDA shouldn't exceed 2.5 more than temporarily. Including leasing debt, it's 1.2, and excluding it's 0.6. Our dividend policy is that we should distribute 30%-60% of our profit after tax to our shareholders, and the proposed dividend for this year is 49%. We have also a sustainability goal that more than 30% of the group sales should be within the EU Taxonomy, and also provide 30% energy savings to our customers. Looking at the last 12 months, we are at 13% there. We will go to page 8 and have a look at sustainability and green transformation. Sustainability is an important issue for Balco Group. We have a vision that to offer energy savings through innovative solutions and high quality products in form of balconies. That's our solution that should provide better quality of life for the residents, and also create a safer and more aesthetically pleasant environment. Achieving this requires sustainable business practices, which are a prerequisite for the Balco Group's operation to develop, to co-build profitable and create value over time. We have also looked at the Agenda 2030, and the Balco Group takes its responsibility seriously and have selected four specific goals that we believe can make the biggest positive difference, and which also align with our overall business objectives and strategic sustainability areas, which are sustainable governance, environment, and people. I hand over to Kenneth and green transformation. Excellent, Michael. Green transformation is an important segment for us, and the interest is higher than we expected. We are selling and we are building projects. Our goal is that within 3 years, more than 30% of the group sales should be within the EU Taxonomy and provide at least 30% energy savings to our customer. The renovation of balcony is a trigger to start this process. I mean, the buildings we're dealing with is 50 years or older. Renovation of balconies with Balcomat 30 new glazed balcony solution energy saving of 15%-30%, so it's a trigger that enables energy saving of at least 30% and possibility to get finance with green loans bonds. When we have a cooperation agreement with a customer, our energy consultant can help the customer to analyze their energy declaration and give them suggestion on actions that can help the customer improve energy declaration from D or E, F to B or C. The offering we have, of course, is that we are a general contractor, doing all the work ourselves. We start with the balcony. To ensure energy saving of at least 30%, Balco has broadened its offering in addition to balconies, and this is, of course, facade renovation, which we do ourselves, roof insulation, heat pump recovery, and solar panels. Next page. Balco Living, totally new segment, new product segment. Balco is the first in Europe to offer this. Significant development resources over one and a half year have been working with this, and we are intensifying this work even more. This gives new living space at a low structure cost. The cost per square meter is between SEK 25,000-SEK 30,000 per square meter with these high costs we have today. That includes floor heating and light panels inside. Up to 20% increased living space without increasing the energy consumption. These are old buildings, and you build this outside 20-20 square meters, the total energy cost will not go up on the flat. The new square meters, the energy cost for that is zero. Of course, this product gives many opportunities in many areas for tenant-owned areas, private-owned areas, for how to say it. Other areas Public-owned areas, of course, where you have an issue with too little living space. I mean, the product should be able to provide major positive social effects. The marketing we do of them is in Sweden, Norway, primarily, and also in Sweden, we're doing the political marketing there. We anticipate that the segment will be a significant part of Balco sales within a three-year period. We believe that we sell product this year and build next year. Okay, questions please. Thank you. 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. Our first question comes from the line of Nick Farm from SEB. Please go ahead. Thanks, operator, and good morning, everybody. My first question would be if you could try to estimate the impact in Q1 from delayed building permit approvals. It would be very helpful to understand the impact on sales and possibly on order intake. Thank you. Order intake, I would say 50%-20% at least. Yeah. Turnover in millions, EBIT is perhaps SEK 5 million-SEK 8 million. Yeah. Sorry, I didn't catch that. Could you repeat that please? In order intake, I would say 50%-20% more at least. Yeah. In EBIT, I'd say SEK 5 million-SEK 8 million, I think. Yeah. I guess. I think it's better to say like this, that the first half year, we have a really good order set. We have a really good customer interest. I mean, it looks really good. The first half of the year, we didn't start as we expected. If you look at the second quarter, we think it will be okay, but not splendid. We actually think that the full year we will reach all our targets we believe in beginning of. Yeah. End of last year. Yeah. the start is this disappointing. Can I also ask you, I think you know producing a 9% EBIT margin under sort of the circumstances, I think is actually good. My question is- Yeah. Let me withdraw that question. Anyway, in this quarter, you're also guiding for a continuing negative impact from delayed building permits, right? My question is, do you think you are able to continue to manage costs and protect your margins in Q2 as you did in Q1, I have to say? Or do you expect very negative absorption effects from whatever the outcome is of delayed building permits on sales in the quarter that we're in right now? Before you answer that, Michael, I would say that now we don't have an issue with building permits. There are no issues now. The issues is that we believe that we will start with more building permits in Q1. So what we see now, we still will have a little bit to do. We have too much resources in Q2 still. We need all these resources that we have employed to cope the need of the vacation, because that authorization will have an issue in some factories to cope the demand. Now we think that we will be able to keep more or less the same operating profit margin in the second quarter as we had last. Mm. As Kenneth mentioned, for the full year, we think that we will reach the target we set beginning of the year. Second half year looks very promising. It will be little bit lower than we expected in the second quarter, but the margins will be rather stable compared to last year. We seem to have too many people because we thought we would have full blast everywhere. Yeah, yeah. We can't, how to say, get rid of people that we need because we need them very soon. Yeah. Yeah. Makes perfect sense. Thank you very much. My final question, and then maybe I'll come back into the call later on. Can I just ask you, and sorry if I missed this, but what's the reason for the significant increase in operating receivables in the working cap in Q1 this year? No, it's depending on the different phases or in the projects. Right now the main big increase was more trade receivables, and it's due to yeah a delayed invoicing due to that we didn't start up the year as expected. Oh, okay. We invoice in March things that normally perhaps should be invoiced in February and got paid in March. The big increase in trade receivables, no late payment, it's just delayed invoicing. Excellent answer. If I understand you correctly, that means that this should, apples to apples, reverse in this quarter Q2, right? Yeah. Yeah. Correct. Yeah. Okay. Thank you so much. All right. Just as a final reminder, if you do wish to ask a question, please press zero one on your telephone keypad now. Our next question comes from the line of Sofia Sörling from Carnegie. Please go ahead. All right. Thank you so much, and thank you for your presentation. My first question is also about the solid order intake. I believe it's solid, but perhaps lower inflow compared to previous two quarters. You mentioned the delay in building permits, but would you say that this is the main reason or can you give us some color on the dynamic behind this? Regarding order intake, the main reason is that there was actually lockdown in January, February in Sweden and Norway. Mm-hmm. That was the real truth. I think that affected the order intake because you need to have the meetings. Also it started to, I mean, to move some of the, let's say, the voting. Yeah. That's probably. I mean, when people saw that in February, okay, it's opening up. Okay, we are waiting with votes, so they postpone it. It was, say the first two months are very turbulent. That was the order intake. The interest in orders has not changed at all. There is tremendous possible orders, possibilities. And then also regarding building permission, I mean, we had many people sick at home. Mm-hmm. 30% were sick in January, February. That affect turnover. Of course also ask the why. Why didn't we get billing permissions as we expected? They were probably sick. All right. We have got the- Okay. billing permissions we need now. All right. Okay. Thank you. Regarding demand, you don't see any slowdown in demand among tenant associations due to uncertainty with increasing rates going forward? No, but if you ask us what is worrying us, I mean, it could be we are looking at we will catch up. It seems like that. Of course, what shall we look at from the top view? One of the things worrying me is of course if people are worried. Mm-hmm. All right. I mean, we probably have one month now going forward, but we are still a little bit uncertain in the world about will we have the gas enough or blah, blah. I mean, uncertainty is of course not good in any area like that. Thank you. Regarding Balco Living, have you received any orders as of yet or any pre-sign agreements or that you can share with us? No. Yet it's too early. I think it will be end of this year, we will probably have some agreement, and then we will build some product next year. The recent interest in the product that is also a kind of product because it's totally new, it doesn't exist. It's pretty much work, like to explain what it is. All right. Okay. The sales growth, you mentioned that organic growth was 2%. Yeah. How much of the residual part is due to structural changes and FX changes on a group level? No, the other part is coming from Akoteknik that were consolidated from 1st of April. Currency changes was yeah less than 1%. All right. Okay. Thank you. My last question is about M&A. Could you give us some color on your M&A outlook 2022? Yeah. We have several discussions ongoing. We still hope that we could hope to make perhaps two acquisitions, which is during this year. We still look at the Nordic market mainly. All right. It's still in the Nordic countries relevant. Okay. Yes, that was all my questions. Thank you so much. Thank you. We have just one follow-up from Nick Farm from SEB. Please go ahead, Nick. Thanks. Just one final question if I may. I was just looking at the balance sheet and more specifically at the capital employed. My question is, I mean, you're running a fairly lean balance sheet, of course, strong balance sheet, with regards to the previous question. My question is, do you think there is some scope at the end of the day to drive return on capital employed from also improving capital employed and not only the sort of operating margin that you're targeting? Yes, when the projects are running even more, and we have getting the building permitted, it's often getting better cash flow as well and improving return on capital employed as well. Of course there is possibility that. I would say when you have a good model, you have a good cash flow. Yeah. It's normal. Yeah. Yeah. Right. Okay. One nitty-gritty question. Sorry if I missed this as well, but what was the sort of acquired component in the order intake growth in the quarter? You reported 11% increase in orders, right? What Yeah. Where the number for the acquired unit there or vice versa? The acquired unit was 3%. Three percent of the eleven percent? 3% and 8% was organic. Right. Right. Excellent. Kenneth and Michael, thank you very much for taking all these questions. Right. Thank you. We just have one question from Mathis. Hello, can you hear me? Yeah. Yeah. So just a quick question on investments you mentioned into marketing, development, and organization in order to develop the green transformation activity and the Balco Living offer. May I ask you to elaborate on this investment? Is it only on formation and people? No CapEx into physical assets. What do you think could be the impact in terms of margin? Finally, when do you think you will see a significant impact on organic growth for these two offers? Thank you. A good question. In the green transformation area, it's, you see it, you will see it already this year in order intake, turnover, and profit. At the same time, we have own organization in everything, say, product leaders, logistics, engineering, site staff. Site managers Site managers, assembly people. We are also now building up a flexible organization that can both deal with Balcony and Façade at the same time. This is so that we don't need to buy 10-15 façade companies. This is happening today, and this organization, the objective is that we should be at least 37, 30 people in this organization. We can build products everywhere in the Nordic countries. This is just costs and some education. Mm-hmm. Not big money. Yeah. This is happening. That is the green transformation. The green transformation, that is already giving effect in all kinds of areas and corners. The Balco Living, I would say that, there are some resources more- Okay In development. I would say two full-year resources more. There will be 3 people working with this fully. Of course, that will affect some cost-wise running costs. Then I would say that investment-wise, investment in balance sheet, I would say that will be about SEK 5 million. Yeah, yeah. To make this work will do. Balco Living will cost money this year, will give turnover and profit next year. What I see today is that the Balco Living segment going forward will also include some other areas for us in our own internal glazing business. I will not tell you exactly what that is, but I will say that after we have sold two of the first Balco Living projects, that will give also some really good effect in the glazing area. Yeah In the way we are working actually. Actually, yeah, give some good energy. That, that's connected to the financing. Yeah. That segment is also good. Green transformation, better than expected. Balco Living is, let's say, good work. Mm-hmm ... in all kinds of areas, development, marketing, you know, mention. That was our first for the answers. Yeah. Now, with the use of that green transformation will be even more important now with the higher energy costs and both saving energy and for environmental part, and then of course also for the financial part with the high energy costs. Mm-hmm, mm-hmm. Okay. Okay, very clear. Thank you. Last question on inventory. As I think we touched on receivable, just the inventories have doubled compared to last year. Can you just comment on that? Is it in order to front the difficulties in supply or yeah. Do you have any comment on the increase in inventory? If you look compared to last year, it's a quite big increase, but the year end is not that big increase. One reason is that Akoteknik has more of a production company, so they have quite big inventories. One part of the difference compared to last year is that Akoteknik was consolidated from April. We have also increased the inventories in general. Of course, due to higher prices of the goods that we buy, but we also buy some extra, yeah, to be safe, for- We had a Ukraine issue there in the beginning, especially in Poland. Yeah with transportation. To buy some extra material in both steel and aluminum. Okay. Thank you. It will be lower going forward. Okay, perfect. Thank you. As there are no further questions, I'll hand it back to the speakers. Excellent. Thank you very much. Good questions. Yeah. Thank you. Thank you. This concludes our conference call. Thank you all for attending. You may now disconnect your lines.