Welcome to the Beijer Alma Q4 2023 Conference Call. For the first part of the conference call, the participants will be in listen-only mode. During the questions-and-answers session, participants are able to ask questions by dialing star, five on their telephone keypad. Now I will hand the conference over to the speakers, CEO Henrik Perbeck and CFO Johan Dufvenmark. Please go ahead. Good morning, everybody, and welcome to our webcast, where we today will present our fourth quarter 2023. I'm Henrik Perbeck, and with me I have our CFO, Johan Dufvenmark. Good morning, everybody. So we will present the overall performance and the recent developments of the Beijer Alma Group, and in addition we will present our reporting segments, our two main subsidiaries. These are Lesjöfors, full-range supplier of standard and customized industrial springs, as well as wire and flat-strip components acting globally, with the majority of sales in Europe. And, secondly, Beijer Tech, acting mainly in the Nordics within specialized manufacturing, value-adding industrial trading, and automation in profitable niches. And Beijer Tech is also a platform for acquisitions into new industrial niches. So, starting with some comments from my side, today I will present to you what I believe is, a bit of a mixed report in the uncertain operating environment we are in today. We saw, first quarter with a good cash flow, some healthy organic growth, but also margin development in industrial segments that I'm not entirely happy about. So the group noted a varied demand situation, and as you know we have a very diversified customer base. Volumes in the broad industrial segments were fairly stable, whereas some other customer segments, such as the automotive aftermarket, the medical technology, and some other niches, posted a good growth. We have, however, seen margin pressure. This has been addressed through measures in relevant businesses, and it has an impact on the profits for the quarter. Cash flow remained strong, as a result of consistent earnings and also our focus on gradually reducing our inventory levels. In Lesjöfors, we saw mixed demand picture between customer segments. The chassis springs business area posted strong growth, although Q4 is typically the low season. Within industrial springs, demand decreased somewhat in the Nordics, U.S., and Asia. The situation varied between customer segments. For example, once again, demand in medical technology was good, whereas, for example, door springs used by end customers in construction had a tougher demand situation. The U.K. grew profitably, but several other businesses in Central Europe continued to experience margin pressure. So a number of measures were taken, such as savings and local restructuring, to ensure profitability and growth over the long term. Beijer Tech in the Nordics had a more stable demand situation. Order bookings increased organically, primarily due to new projects, while volumes in industrial trading declined slightly. Several of our niche companies noted good demand driven by trends aside from the activity level in manufacturing industry. For example, last year's acquisitions, Botek and Finn Lamex, contributed profitable growth and have had an excellent start in our group. So overall, a good quarter for Beijer Tech. So the operating environment remains dominated by some uncertainty regarding demand, but also inflation and interest rates, of course. This means that we're continuously trying to balance between growth initiatives and savings. During this quarter, or Q4, a German Lesjöfors company was divested, where we could not really see the long-term potential for profitable growth. When it comes to acquisitions, we continued to evaluate good companies that could strengthen the group, by contributing to, to further profitable growth. So let's look a little bit at an overview of the group's financial performance. Yes, and firstly, again, Habia Cable was divested in Q4 2022, and it is reported as discontinued operations, and unless stated otherwise it's not included in the comparables. So looking at the performance, we can see that order bookings grew by 20%, of which 17% was organic. The net revenues grew by 16% and 13% organically. And to give some further flavor of the developments during the quarter, we had a quite stable situation during the first months and, unexpectedly, a weaker December. The start of the new year, however, we have seen demand levels back to normal levels. Part of the reason for December could be that some operations, our own and also customer operation, decided to close manufacturing during Christmas week. The adjusted operating profit increased to SEK 177 million with a margin of 10.4%. There were adjustments made, which has a net positive effect of SEK 64 million on actually a bit, but Johan will come back to this and go through in more detail. So moving on to the performance of the reporting segments, our subsidiaries. Start with Lesjöfors. Lesjöfors, our spring manufacturer, has two business areas, Industrial Springs, which is mainly customized products to a very diversified customer base globally, and the other, Chassis Springs, are standardized replacement springs sold to car parts wholesalers, mainly in Europe. Order bookings for Lesjöfors versus last Q4 increased by 13%, of which 18% organically. Net revenue also grew by 13%, where 17% was organically, so a significant headwind from currencies here by -8%. For Lesjöfors, we did see a weaker December, as mentioned, but the first month of the new year showed more normal and stable levels. For Industrial Springs, the largest business area, which as you can see is now 83% here in Q4, growth was 11%, thanks to organic growth and also acquisitions, but with negative currency effects. As mentioned, the volumes decreased somewhat in the Nordics, U.S., and Asia. In Europe, the U.K. was good and posted profitable growth, while several operations in Central Europe faced greater margin pressure despite fairly stable volumes. Actions have been taken to improve profitability. Some end markets posted growth, such as medtech. The building sector was weaker, however, and we have the last year's acquisitions. Amatec and Tollman, of course, contribute with inorganic growth. Chassis springs, relatively good demand, during the fourth quarter. Despite this, it's, of course, the low season, so it has a smaller share of Lesjöfors total business. Now it's 17% in this quarter. We believe inventory at wholesalers are at normalized levels, and it's end customer demand driving volumes, although it's a little bit still too early to see any significant effect of colder winter temperatures. For Lesjöfors, the adjusted operating profit decreased somewhat to SEK 130 million. There are adjustments, as mentioned, of SEK 64 million, which Johan will comment on in more detail. As you can see top right, operating margin in Lesjöfors was lower than preceding quarters and last year by a 2.5% point on adjusted EBIT terms this quarter. This is, of course, not satisfactory and can be explained by a combination of product mix effects, with more, you know, organic growth in less contributing areas, but also some one-off effects related to cost reduction initiatives and year-end reservations. One example of, as mentioned, of this more of restructuring is the announced divestiture of a German Lesjöfors company in December, which was, you know, a strategic choice despite cost savings achieved in the short term; we evaluated not seeing the long-term development in line with Lesjöfors profitable growth targets. Moving over to Beijer Tech. Beijer Tech operates in two business areas, fluid technology and industrial products, both acting within industrial trading and manufacturing. As you know, it's a platform for acquisitions into new interesting industrial niches, such as building automation, which is for now reported into industrial products. So the quarter for Beijer Tech, I think, was a good and healthy quarter. Order bookings continued to increase by 35%, of which 15% organically. The organic growth is partly thanks to new projects, but also sort of a healthy, stable underlying business in the trading segments. Net revenue grew by 22%, of which 3% was organic. Both business areas, industrial products and fluid technology, demand was overall stable. Within the trading segments, volume declined slightly, whereas demand was good in several of our new niches. I think this is interesting because these niches are, you know, demand is typically not driven by industrial cycle, but other trends. The latest acquisitions, Botek and Finn Lamex, are good examples of this and contribute to growth in the industrial products business area. To reflect going back a couple of years, Beijer Tech used to be a much more cyclical company, but it's now much more resilient to fluctuations in the overall demand cycle. The operating result for Beijer Tech increased to SEK 58 million, with a healthy operating margin of 10.3%. There are no adjustments in the Beijer Tech result. So now I will hand over to Johan Dufvenmark for some more comments on the financials. Thank you, Henrik. So let's look further into the financials. As mentioned, net revenue is up SEK 232 million compared to last year. The largest part of this is due to organic growth, which was SEK 190 million and equal to an increase of 18%, while acquisitions contributed with 13%. Both Lesjöfors and Beijer Tech had a positive organic growth, 17% and 3% respectively. The effect from a stronger Swedish krona was large, SEK -85 million. Order bookings increased with SEK 282 million- SEK 1. 710 billion. Both acquisitions and organic growth were positive, 9% and 17%, while the currency effect in order bookings was negative SEK 93 million. Beijer Tech had an organic increase in order bookings of 15% and Lesjöfors 18%. Let's go into the segments. As we saw in the previous slide, we had a strong increase in net revenue, and it was related to both acquisitions and organic growth in as well Lesjöfors as in Beijer Tech. Adjusted operating profit was SEK 177 million in Q4. The increase compared to last year was, among other things, related to chassis springs, some strong segments in medical technology, and acquisitions. Beijer Tech had a strong last quarter driven by parts of the fluid technology and acquisition as well, concluding a record year. We have some items affecting comparability in the period, and these are, that the earnout provision for John Alvarsson's has been lowered to $60 million, corresponding to 165 million SEK, and therefore 107 million SEK have been reversed as a positive in the P&L. Our assessment of the earnout is that the ambitious thresholds probably will not be met, fully be met, but still we are satisfied with the overall performance of the company. And as, Henrik mentioned, and as we have discussed earlier, is that we sold the company, Stumpp + Schüle on, December 21st. The main reason for this was poor economic performance, as well as limited possibility for synergies with other Lesjöfors companies, as well as a decreased exposure towards the automotive sector. The investment resulted in a write-down of assets and other items of SEK 107 million in the fourth quarter, to be added to the previous items affecting [comparability interest rate] of SEK 40 million. We did as well reverse an additional SEK 2 million from the Russia close-down provisions that we took as an item affecting comparability in 2022. In total, these items mentioned were a positive SEK 64 million and all related to Lesjöfors. Now let's look into some of the key financial ratios. Adjusted EBITDA is up SEK 7 million compared to last year, the difference to adjusted EBIT being higher depreciation following a number of acquisitions. Cash flow after capital expenditure was positive SEK 145 million, lower than last year, which as well contained the result of the Habia Cable divestment. Overall, we are satisfied with the cash flow in Q4 and the overall performance in regards to a more efficient use of working capital during the year. Net debt is higher than last year, and this is related to acquisitions, but we have seen a positive development related to good cash flows and a slimmer balance sheet since Q1. The financial net is no longer affected with the main effect from IAS 29 since the method adopted in Q3 was faulty. We have retrospectively removed a large IAS 29 effect from Q3, and you can read about this in the report, but still there are some negative revaluation effects related to IAS 29 in the balance sheet, and for Q4 this amounted to -SEK 9 million. Overall, the finance net in 2023 was higher compared to 2022, and this is related to higher net debt, but most of all higher base interest rate. And now let's talk, as well about EPS and dividend. As you can see in the report, the Board of Beijer Alma proposes to the annual general meeting a dividend of SEK 3.85 per share, and this corresponds to 45% of the profit. This is in line with the company's dividend policy and continued focus on acquisitive growth. When it comes to the EPS, please note that in last year, earnings per share contained the capital gain from sales of Habia Cable and also nine months of profit from the ownership of Habia. If we take this into account, EPS for 2023 is 1% lower than 2022. Thank you, and back to Henrik for looking at the events after the quarter and some final remarks. Before I conclude on the quarter, I want to also shortly summarize our full year 2023. We can report a solid year's performance with profitable growth in the challenging market environment. Growth was mainly through acquisitions, but also some organic growth. And the demand picture over the year has been mixed. If we take out some highlights, I think the record year for Beijer Tech, thanks to successful niche companies on top of a healthy underlying industrial trading business. We had a good profitable growth in Lesjöfors chassis springs after having put the departure from Russian market behind us finally. Good development in some segments like, like medical segment and also including the John Alvarsson's acquisition in the U.S. And more general, the establishment of Lesjöfors as a top five player in the U.S. industrial spring market. But of course, also the margin pressure in the Lesjöfors industrial springs, which reflects the challenging market conditions for, among other things, in the door spring business. So overall, the EBIT, adjusted operating result EBIT grew by 8%, whereas the margin ended up at 12.5% for the group for the full year. In terms of acquisitions during the year, we acquired four companies, together bringing around SEK 520 million run rate in annual net revenues. There were two in Lesjöfors, Amatec in Holland, and Tollman Spring in the U.S., which strengthened both our European and US platforms for Lesjöfors. In Beijer Tech, both Botek and Finn Lamex are very interesting niche companies, and with these we continue to transform Beijer Tech to a group with increased value add and exposed to attractive market trends. Our acquisition strategy is long-term, and we were perhaps a bit more cautious during the autumn. Currently, we are evaluating several interesting companies in our pipeline. So, coming back then to the conclusions on Q4, growth in the quarter was mainly organic, and the overall demand situation varied across the customer segments. Nordic, US, and Asia were somewhat lower volumes in industrial segments. In Europe, we saw growth in the U.K., where Central Europe experienced margin pressure and actions to improve profitability have been taken. We did the divestiture of German Lesjöfors company in Q4, and within Lesjöfors medical technology and chassis springs were areas with good demand and performance. Strong continued order intake in Beijer Tech, especially with niches in non-industrial trends, and in general, a very solid quarter from Beijer Tech. We generated a strong cash flow in the quarter. Finally, as just mentioned, the acquisition strategy is long-term and we're continuing to build pipelines of interesting companies for the future. With that, we will open up for some questions. If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five on your telephone keypad. The next question comes from Carl Ragnerstam from Nordea. Please go ahead. Good morning. It's Carl here from Nordea. A couple of questions. Firstly, I mean, looking at the Lesjöfors margin, inevitably quite a little bit on the lower side. Could you help us bridge sort of the margin development year-over-year? I mean, especially considering the quite strong organic growth here in the quarter, it seemingly gets zero to nothing, a drop through from it. And also if you could give some flavor on the significance of the non-recurring items you might have here related to restructuring and other activities as well. Thanks. Morning, Carl. So, regarding the margin drop in Lesjöfors, which I commented on, there is, of course, as I said, it's not satisfactory, and it is a combination of items. What I call the product mix effect or actually also geographic mix effect, I have mentioned several times that some of the European markets, we have seen margin pressure, and so whereas the volumes in some of the other markets such as Nordics were somewhat lower. So we have a kind of negative mix effect from there, in terms of that related to the organic growth. And in terms of, you know, one of the items, there as I mentioned, there are some initiatives taken. Some were related to the actual divestiture, but also in addition to that, and also some reservations for coming to year-end with reservations for inventory levels and customer receivables, etc. So all in all, this creates this bridge, and we will, you know, we're of course not entirely happy about that margin, but we continue to work our way up. Yeah. Okay. And I mean, looking at the margin trend in Lesjöfors, it's been. I mean, you've done some initiatives, right? But it's seemingly not giving any tangible effect on the margin so far at least. Maybe it's at early stage. Could you give some flavor on how you see the margin trajectory from here? I mean, also maybe putting it into context that you've done quite a few acquisitions, maybe some of them quite some margin enhancing, some of them dilutive. So how you see the margin trajectory here in 2024? Well, I don't want to comment specifically on the trajectory, but certainly, the initiatives that we have taken in Q4 will, or are expected to have, positive effects versus a trend in the last quarter. Regarding the acquisitions, you are right that they are, some of them are a little bit dilutive for the overall Lesjöfors group. I think we have discussed earlier if we look at the, for example, on Alcomex and the door spring business, this is somewhat lower on average than the overall Lesjöfors group. But it has, and also has, a bit of seasonality with the weaker Q4. So certainly the aim of the initiatives we have been taking is to improve margins. And also if you reflect a little bit, which I think is interesting, because Lesjöfors historically has been a fairly resilient operation. If you compare it to sort of what has happened with the margin here over the past couple of quarters or maybe a couple of years, would you do anything different now in retrospect or have you been too, I mean, too late on implementing cost initiatives or is it maybe management changes that, I mean, we saw we have had that happen in Lesjöfors, which could be impacting or how did it end up in this situation a little bit? I think we have a lot of very interesting. I think Lesjöfors has a very interesting strategy, globally in the niche of springs, so to say. And we have certainly building a very interesting global group around that. Over the last couple of quarters, we have seen, you know, a small decrease in volumes. And I think we are now in not only Lesjöfors, but in the general market in, you know, in Europe in particular, we are in a bit of a down cycle. So, you know, as I mentioned upfront, it is a balance between, you know, building for the future and what will hopefully create a lot of value and also keeping track on costs and savings. So, and of course, we have done some major acquisitions. Lesjöfors is almost twice as big as a couple of years ago. And so, you know, of course, we hope to and plan to find some very interesting new business related to this, over the next couple of quarters and years, most of all. But if I look at, I mean, the organic growth in Lesjöfors in the quarter, 17%. We have chassis springs growing by 25%, industrial springs just 11%. And so that should at least provide some margin tailwind, right? So could you give some flavor on what volumes you've actually taken to drive the 17%? Is it that you're stuck in some longer contract for some reason or, I mean, because they must be very, I mean, close to, I guess, loss making if you end up in these kind of margins, the additional contracts or, I mean, volumes you've delivered in some regions. Well, if you look at the growth, in Q4 versus last Q4, the chassis spring is a higher part of that growth. And on the industrial side, it's about 10% growth. Of course, as you describe, it's not really about, you know, taking additional contracts that on a sort of it's more about the general volume or all the existing contracts are, where you see the volume effects. So, yeah. So it's more of a overall demand, rather than some initial new contracts. But in the short term, in the short in Q4, of course, the Chassis Springs had a better quarter than last year and the growth was less in, relatively less in the Industrial Springs. And the final one from my side. Sorry for quite a few questions here. But, but when you said that the demand situation improved in—or at least seemingly so far—in Q1 versus what you're seeing in Q4 with the weak December, would you say that the mix effect will also be restored by that, meaning that the, I mean, the customers that closed down the production ahead of Christmas maybe comes with higher margins or? Yes. I think it's we saw a much more normal picture in the first start of this year. Okay. Very good. That's all for me. Thank you. Sorry. Maybe it's. No, but I think that some parts, of course, so even if we saw this a little bit stronger start of the year, I think that when it comes to the parts where we're exposed to, like new buildings, maybe that will not change for Q1. So that, of course, will remain as a part. But, you know, we are very positive that that market will come back. But if you look on the overall picture, you know, we probably will still be affected from this segment. Okay. That's very clear. Thank you so much. The next question comes from Johan Dahl from Danske Bank. Please go ahead. Yes. Good morning. Can you hear me? Yes, we can hear you, Johan. Excellent. Just a few questions, please. Firstly, on the contribution from Amatec and Tollman Spring, was that positive in the quarter from a year-on-year perspective in Q4 versus Q4 last year or was it flat or in the negative? For Amatec is up to expectation, so they are following the plan that we, you know, we kind of acquired them on. When it comes to Tollman, if you remember that we did move back the additional purchase price consideration. So of course, they are, as we said in the Q2 report, they are performing, not up to the targets we had for that, when we acquired them. They are a little bit exposed to general industrial demand. So you can say one is performing where we thought, and the other one is performing a little bit below what we expected. Okay. So no material contribution. Is that how we should read it or? Amatec is not a very big company, so if you call it major, so the answer is no, but still it's a positive contribution. And Tollman is also a positive contribution, but it's a little bit less than we expected. Gotcha. On these, you talk about margin pressure in Europe in Lesjöfors. To what extent is that sort of generated from competitive pressures such as, you know, pricing, raw material inflation or what have you? And to what extent is it sort of internally generated in your operations, general cost inflation, sort of lagging on productivity, etc.? Well, without giving a specific split, I would say you have both impacting. When it comes to the competitive side, of course, you know, the current market in Europe right now is harder to get out to price increases than maybe a year ago. And, of course, general cost inflation also matters there. [crosstalk] Yeah. Can you I mean, you grew 17% in Lesjöfors organically, you claim. How was production levels in Lesjöfors, you know, roughly in line with that? We obviously have a working capital component in cash flow, but sort of overall, or was it a significant reduction in inventories in Lesjöfors? Not a significant reduction compared to last quarter. But I think if you look at it on a year-to-year basis, you can say that there is a much more efficient use of working capital. That is true. When it comes to the organic growth, of course, there is a strong FX effect. So when we calculate the organic growth, we look at the average of the FX effect. And then the residual is the organic growth for the quarter. So of course, taking that into account, there is, as we said, a low, you know, quite a large mix effect, when it comes to the profitability in the end. Yeah. No, I'll, I have difficulty in understanding that FX effect, but we can take that offline later on. I mean, it's fairly significant. And I was just wondering finally if you could talk about, did it have any inventory valuation impact on Lesjöfors results that you saw, this FX effect on the in the fourth quarter, that's material and worth talking about? No, it's not material. Of course, you know, when it comes to the year-end, we do look on inventory, but that's something you do all the time. But there are some, a couple of million SEK, so it's absolutely less than SEK 10 million. But it's not zero. Thanks. As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. The next question comes from Aline Garten from Carnegie Investment Bank. Please go ahead. Good morning, Aline. Yes, good morning. Do you hear me? Yes, yes. Yes, super. I was just wondering if you could talk a little bit more about the mix effect in the order book. Could we expect the same mix effect that we saw in Q4 on topline? You mean between mix between what? In topline. So, so in the order book that you saw a very strong, organic growth in the order book. And I wonder, is it that the same mix of customers and demand as you're seeing on topline? So what I'm trying to to look at is should we expect the same margin the next quarter by looking at the order book in Lesjöfors? So I think for some parts of the business, it's true. So if we look, for example, for the door spring business, of course, in that particular part of Lesjöfors, we think that the mix will be the same. So a little bit weaker on door springs, but very strong on industrial springs. But giving a little bit of a negative mix effect, but pretty much the same as Q4 then. When it comes to other parts of the business, it's not that easy to say. No, I mean, of course, chassis springs typically, as you know, has a low season in Q4 and more higher season in Q1 and most of all Q2. So that, of course, has some of the order intake relates to that. but also, in Beijer Tech, of course, as I mentioned, we have, you know, the trading side is fairly stable and healthy, with a little bit lower volumes. And here we see, of course, good order intake in several of the niche companies, that also by nature has a little bit longer order book. And this has been a trend, of course, during the year. And Beijer Tech has a strong order intake over the whole year versus sales. So that should be a good mix effect from that. All right. So the projects in the order book for Beijer Tech, are you expecting them to happen during Q1 or will they happen during the full year 2024? More than just Q1. It's a little bit, you know, it's a lot of companies, as you know. Some are, for example, in automation. It's related to building projects, and that would be more of a sort of yearly deliveries. Some are related to machinery and equipment. And that could rather be, you know, within one or two quarters. So it's a little bit of mix. And but overall, good good news with a good order book. Okay. Thank you. And on the acquisition side, you mentioned a bit in the beginning of the presentation, Henrik, that you're seeing a good opportunity to acquire. Do you have a good pipeline already or how far are you? Because you worked on net debt, so you seem to have firepower to do more acquisitions going forward. We have a healthy balance sheet to continue our acquisition strategy. We, as I mentioned, were a little bit more cautious during the autumn, following the four acquisitions we did in the start of 2023. We have interesting cases that we're working on. So, I think the pipeline is decent and good to work from. But, you know, as always with acquisitions, there takes two to tango. So, we, you know, a lot of our discussions are companies that we know and, you know, it's a matter of when things are completed. So it's absolute activity out there, both, you know, from internally generated, but also from what you could call the market in terms of companies being sold. Okay. Super. Thank you. And then I have one last question on Beijer Tech. Could you just talk a little bit about the difference of EBIT last year and to this year? It was a quite improvement that we saw. And I just wonder, what was driving this improvement? So to be fair, I think, you know, the Beijer Tech, EBIT or the margin is similar to recent quarters. So I think it's a healthy, margin for Beijer Tech. Actually, if you recall, last Q4 was actually a bit weaker than we expected. So, so I think it's more a matter of that we have a little bit weaker comparables from last year. And it's more quarter on quarter, rolling quarters, it's, it's a stable and healthy mix of business. And of course, the acquisitions, as we. Yes. Yeah. Including the acquisitions. As we said. Yeah. They were not part of last year. No. Super. Thank you so much. Thank you, Alina, for also asking some questions about Beijer Tech. Good. So any questions via email? No? No. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments. So thank you all for participating today, and goodbye from our side. Thank you. Thank you.