Hello, welcome to today's webcast presentation with Balco Group. With us presenting today, we have the CEO, Camilla Ekdahl, and CFO, Michael Grindborn. We'll do a Q&A after the presentation, and you can either type in your question 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 then nine. With that said, I'll give the floor to you guys. Please go ahead. Welcome. For our first-time listeners, we make a very short summary of Balco Group, who we are. Balco Group was founded in 1987 and today consists of the companies Balco AB, Balco Altaner, TBO-Haglinds, RK Teknik, NMT, Stora Fasad, and Söderåsens Mur & Kakel. The head office in Växjö, and we have about 500 employees. We operate in mainly two segments: renovation and new build. The core expertise is in the renovation area, and it's to replace old balconies with a new one and make it a glazed balcony. The group has a broad offering of balcony solutions, including both open and glazed balconies, as well as complementary offers such as facade renovations. We are the market leader in Scandinavia with the key markets, Sweden, Denmark, and Norway. We also have a strong challenger positions in mainly UK and Germany. All glazings of a balcony result in energy savings. Simpler glazings provides 5%-10% energy savings, while Balco's patented glazing provides a documented energy savings of 15%-30%. Facade renovations with additional installations gives an energy savings of about 10%. That said, we go into the quarter one and some highlights. We actually had the best quarter one revenue as ever with a net sales increase of 13% up to SEK 326 million. However, we also made a cost-saving program. That was, of course, depending on the tougher markets conditions we have seen on the markets, where we have some pending order intake and also some lower profitability. We will provide savings of SEK 50 million annually and have a cost-affecting comparability of SEK 5 million in the quarter. On this cost-saving program, we have focused on indirect manning, we are keeping all our operational resources, so we are well prepared for taking new order intake when it comes. About 90% of Balco's turnover comes from the renovation segment, here we see now that the customers are getting more used to the higher interest rate, this is especially for the Swedish markets, where we have had a very low interest rate before. Still, there are some concerns about it, of course, because the interest rate increases are not over yet, but we start to see the end of the increases. We are confident that the order intake will pick up again when we see that we are stabilizing the interest rates. We come to the acquisitions. We have made one acquisition during the quarter. That was NMT Montageteknik in Boden, which has a turnover of the last financial year of SEK 49 million. NMT is a turnkey company, and the company has been one of Balco's strongest competitors in Northern Sweden. I will come back later in the presentation and talk more about NMT and what they can contribute to the group. Let's go to financial figures. Yeah. I'll run you through some financial figures for the quarter. As mentioned, a good net sales growth and stable profitability. Our net sales increased by 13% to SEK 326 million. Of this acquired group was 3%, currency effect was 1% and organic growth 9%. All of our organic growth will came from price increases, so the volume increase was not there, so all coming from price increases. Our adjusted profit was SEK 28 million up from SEK 27 million last year, corresponding to an adjusted operating margin of 8.7%, where we had 9.2% last year. The order intake amounted to SEK 245 million, and the order backlog is now SEK 1,241 million, roughly SEK 300 million less than a year ago. Profit after tax amounted to SEK 40 million, corresponding to earnings per share of SEK 0.68. Operating cash flow, as normally in quarter one, was quite low, and it was negative by SEK 11. It was negative SEK 14 last year. Quite normal for a first quarter, but normally has the worst lower cash flow of the quarters. Renovation segment, strong growth in net sales. It grew by 21% to SEK 299 million, and it corresponded to 92% of the total net sales in the quarter. Order intake in the quarter amounted to SEK 199 million. It was 81% of the total order intake in the quarter. Adjusted operating profit amounted to SEK 26 million, down from SEK 33 last year. Corresponding to an adjusted operating margin of 8.6%, down from 9.8% last year. Order backlog for the renovation segment is now SEK 1,091 million, and it corresponds to 88% of the total order backlog. Go to the other segment, new build segment. Here we had a good order intake in the UK market. Net sales in the quarter amounted to SEK 26 million, down from SEK 42 million last year. Order intake amounted to SEK 46 million, more or less the same as last year, where we had SEK 52 million, and it corresponded to 19% of the total order intake. Adjusted operating profit for the quarter was SEK 1.4 million, down from SEK 2.5 million, corresponding to an adjusted operating margin of 5.2%, down from 5.9% last year. Order backlog for the new build segment is SEK 150 million, it corresponds to 12% of the total order backlog. Have a look at our financial position and balance sheet. It's still strong, and we are prepared for doing more acquisitions. At the end of the quarter, our equity amounted to SEK 746 million, with an equity ratio of 57%. Net debt to EBITDA, including leasing debt, was 1.2, the same as last year, and excluding leasing, it's 0.9. During the quarter, the acquisitions of both Arutex that we made in end of last year and NMT Montageteknik was completely then paid for. We still have acquisition headroom. We have a banking agreement with Danske Bank that is valid to October 2024, with a sustainability-linked revolving credit facility of SEK 510 million and an overdraft facility of SEK 75 million. To have a look at our financial targets, Balco has a group target that we should grow our sales by 10% per year. Looking at the last 12 months, we have a revenue growth of 18%. We also have a profitability goal that our earnings per share should grow by 20% per year. They were not so good. Our earnings per share have decreased by 16% the last 12 quarters. Our capital structure says that our net debt to EBITDA shouldn't exceed 2.5 other than temporarily. Here we are on a good level, 1.2 including leasing debt and 0.9 excluding leasing debt. Our dividend policy is that we should distribute 30%-50% of our profit of the tax to our shareholders. The proposed dividend for 2022 is 1.5 SEK per share. It's 40% of the profit of the tax. We also have a sustainability goal that more than 30% of the group sales should provide 30% energy savings to our customers and be compatible with EU taxonomy. Here we see that 9% of the sales this year is providing 30% energy savings to our customers. 61% of the sales is compatible with the EU taxonomy. All kind of glazing in the renovation segment gives an energy saving is like an isolation element to the house, and therefore is within the EU taxonomy. Some sustainability updates. We see sustainability as a prerequisite for our long-term profitability, and we are working quite strongly with this to continue reducing environmental impact, offering more sustainable materials, improving waste management, and providing opportunities for our customers to reduce their energy consumption. This has improved our ESG rating with Sustainalytics. It went down from 20.8, 2021, to 18.7 last year. We are now ranked as a low-risk company, and actually among the 20% of all companies in the world with the lowest ESG risk rating. We have also worked and improved our CO₂ equivalent per worked hour. We have a goal that until 2025, compared to 2019, we should reduce it by 35%. Look at Scope 1, we have already reached that goal. We have reduced the CO₂ equivalent per worked hour by 37% in Scope 1. Looking at Scope 2, we have reduced it by 30%. We have also had good improvements in our accident rate that is measured by number of accidents at work per 1 million hours worked. It reduced from 13 in 2021 down to 8.2 in 2022. Over to you, Camilla. Yeah. To the market update. As I said before, we can now see here, and especially in Sweden, that our customers are getting more and more used to the higher interest rates. However, there's still uncertainty about where the top will be. We still see that some of them are waiting, and what they're mainly waiting for is both, of course, the increase that we are now expecting here in April. Also what will happen in June. That, as you know, is a big discussion, how much the increase will be in June. We still see some waiting on the market. As we know, we are in the renovation segment, as we said, and the pent-up demand is not disappearing. We still see that the interest in our products are really big, and we have a lot of meeting with our customers, and we also have found some solutions for them to help them to take the decisions here short term. We are very confident that the order intake will take place again when we have seen the top, so to say, of the interest rate here in Sweden. On other markets, we are not as all as affected as we are in the Swedish market regarding the order intake. Both in UK and Germany, we are less affected by the interest rate increases. We can also say like that we the customers that we are meeting here in Sweden, since we are working with renovation, are old associations. The old tenant-owned associations, they have a very strong financial positions in many times. That means that they can take the balcony investments without making a very big increase on the monthly cost for the residents. That is, of course, helping us in the discussions we have with our customers. We have also paralleled here taking some of our companies that will focus more on the publicly-owned companies because here we see that they continue to invest in renovations. Some of them have actually increased it during this time. So some of our balcony companies are more focusing now on the publicly-owned companies. As I said, the new building for social housing in UK and Germany has still a good demand, and we have very good products for these markets. As you have seen, we still have a very good, we have a very good financial situation, and therefore, of course, we continue also to look on acquisition. Acquisitions are an important part of our strategy. The experience from our previous acquisitions has given us a clear and structured process for how we successfully can integrate and develop the acquired companies. We are looking for European balcony companies or with other companies that can complement our green transformation product offering. There are some other things that is important for the companies that we are looking at, that means that they need to have a very strong position in a market niche. They should be profitable, well-managed. Their business philosophy and culture needs to be in line with our culture we have already. The business model should be sustainable, and we also want to continue commitment from the management and key employees in the companies. Of course, we can offer them back our financial stability, we can offer the cooperation and the knowledge sharing we have in Balco Group. We continue with acquired company that they should continue to work as standalone companies, and we are doing synergy effects in between us. We look on the acquisition we made here in quarter one, which was NMT, and this is a little bit different from what we have, so to say, in our core strategy. If you take from the background here, NMT was founded in 2016, they offers turnkey contracts in balcony renovation in northern Sweden, mainly to the tenant-owned housing associations. They have 11 full-time employees and a turnover of SEK 49 million during the most recent operating year. They were a very strong competitor to Balco in northern Sweden. They didn't have any own products, they were selling other products, they had a very, very strong competitor to Balco. Now, when we have acquired them, we see that we will integrate both their assembly and project organization, these will be fully integrated with Balco, which is a little bit different from what we usually do with our acquired companies. This is depending on that NMT didn't have their own products from the start. We will integrate them, we will create a hub in northern Sweden, together NMT, together with Balco's resources, we see it's very important for us that we are very close to the customer. We have seen that their success in NMT's business is really the very, very good relationships they have with the customers in the north of Sweden. We see NMT as a very strong contribution here ahead in our group. As we said, the turnover is the best ever for the first quarter and decreased by 13% to SEK 326 million with adjusted profit margin of 8.7%. We have made the cost-saving program, and that will give us a cost saving of about SEK 50 million annually and has an effect of the comparability on the result of SEK 5 million in the quarter. As we have talked about several times, we are waiting now for the top on the interest rate increase that will come down. When we have reached the top, we can see a stabilization on the market, and we expect also then the order intake to increase more. The outlook ahead is once more again, the renovation. We are working in the renovation. The interest is there, the need is there. We need the stabilization. Also, once more again, we have a very strong financial position, which means that we can continue to grow through selective acquisitions that strengthen our market position, mainly in existing markets, but both in Sweden and in other markets outside Sweden. That was all from us. Questions? Thank you very much, Camilla and Michael, for that presentation. Now we'll open up for the Q&A section. If you have a question for Camilla or Michael, you can either type it in in the form that is located to the right, or if you're calling in, please press star nine to raise your hand. We'll start with a question that came in here. We'll take the number ending in 31. Please go ahead. Good afternoon, everybody. This is Nicklas Fhärm with SEB Equities. Hey, Nicklas. Hi. Hey. Hi. My first question would be, it would be very helpful if you could just walk us through the composition of the savings program that you launched in connection with today's results. I assume because there are limited, sort of non-recurring costs associated, this is not primarily, staff-related reductions. Please, if you could, give us an idea of where you will save SEK 15 million. Yeah. We have done another cost reduction program. It's coming from 10 people had to leave the company. They have already left now, and we have taken the cost for these, yeah, for the remaining salaries of these 10 people. We had another 5 people who quit for themselves, that we are deciding not to replace. In total it's like 15 people less. It comes from savings in salaries, all of them. Very clear. Thank you for that. While we're on the topic, can I also ask you to update us on the ongoing savings program, the SEK 20 million program? What were the actual contributions these Q1 results today from that savings program, please? Yeah. We have seen that we have the expected result from this. These people, the cost were already taken in December. We have a saving of, roughly SEK 5 million, coming from this, during this quarter. Excellent. Thank you again. Can I ask you, I've been looking, maybe I've missed it, but, what's the M&A contribution to Q1 order intake, please? We have acquired order intake from the, from NMT of SEK 30 million. Excellent. Thank you. Then maybe I can come back later into the call, but if I may, just one final question. Would it make sense, do you think, to assume that the decline that we now obviously are looking at in terms of orders, for rather obvious reasons, would it make sense to assume that this decline would sort of further accelerate into current trading in Q2 and perhaps even in Q3 compared to in Q1? Should we expect something more similar to Q1 for that matter? Our expectation is not that it will be worse in Quarter 2. We expect that we will be on the same level or better. All right. Right. Thank you so much. If possible, I may come back later into the call. Yeah. Thank you. Okay. Thank you. I will take the next question calling in with a number ending in 23. Please go ahead. Hi, everyone. This is Sofia Ståhl from Carnegie. Hello, Sofia. Thank you for your presentation. Hi. Hi. Thank you for your presentation, and great question from the previous speaker. I had an add-on question on order intake. I was curious if when you have your discussions with the tenant associations, do they have any new consumer preferences? For example, I, if I recall it correctly, you have roughly 50/50%, say, of glazed balconies versus open balconies. Has this changed during the last quarter or during this first quarter in 2023? Could you see any changes in consumer preferences? My first question. I would not say that we see any difference in the preferences regarding a glazed or open balcony in itself. What we have seen is that on the glazed balconies that we are selling, the customer may not so say add on everything on it. Before we could be that we have roller curtains, you had, you have all extra on it, so to say. It's more maybe that you go back to a little bit more the basic, what you actually need to have. Other things what is good to have, that can be that we are selling it in a later stage instead. For taking the decision, and that is also how we are going to the market, but make it easier for them to take the decision to make the investment. We are trying to reduce the first investment cost for them. All right. Thank you. When you talk about this pent-up demand, and you say that many of the tenant associations pauses their investments, but Maybe this is a tricky question, but with all the tenant associations that you discussed, Like, if you would make a rough high-level split of how many would actually pause their investment and make this Balco Method, or how many will actually do, like, more of a quick fix renovation of their balcony, or how many could actually wait for almost like for a longer period of time, for example, like 3 years. If you would do the split of all this pent-up demand, would you say that perhaps 80% will pause their investment and go through a Balco Method later on, or only 10% will do a quick renovation fix? What is your take when discussing all the tenant associations? Yeah. It's of course different versus who you talk to, because it's depending on, as I said, depending on the finance they have in the tenant association-owned associations. If you have good finance, which most of them have, that we are discussing with, they are rather waiting, and then wait for the right time to make, so to say, decision and to make it really as they want. If they have- Yeah ... worse finance situation, of course, they need to go for the renovation, the other method. It's very difficult to say. I don't dare actually to say any figures here. It's more depending on which kind of how the good financial status they are in. I will also say. Okay how bad their slabs and balconies are Are, yes. ... today. If they need to do a really big renovation of it's normally cheaper to wait and... Yeah ... do it through the Balco Method. Yeah. If you can do just some simple renovation that lasts for another 10 years or 15 years, then perhaps they go for the quick. If the finance situation is not there. if the financial situation is not there, yeah. Yeah. Yeah. Yeah. All right. I was curious about this quite small market for you, the U.K. market and Germany. First U.K. market, what would you say is the trigger for you in the U.K. market at the moment or current trading? In Germany, it seems like Germany has the largest renovation market. How are you working to reach this large renovation market in Germany? If we start with U.K., we're working on new building there. There, of course, the amount of new build households, that is what is driving us there. We see that there is still a big demand in U.K. for new houses. There we work a lot with also projects to the social housing. That is, of course, that's needed. It's very common there that they are placing a balcony on the social houses there. That's the driving force there. In Germany, we have seen also there they have a big demand for new build. We have actually start to implement the products that we have seen that is successful in U.K. We're starting discussing them in Germany. We also have another product which is also good for new building industry, which we are discussing in Germany. We have some ongoing discussing with new building also in Germany because we see also there's a really big demand for building new households. In Germany also, we have the renovation, and then we are mainly connected to the VG market, where they have already put money, so to say, into the foundations for doing the balconies. There we also see that is also the trigger that we are working with that client group. If you look on the tenant-owned client group in Germany, you have a little bit similar situation as in Sweden. They are a little bit postponing, they are a little bit more waiting. The other ones, both the new building and these, they are really doing their investments continuously. All right. A final question here regarding what is your ambition with northern Sweden? What are your expectations in order intake, for example, maybe the second half of 2023 and the beginning of 2024? Also, when you mention a new hub in northern Sweden, should we expect like a new production facility in northern Sweden or-? No what do you mean by a new hub? With a new hub, we mean that we have office in Sundsvall, which you can of course, always discuss if that is north of Sweden or not. Because we have a big part of Sweden that is left, but still, so to say, that is where NMT has their office. And we're expecting that to be the hub. When we meet in the hub that is connected to designers, project managers, and assembly organizations, business manager, and sales. No production. All right. You expect What is your expectation on sales growth in Northern Sweden? We don't give any predictions, so to say, about sales growth in different parts of the country. We know that we know we have a big, so to say, interest in Northern Sweden. We know that there is also new build industry coming up. We are not into the new build industry yet, but we might be if we are interested in it. We don't want to give any predictions about sales income in different areas of Sweden. All right. Okay. Thank you so much for your answers. Thank you. We have phone number calling in ending with 31 raising his hand, so we'll give you the word. Thanks for letting me back into the call. It's Nicklas Fhärm with SEB Equities again. three more questions, please. Could you give us an update on sort of cost inflation and the impact on sourcing and cost of goods? The way I read your comments in the report is that it's mostly mix effects and other effects perhaps that has impacted the gross margin. For the record, would you care to just give us a quick update on sourcing environment, please? Yeah. If we look, compared to end of last year, it's stable on the material side. Steel is stable and also aluminum and the glass. Of course, compared to 1 year ago, we have seen material increases, and that has mostly been compensated SEK per SEK. That's has, of course, an effect of a total gross margin, compared to last year. If we look at the last quarters, Q3 and Q4 last year, we are on the same or better level on gross margin, and we have also more or less the same mix as we had end of last year. Mm. Mm. Mm. We expect for the current situation, this level of roughly 22% of gross margin should be, perhaps the standard for the coming quarters. Right. Right. Got you. Thank you. I mean, you really maintain a strong balance sheet, of course. I would just be interested if you could update us on the pending earn-out payments next year relating to RK and Stora Fasad. I think it sums up to about 30 million SEK according to the original sort of disclosure. The original was roughly SEK 30 million, as you said. We made, as you perhaps remember, in December, new calculations. Right now, we expect roughly SEK 20 million. Excellent. Thank you. Final question. I'm obviously aware that you have changed financial targets since a while back, Your old or previous margin targets of generating EBIT preferably above 13%, Is there any reason... I mean, given the acquisitions you have made since then and the change in the overall group structure, is there any reason for why that margin level would have changed if you would have made a margin target today for any reason? As a matter of fact, we are discussing this and probably we'll do an update also of a new margin target at the end of this year. We'll come back on that. Mm-hmm. Yep. Yep. Excellent. That was all for me. Thank you so much for all the questions and all the answers. Thank you. Thank you. Okay, we'll take the next question that has come in. The next question is regarding your gross margin levels, where you have commented that it will weaken. The question is, compared to what level? Yeah. If you say compared to last year, of course it went down from more than roughly 25% down to 22. That's mostly because of a mix change that we sell from other markets and also other companies in the group has grown more than the margins. For AB, Sweden and Norway have the highest gross margin. Their share of the total sales has gone down, and we expect it to be lower in the long run where we're doing done more acquisitions. We expect the more, perhaps, future margin, at least looking at this year, to be around the level of the adjusted gross margin of this period, roughly 22%. Okay, thank you. We'll take the next question. What are the geographical trends in the order intake? As it has been, if we look, the recently quarters, as we have said before, is that we have had a good order intake both in Germany and in U.K. They have been, so to say, following a good pace. The reduction in order intake has been mainly Sweden, but also Norway. Sweden and Norway has been, so to say, less order intake, and where we have been struggling a little bit more with the discussions about the interest rates. Okay, thank you. We'll take the last question here. What are the main risks facing Balco Group, and how are you managing these risks to protect shareholder value and ensure sustainable growth over the long term? The main risk would, of course, be if we see that. If we look on the Swedish, because Sweden is still a very, very important market for us, and the main risk would, of course, be if we see that the inflation rate is not going down at all. We are keeping a very, very high interest rate and that they increase the interest rate even more after June. When I say even more, I mean a lot more. Otherwise, the most of the discussions we have right now with our customers is that they are, as I said before, they are expecting an increase in April. They are also expecting an increase in June. That is not, so to say, giving any problem for us, mainly that it's postponing things. Of course, there will be could be a problem for us if that is not affecting, and they continue to increase even more, and I mean much more then. What we are doing to prevent it is that we have, we are working, and therefore we are working with the cost structure, of course, to reduce our costs. We are working with different tools to our salespeople, how they can help the customer to take decisions, how we can help them with the financing, and also to show them that quite often, they don't need to increase their monthly cost as much as they expect from the start before we look on the balance sheets. That is how we work with it. Of course, also, as we said, that some of our companies are now also going more into the social housing. Before have been very, very heavy on the tenant-own side. We are also having companies now in our group which have very good products for the social housing. We are a little bit splitting out, so to say now, to make sure that we are not 100% depending on tenant-own. That is still our big customer market, of course. Okay. Thank you very much, Camilla and Michael, for being here presenting today and answering all of our questions. A big thanks to all of you who called in or typed in your questions and follow along Balco Group's Q1 report. I hope you have a great rest of the day, and until next time. Thank you and goodbye. Thanks a lot. Thank you.