Welcome to the Bergman & Beving Q2 2024 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. If you are listening to the presentation via webcast, you can ask written questions using the form below. Now, I will hand the conference over to speakers, CEO Magnus Söderlind and CFO Peter Schön. Please go ahead. Good morning, everyone, and welcome to the Q2 report of Bergman & Beving. This is Magnus Söderlind, and I have, beside me here, Peter Schön, our CFO. So let's begin then. Just to start with some highlights from the second quarter. So we are proud to announce that we increased earnings, we increased profitability and earnings per share, this quarter. And the EBITDA increased 12%, and the profitability that we measure as profit over working capital increased 6 percentage units. And also, I'm very glad that we now, despite we had 19 consecutive quarters with increased profit, but not an increased earnings per share, that we now have reversed that trend and have a positive development as earnings per share with 12%. That is, of course, due to that we have easier comparable financial net figures due to kind of the interest rate development, mainly, I would say. We are doing this despite a continued tough market, both within construction and in the industry sector. As communicated earlier, the most relevant KPI for aggregated for Bergman & Beving is the number of employees within the construction and the industrial sector in the Nordics. If you look at that development during the last year, we can see a decrease of 3.4% in number of employees. I think you will see that later on is partly reflected in the organic development of our revenue. We have stated in the CEO words that diamonds are formed under pressure. We had some tough market conditions during the last quarters, but we have used that to kind of improve the efficiency of many of our companies and prepare them for a better market in the future. We have continued to reduce costs in comparable units also in this quarter. We have maintained our strong gross margin. We have clearly communicated that we show that later, that we have done a lot of phasing out low margin, high volume products. We are close to an end of that process, and that is kind of reflected in the improvements in our gross margin. We have also continued to reduce the inventory, so we have in this quarter organically reduced that inventory level with 108 million SEK, compared with previous year. I'm also happy that all our three divisions is increasing the profit in this quarter. So it's not a single company or a single division that contributes to this profit growth. It's kind of all the activities and the performance we have across the group and across the divisions that have delivered on this profit increase. As said earlier, we now have nineteen consecutive quarter with increased profit, despite the kind of COVID situation we had some years ago, and now the weakening weaker markets. We continue to deliver on our acquisition strategy, and I will go into the acquisition we made and what we aim for going forward later on. Let's look into the acquisitions. We have made three so far this year. It's actually one in the Q2 we acquired, it's Spraylat. It's a part now of the Core Solutions division, and this is a highly niche, highly profitable company. And I can say that much is well above the hurdle of the 15% EBITDA margin that we have set for acquisitions. So even if it's quite a small company, it have I would say a good contribution to the EBITDA growth in the company. And this company is actually having developed a very special fluid chemical that is used to protect windows mainly in construction and renovation projects. So you more or less spray this to the windows, and then you peel it off when the construction is finished, and that is a way to make sure you don't damage window surfaces during building and construction. This kind of fluid is also used with a different recipe to protect solar panels if there is a fire. And sorry, I don't have the time to get into the details, but that is a very interesting and promising application area of this one of the products within the Spraylat portfolio. We also made one acquisition here, the first day of the Q3 quarter, the 1st of October. It's a Finnish company called Levypinta, and they are doing high-pressure laminates. It's really a niche, high-end area of this type of product category. And this is a kind of a little bit bigger company with a turnover of roughly 180 million SEK, and also in line with our acquisition criteria to acquire a company with a profit margin above 15% and a profitability above 45%. So in total, now we have acquired 255 million in turnover, but we still have the ambition to get into the 50 million-80 million earning capacity per year in acquisitions. We are on that route, I would say now, and we aim now to kind of close the gap we have to the 50 million-80 million acquisition earning per annum in the rest of the year. So I said it before, but we now have 19 consecutive quarters with increased profit, and we also have an increase in the EBITDA margin, as you can see on this slide. And we also now have an increase also in EBIT, with 11% and EBIT of 14% this quarter. And if you look at this full year period, the full period on this graph, we had an EBITDA CAGR of 27% in profit improvement. And we are now. I will not say, we are now well above the 10%, so we are 10.5%, compared with 9.8%. I'm very happy to announce we are now double digit on the EBITDA margin, and that is something we expect to be kind of our new level going forward as well. If we look into the revenue development, you can see on this slide, we have an organic decrease of 3%. That is roughly in line with the KPI of number employees development in the Nordics during this. That is actually the Q2 figure, and the Q2 figure, KPI. And we have a small currency effect with a minus 1%, and then acquisition contribute with 9% to the top line, ending up with an actual total group level of 5%. As shown on the first slide, we have maintained the strong gross margin we have worked on. You can see on this slide, we have a rolling twelve very positive development on the gross margin, as such, and also on each individual quarter. As we now are more or less to the end of the phase out, we of course expect to have a continued gross margin development over time, but not in the level we had had historically. That will then mainly, going forward, be through the acquisition we make, with the aim of acquiring companies with very good gross margins and good profitability. We also set a target to reach 75% of own products. That is part of the journey to continue to improve the gross margin. We are now at 73%, so we have some percentage points to get to the 75%, but I think we are on track to reach that target, latest fiscal year 2025, 2026, as communicated earlier. About targets we have communicated, we have communicated that we should reach the profit over working capital of 45%, latest fiscal year 2026, 2027. We are now at 29%, rolling twelve months, ending in Q2, September this year. So we are on track to get to the 45%. We have this year and the next year and one more year to go, so it's two and a half years to reach the 45%. But we have activities and potential to reach the 45, so we still are heading for that target. We also communicated that we should reach SEK 500 million latest fiscal year 2025, 2026. That's one and a half year from now. We are now rolling twelve in September at SEK 391 million. And I still feel it's possible to reach the SEK 500 million. And of course, that is partly dependent on that we get some better underlying market, of course, to get to the SEK 500 million. But hopefully, we will have that in the next coming quarter, a kind of a pickup in the market that will help us to get to the SEK 500 million. And lastly, we have set the EBIT margin target to reach it at 10%. We are now rolling twelve in September at 8.1%, so we have a continued improvement also in the EBIT margin, and what I can see today, we should be able to reach the 10% in one and a half year time from now. Based on that, we make improvements in the companies that we already have in the group, in combination that we continue to acquire, as shown earlier, highly profitable companies, so with that, I will hand over to Peter. Thank you, Magnus. And the next slide is the EPS. And just as Magnus said, we now have nineteen quarters with increased EBITA profits. But as you can see, the last two years, we have had a sideways development, and even for some quarters, a decreasing earnings per share. But now, due to a bit lower interest rates, and also that we have had a really good cash flow, so the net debt is also under control. We see that we now have reached a turning point again for earnings per share. So we will stay on the course on increasing the earnings per share as well as the EBITA going forward. The inventory level, as you can see in the report, it's also a bit sideways. Organic inventory reduction since last year is SEK 180 million. We've done a lot of work, as you can see in this slide, since the beginning of 2022 to 2023. As we have said earlier, we won't have the same development going forward, but we do still have potential for reducing the inventory and increasing the inventory turnover. Normally in Q2, we have a seasonality that it's normally a bit higher. Because now we're going into, call it the high season for a lot of companies within Safety Technology and some of the old companies within Industrial Equipment, such as Luna, for example. So, yeah, we will reduce inventory going forward, but it will be in a slower pace than it has been the last year or two years. So, cash flow from operating activities, and as we stated here in line with expectations, it was in line with our expectations. And the reason for that was two things. One is that we have a seasonality effect. If you look at the same quarters going back, it's a bit lower cash flow than average. And also that we had a really strong Q1, so we do have maybe a bit of effect from that as well. I think one maybe new thing is that we have purchased the goods a bit earlier due to the logistics challenges from transportation from Asia. We have paid some of the suppliers in this quarter, and also that the customers are really careful on not buying too much, so they buy more gradually every month, what they're needing. For the winter products, it's not like large shipments. It's more gradually. The net debt situation. As you all know, we've done a lot of acquisitions the last year, but been able to keep the net debt on the same level. Of course, now when we don't have the same extremely high cash flow, we will increase the Net Debt/ EBITDA... Sorry, the Net debt, but I think the Net Debt/ EBITDA will, you know, be around maybe 2.5% going forward. So between 2% and 3%, we said, we've said that we will keep it long term. Good. And one important thing is that the acquisition target remains intact. We do have a really good credit facilities, and we do have the cash flow under control, so we'll just continue doing the acquisitions as Magnus mentioned, the SEK 50 million- SEK80 million per annum. So, yep. Let's go into the different divisions then, starting with the Core Solutions. The Core Solutions company is still facing a slow market, but managed to improve profit and profitability during the quarter. The biggest company in this division is ESSVE, the fastening company, and they are now facing a weaker demand in the Nordics as well as in the Eastern Europe countries where they are present. Despite this, ESSVE in Sweden, which is one of the biggest markets for ESSVE, is to increase the turnover, and that is due to the fact that they have been taking new customer contracts that is now rolled out in Q2, and will have a continued rollout here in the next two quarters. So we also acquired Spraylat, as communicated, and Levypinta into these divisions during this fiscal year. And as you can see now, the EBITDA% was a little bit down in Q1, but it's now picked up again, despite a weaker kind of revenue that you can see on the left slide here, the rolling 12 figures. And also the EBITDA in absolute terms is now picking up again, and hopefully, we will see that trend going forward as well. So, a little bit weaker demand, or with a bit weaker revenue, the 3.4%, compared with 34.6% last year. And as you can see, the EBITDA is increasing 5% to SEK 39 million this quarter. This is typically a weaker quarter for Core Solutions. The EBITDA margin is steady above the 10% and increased with 1% compared with previous year, now at 11.7%. That is partly due to acquisition of highly profitable companies with good margins, in combination with improvements in the companies within the division. Safety Technology, they have improved profits by revenue increase, improved gross margins, and lower cost. As you can see on the graphs below here, this has really been a kind of a division with weak performance both in terms of EBITDA in absolute terms, as well as EBITDA margins. Despite, as you can see on the left side, the revenue has been a little bit weak some quarters, but not really a big decrease in revenues. And that has been due to that the gross margin kind of improvement hasn't been there as expected, and the cost has been too low. And that has now been addressed, and you can see that that has affected the profit and the profit margin as such. And that is putting also the division in a stronger position when the markets start to pick up here. And as communicated earlier, we have a new division head. He started here early in the Q1 quarter, Erik Persson, and Fredrik Valentin has now left the group. And as said earlier, we have now a positive development in many companies, so five out of seven companies is showing increased profit in this quarter. Skydda is one of the biggest companies within the divisions, and here we have taken a lot of efficiency measurements along during the last two years, and that's still in continuation. We have had a lot of product phase out of low-margin, high-volume product, and that has now had an impact both on the gross margin development, but also the profit development. Skydda still has an underlying slow market as such. Those type of activities, now lower cost and improved margin has helped the performance of Skydda. On a division, we have a revenue increase, even if it's only 2%, but that's positive at least. But here we have a really strong EBITDA improvement with 53%, ending up with SEK 29 million in this quarter, and also a significant improvement in the EBITDA margin, now at 8%. But this division should absolutely be about 10%. So this is hopefully a start of a journey getting back to the 10% profit margins. And last, then the Industrial Equipment division, the profit continues to grow, and in this division is mainly driven by acquired companies. As communicated and said earlier, the Nordic industry customer demand is stable, but on a lower level. We don't see any signals, actually, that will improve in the next coming month. We still face a lot of uncertainties, also within the industrial sector in the Nordics, and that is, I would say, relevant for all our divisions. And the Luna, we had made some major cost reductions during the last quarters in Luna, and also made some product phase outs here that had a positive impact that outweighed actually the slower market that Luna now is facing. So it's kind of on the same theme as on Skydda, improving the gross margins and reducing the cost, and by that, compensating for a weaker top line. So here you have the best revenue increase with 13%, and the EBITDA continue to increase here by, and in this division is 10%, reaching SEK 55 million this quarter. The EBITDA margin is 12.1% compared with 12.4%. I now see they are stable above the 10%, and I think this is more kind of a quarterly effect as such, and I expect them to be kind of on this level or even improving over time. As you can see on the graphs here, it has been a steady development, both in terms of the EBITDA development, and also you can see this is the division that historically have had the best revenue development. Once again, that's mainly due to the acquisition we made. Here, Luna is a big company within the division, and they have had a declining revenue for many quarters, and that has been well compensated by mainly acquisition made in this division. So, to try to sum up what we are aiming to do going forward to reach the 510 and 45 that we have communicated. We will continue to do what we'll always be doing, focus more on profit than revenue, to make sure we grow the profit over time, and not so focused on growing top line. And we will continue to allocate capital according to our Focus Model, i.e., companies that in our model is on the, in the red zone, then having a profit over working capital below 25%, we don't want them to grow top line. We want them to focus on reduce cost and improve the margins, so we don't allocate growth capital to those. Instead, we allocate the growth capital to companies in the green zone, and that is companies with having a profit working capital above the 45%. Those companies who want to grow the top line, and they can do that both through organic growth and invest in measurements to get that going, as well as doing add-on acquisitions. We will continue on that, and it's really company by company strategy based on where they are in the Focus Model, and we also make sure they have goals and activities aligned with those with our capital allocation models and where they are in that model, and of course, we add value to our companies through our B&B Toolbox. It's a different type of measurements we have to support our companies in the development, based on where they are in the Focus Model, of course. We will continue to acquire companies in line with our acquisition strategies. Then we have some current themes in the group, and they haven't changed much since the last quarter. We'll continue to work on strengthening our cash flow, and that is mainly through improving the stock levels and mainly then the ITO levels, as a first step to get back to the pre-corona levels, that is 2.5, and we are now at 2.1 on the group level. So we still have some work to be done there, and we are still very cautious on assets investment based on the kind of uncertain underlying markets that we are facing currently. And on the same theme, we still have a tight cost control, and we have a lower kind of cost increase on the group level compared with our revenue increase, and that is kind of a balance I think is good, and that we should continue to have going forward. As communicated, we continue to kind of have a strong gross margin and really work company by company to make sure we protect that good gross margin that we have had during the last quarters. We still make some price increases in companies, but it's much, much tougher now to get them through at customers. And it's really a lot of things that need to be done to make sure we continue to protect and improve our gross margin going forward in the companies that we own in the group. And lastly, that is maybe a new theme since the last quarter. We don't see many concrete signs that the underlying market is picking up, but based on kind of the interest rate development and the investment that is done, we hope at least in maybe starting beginning twenty twenty-five that the market will pick up into some degree at least. We are now preparing to capitalize on that economic kind of pickup that we hope will materialize here earliest. I would say beginning 2025 now, as we know today. With that said, we now open up for questions. If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Zino Ricciuti from Handelsbanken. Please go ahead. Yes, good morning, Magnus and Peter, and thanks for taking our questions. I would just like to start out in Safety Technology, of course, a great improvement there. I would just like to hear about how you're feeling about the sustainability of the improvements when you are looking ahead in that segment. I would say if you look at the comparable figure, I think they were too low. I think it's more getting back Safety Technology to where they should be. This year is more in kind of in line with what they should deliver, and I would say there should even be some improvement opportunities on the level they are today. Yeah, if you look back two years, they made, like, SEK 35 million in this quarter, and now it was SEK 29 million. So still it's an improvement for sure for last year, but it was also a very weak quarter last year. Very good. And going into the cost measures, which you're mentioning, that you have implemented but have not yet reached their full impact, can you elaborate on what kind of, or roughly on the proportions, which how much we're seeing in this quarter and how much we should expect when we're looking ahead? I mean, we have been running efficiency activities across the group for, I would say, the last two years. In some companies, we have extended those activities or expanded those activities along the way. And there are many kind of cost elements that we have been working on, but of course, one of those is number of employees. And as you know, it takes time to get out that cost out of the system. So we still have some delay effects on the kind of decisions and activities we already implemented in that respect. But we don't communicate how much of that effect we will have in exact terms going forward. But there are several million still that we will get out of the systems in the next coming quarters. Okay, thanks for the clarification. And last question from me, given that you might be a bit more, I don't know, pessimistic to the economy than before, and when you were seeing this, maybe this pickup earliest in 2025, if we were looking at it from the context of acquisitions, does that make you more cautious when you're evaluating targets and being confident that you're paying, so say, the right multiples on sustainable earnings? It's a very good question. I mean, given the economic situations in the companies that we have continuous dialogue, we face also in some of those companies a weaker kind of trends. We take different measures in those types of situations, but one of the measures is kind of that we delay or push the kind of discussion forward just to outwait and see if and when it picks up. Without saying too much, there are several cases that we have a little bit on hold currently, based on the uncertainties in the markets. Some of the companies still have good traction and are still facing kind of good demands. So in those instances, we are willing to get to a closing, and we have made three of those this far, so far this year. Okay, great. Very good. I'll get back in line. Yeah, so I think it- The next question comes from Albin Nordmark from Nordea. Please go ahead. Hello, Magnus and Peter, thanks for taking my question. So first, you mentioned some cost measures there, as per the last question. But are you increasing costs as well in some areas, in terms of capitalizing on an improved economic situation, as you mentioned there lastly, in the presentation? Yeah, I mean, we have our Focus Model, as I mentioned earlier, that is guiding how we allocate capital across the group. And the majority of our companies in the green zone, i.e., those are companies where we like them to grow top line, and in some of them, we now currently, of course, invest to grow those company, especially in those company that doesn't facing a weaker market. We have those companies in the green zone as well. So yes, we are making investments, growth investment in several of our companies currently. Yeah, makes sense. And then, for the M&A market, has anything changed in terms of activity? And is there a difference between the countries in the Nordics? I wouldn't say it's a big kind of change. I feel that there are many processes, and I guess that's also in other companies, that is kind of delayed during the uncertainties and the lower kind of trends they have currently just due to the market conditions. So, my general impression is that there are a lot of activities, but maybe that isn't reflecting the number of closings, due to kind of the uncertainties, that many companies are facing currently. So my estimate is when kind of the market start to pick up, that the activity level actually will go up. All right, and any sense of when the market starts to pick up? Yeah, it's, it's very company by company, once again. I mean, if you look at our company, we have some companies with having, you know, a great, kind of increase in demand, currently, and some companies really facing, you know, significant weaker demands. So, so it's really company by company. You cannot generalize, and that is dependent on where they are present in different markets, different geographies and, different product categories as well. Right. So, lastly, which market and the product categories is the most positive one? I go back to our Focus Model. I mean, most of our companies in the green zone are actually having decent or good market conditions, and that's still the majority of our companies. The challenge we have is that some of our bigger companies, like Luna, Skydda, and also ESSVE mentioned, on a kind of group company level, have weaker demands, and that is, of course, affecting on a group level, since they represent, you know, close to. Yeah, it's more than half of the revenue on a group level. So those three companies have an impact on the total as such. Great. That's very helpful all for me. Thank you. Thank you. The next question comes from Emanuel Jansson from Danske Bank. Please go ahead. Hey, good morning, Magnus and Peter. Thank you for taking my questions. Regarding the market here, can you see any change in activity from the resellers? I mean, looking at the development in the Safety Technology division. Yes, we can see some kind of indications. One is that we have communicated earlier. I would say more or less all the resellers in the Nordics has really worked down their stock. Maybe some of the effect is now that they need to kind of fill up part of the stock. They are kind of running dry. At the same time, as Peter was indicating, they are really not building stock ahead of demand. We see that they are much more now cautious ordering lower order quantities, and to get those deliveries more speedy. Generally speaking, we don't see any indications from the resellers that they see an increased demand in their markets. Okay, perfect. That's very helpful. Thank you. And I think in general, looking at the recent years of acquisitions, at least my view is that you have focused or maybe increased the number of companies in the group which are more related to maybe the industry versus the construction segment. And if you still see some uncertainties within the industry, how do you expect these, like, new B2B companies in the group to handle a downturn? And would you also say that these new companies are as dependent on the number of employee as the older companies in the group is? To answer your first, your last question, yes, the correlation to number of employees in the new companies you acquire are less relevant, I would say, generally. Yeah. Mm. I think if you look at the kind of old companies within safety technologies is very, I would say, directly related to number of employees. If you look at the Luna business, is also very much related to number of employees, as well as, I would say, partly ESSVE, even if it's more like to the construction sector as such. So if you look at the new companies, I mean, we made some acquisitions in the UK during the last year, so they are not kind of correlating. And also, if you look at, for example, Levypinta that we acquired in Finland, if you look at Itaab that is in the roof metal product companies, and those are not related to number of employees to that degree. So I think that KPI over time will kind of lose in significance. If we then go to the kind of what type of companies we have acquired and will acquire, I haven't made the count, but the, for me, it's not so overweighted to industrial-oriented companies. I mean, look at Levypinta, Spraylat, that's more to the construction sector. We have Itaab, Kiilax, and some other companies we acquired last year that is related to the construction sector. Elkington as well, by the way. So we have acquired companies within the construction sector, mainly focused on infrastructure and the, and the commercial building segments. That hasn't had close to that kind of decrease in the underlying demand that that other parts of the construction sector have had. And many of those have had a very positive development during our ownership. So, I don't see that there will be a preferred type of focus on the industrial construction sector going forward in terms of acquisitions. I think it really, once again, will be company by company and making sure that the company are addressing sub-segments, sub-markets, that we think have a positive development over time, and that the company have a strong position in that niche, and can leverage of that underlying growth in that specific market. Perfect. That's a very good answer, Magnus. Thank you very much. And maybe a last question from my side regarding on trying to capitalize on the when the market recovers here, do you think that there are any need of any significant growth investments that are required in order to capitalize on the market when it recovers, you think? No, not significant. My expectation is that the efficiency measures we are taking during the last quarters, that we will kind of benefit from that when the market is picking up. So with that said, my expectation is that the revenue and the top line should increase and the gross margin and the cost base should be kind of more or less on the current level. Okay, great. Thank you very much, Magnus and Peter. That's, that was all for me for now. Thank you. Mm-hmm. There are no more questions at this time, so I hand the conference back to the speakers for any written questions and closing comments. Yeah, so we have some additional written questions. What is the main reason for the decrease in revenue in other countries? Yeah, I think that's more or less the business climate in certain geographies. So, I think that's the main reason for that. And regarding the gross margin, what are the key drivers going forward with respect to potential improvements? Is it mainly acquisition, for example? Yeah, as said, we have been working really to make sure our companies are focusing on the market segments, geographies with the best kind of certain business conditions. We are getting to the end of that now. We have made a lot of efforts phasing out low margin, high volume products. By saying that, that kind of organic improvement in the gross margin, you shouldn't have high expectation on that improvement going forward, even if I still think there are some potentials. The future growth in gross margin will be mainly driven by the acquisitions that we aim for going forward. Good. And then, the next question is, what share our revenues do Luna constitute now compared to two years ago in industrial equipment? I don't know. We don't really give that kind of numbers, but I would say it's, yeah, I think it's around 15%, I would say, percentage units difference, but without being more specific than that. Good. And then the next question is, what is the other operating income items, and what is the impact on EBIT from these items? So, and the other operating income items is generally, yeah, it's exchange rate changes, insurance contributions. So, yeah, I guess the effect is the amount that you see there. Yeah. Good. Okay. We don't have any more written questions from what I can see, and no more in the queue for direct questions. So if there are no further questions, I thank you for participating in this report presentation and the Q&A, and looking forward to talk to you again in the next quarter presentation. Thank you very much. Thank you very much.