Good day and welcome to the Bufab Q4 earnings conference call. Today's call is being recorded. At this time, I'd like to turn the call over to Mr. Erik Lundén. Please go ahead, sir. Thank you. Good morning and good afternoon, everyone, Warm welcome to Bufab's year-end report for 2022. My name is Erik Lundén. I am President and CEO of Bufab Group, I'm sitting here together with Marcus Söderberg, my CFO. I will start today's presentation to go through the Q4 summary Then jump into the year-end results of 2022. After that, I will leave the word over to Marcus for some financial highlights, After that we'll go through the different segments performance in the quarter. At the end, we'll sum up the presentation with the outlook for 2023, Then of course we'll have a Q&A session at the end. If we then start with the Q4 summary, page 3, we end up with a very stable end of the year and a very strong year for Bufab Group. If we start to look at the top line, we had a strong growth in the quarter of 30%, mainly driven by the latest year's acquisitions. If you look at the organic sales, we were up 1%, impacted by weaker demand in the end of the quarter and strong comparative figures. Order intake was slightly higher than net sales. If you look at the different segments, it was Segment West reported strong organic growth and weaker demand in the Segment East and UK/North America. If you look at the profitability point of view, higher gross margin, explained by a favorable business mix and a lower share operating expenses due to continued good cost control in the group. Looking from a EBITDA point of view was a strong improvement, +43% corresponding to operating margin of 11.7%. I was very pleased to see that we strengthened our cash flow in the quarter, operating cash flow improved, and we expect this to continue also in the coming quarters of 2023. If we then continue on Q4 on page four and looking at the full year results, 2022 was a record year for Bufab Group. We delivered our highest sales, operating profit and earnings per share ever. Net sales increased 44%, reaching almost SEK 8.5 billion, and 12% was organic growth. Order intake in line with net sales, and I was very pleased to see that all segments was contributing to the growth. We also had very strong EBITDA in the year and increased earnings per share. EBITDA increased 42%, corresponding to margin of 11.7%, earnings per share increased by 29%. The board of directors of Bufab Group proposes raise dividend to SEK 4.75 per share. If we look at some other highlights of the year, we made three strategic acquisitions with a combined annual turnover of more than SEK 1 billion during the year. We also continue our work with when it comes to sustainability. During the year, we were validated under SBTi and our goals, we'll continue working on improving our way we work with our CO2 emission during 2023 and onwards. We also feel that we are in a good position for continued long-term stable growth and profit growth for Bufab Group for 2023 and onwards. Having said that, I will leave over the word to Marcus for some financial highlights. Please, Marcus. Thank you, Erik. We continue with turning to page number six, and you'll see a table of the financial highlights of the Group. If we start at the top, and you can see that the order intake was slightly higher than net sales in the month. Total net sales increased with 30%. Out of the total growth of 30%, most of it actually come from acquisition. About 21% came from acquisitions. We also have some favorable currency effects. Approximately 8% out of the total growth came from that. As Erik said initially, the organic growth was 1% in the quarter. The organic growth for the quarter was mainly driven by a strong development in Segment West, who actually had another strong quarter. The organic growth in Segment East and Segment UK/North America was, however, negative, for the first time for quite a long time. The reason for that is several things really. A weaker quarter in general in terms of demand, but also on top of that, very strong comparable figures, in the Q4 2021. We'll talk more about that when we dive into each segment. The growth margin, if we change to that, increased somewhat in relation to the comparable, comparative quarter. The high growth margin was mainly attributable to improved business mix versus the comparative quarter. If we look at the operating expenses, you can see that those declined slightly versus the comparable quarter. If you adjust for remeasured additional purchase consideration, who had a positive impact of approximately SEK 3 million in the quarter and a negative impact of approximately SEK 14-15 million in the comparative quarter, then you can see that the share of operating expenses actually increased slightly to 16.6% versus 16.2%. Nevertheless, even if adjusted, we still see quite good and solid cost control in the group, even though volumes are slightly going down. All this together, strong growth on total in combination with somewhat higher gross margin and somewhat reduced operating expenses. Our overall EBITDA increased with 43% in the quarter, corresponding to SEK 242 million, and operating margin also, as you can see in the report, had a good development and ended up in 11.7%. Adjusted for remeasured additional purchase considerations, the EBITDA increased to SEK 239 million versus SEK 184 million previous year, corresponding to an EBITDA margin of 11.5% for both of the years. We turn page to number 7 and have a look at the first graph at the left showing our growth track record for the last 28 consecutive quarters. As you can see, during 2022, we have seen very strong and solid organic growth, and not only organic growth, but also total growth. Both strong organic growth, driven partly by price, at least in the, in the first mainly two and also three quarters, but it drops off slightly, quarter by quarter, you can say. If you look at the right graph showing net sales and EBITDA development, as said, already, nice development growth-wise for many quarters in a row. Since, basically, since we launched the cost savings program back in, late 2019, we have also seen, quite an impressive increase of profitability, for both of overall of the group. The positive trend that we have seen now for more or less 2.5 continued throughout the fourth quarter, as well. With that said, we turn page to page 8. We'll talk a little about cash flow situation and also indebtedness. We start with cash flow. As Erik mentioned as well, we have been seeing better cash flow during the fourth quarter. Main reason for stronger cash flow in the quarter was that we did not build up inventory with such a pace that we have been doing during the last couple of quarters. Also it is a result of the actions that we took more or less in mid-year of 2022, with starting focusing on cash flow, so to say. The development you see in terms of operational cash flow in the quarter, which was significantly higher than the previous three to four quarters, is a result of that focus. Like Erik said, we expect that to continue going forward. Why is that? The main reason is that we are now, like we have talked about during the last couple of quarters, we have more or less normalized our balance sheet in terms of net working capital in order to handle the overall conditions on the market with longer lead times and also high organic growth, at least during the first three quarters during the year. Now when lead times have dropped back considerably together with volumes obviously going down slightly, we're now looking forward to renormalize this and reduce net working capital, to speak frankly, also going forward. Like Erik said, we're looking forward to see the cash flow gradually increase quarter by quarter going forward. If you look on the right graph, looking at the net debt to EBITDA, as you can see, we have been up on high levels, mainly connected with the latest year's acquisitions. We have been quite active when it comes to acquisitions. Made six of them during the last four to five quarters. It's nice to see, however, that we're now quarter by quarter, like we have did before, reducing down the net debt to EBITDA. Of course, better cash flow, as we saw in the quarter and also hopefully going forward, will of course bring down those multiples even further so that we can come back with a balance sheet that supports our strategy when it comes to acquisition also going forward. Focus on cash flow, focusing on making sure that we land the already made acquisitions and also that we pay off debt and slim down the balance sheet, so to say. With that said, we turn to page number 9, and I will not stay here for so long time. It's just a bridge showing what segment that is actually the biggest contributor to the profit increase. As you can see, it's basically the same segments in the quarter as it is for the full year. We have had strong development in North, of course, partly driven by the acquisitions made in recent years, Pajo-Bolte and Tilka. Also, West has contributed nicely both in the quarter and accumulated 40 years. That partly driven at least by the acquisition of Jenny Waltle, but also driven by strong organic growth. East been struggling a bit despite an acquisition in CDA Polska in the first half of 2022, but are facing maybe a bit more challenges volume-wise, which we will talk about later as well. UK/North America also a kind of a shining star from a segment perspective, also adding a lot to the property increase versus previous year. I think I will end there, Erik, and leave the word over to you to continue to talk a bit about the individual segments. Thanks, Marcus. If we then turn to page 11 and start with Segment North, that is our operations in Sweden, Finland, Norway, and Denmark. The segment noted a continued favorable growth during the quarter. The total growth amounts to plus 19%, 1% was organic growth. With the order intake was slightly higher than net sales. If you look at operations in Sweden, Norway and Finland, it was stable demand. If you look at Denmark, it was a mixed performance with HT Bendix, which is exposed to kitchen and bathroom industry, have a weak quarter with lower volumes, while Pajo-Bolte, that we acquired now during 2022, continues to have very strong performance in the quarter. The gross margin was somewhat lower relative to comparative quarter, primarily driven by lower volumes and a negative business mix, especially in the manufacturing companies that we have in the Segment. The lower gross margin was fully offset by a lower share of operating expenses, the lower share of expenses is a direct result of continued effective cost control in the Segment. If we then continue with the Segment West, our operations in France, Netherlands, Germany, Czech Republic, Austria and Spain, was continued to have very healthy demand in the fourth quarter. Total growth of 25%, 10% organic, this was driven by underlying demand that was very strong in the quarter and increased market share gains in Segment West. We saw that operations in Netherlands, Czech Republic have continued to have very strong performance, with taking market share there and it's a high demand in those countries. We can see that a few industries, like automotive and park and recreational environments have very strong development in the quarter. Gross margin was somewhat higher than in the comparative quarter, result of positive business mix, compared to the previous quarter last year. Operating expenses decreased as a result of continued healthy cost control, and then also, of course, the higher volumes contributed in a positive way for the Segment East, that is operations Poland, Hungary, Romania, Baltic States, Slovakia, Turkey, China, and also Southeast Asia. Here we had a favorable growth also in the quarter, a total growth of 9%, but organic growth was down 5%. As Marcus pointed out, the negative growth was mainly coming from a weak development in our operations in Poland and also in Singapore. Here we can see that, for example, the outdoor industry that had a very favorable development during the pandemic, now showing lower demand that's impacting our sales in East. Our newly acquired company, CDA Polska, had a very strong development in the quarter. Looking at the whole segment, the order intake was higher than the net sales. Looking at the gross margin, somewhat higher than the Q4 last year. Here, CDA Polska is a big contributor as well. We've also been good at successfully pass on increased cost to our customers in the segment. The share of operating expenses increased, that's mainly driven by the lower volumes than in the segment. In total, operating profit then was flat, while the margin declined slightly. Looking on page 14, UK/North America was overall a very strong growth, 61%, this was driven by acquisitions and the currency. If we then look at organic growth was down 4%. The reason behind this is the strong comparative figures, also we see less demand for stainless steel products in U.K. and also the RV industry in North America. We also have some really positive development. Ireland had a really good development, also good volumes coming out from TIMCO that we acquired during 2022. The gross margin was lower than in the strong comparative quarter that we had in 2021. The lower gross margin was primarily attributed to acquisition of TIMCO. TIMCO has a lower gross margin than the group overall. If you look at the operating profit increased, while the margin declined slightly in the segment. That was all our segments. If we go to, let me see now, we are on page 15, and say a few words about M&A and acquisition, that is a natural part of our way of growing our business. If you look at our journey since the Bufab Group was founded in 1977, we have done more than 50 acquisitions now. During 2022, we added three companies into the group. That was Pajo-Bolte, TIMCO, and CDA Polska. The work is now ongoing to integrate those company in a good way in Bufab Group. So far, the performance has been very good for those three companies. Overall, we have added more than 900 employees during acquisitions and about SEK 3.4 billion in turnover. We will continue to ensure that we have a healthy pipeline when it comes to acquisitions. We will continue to work to be a consolidator in a fragmented market. I think we are in a good position to continue that also going forward i f we go and sum up the quarter. T urn to page 17. If you then look at the quarter overall, we can say that we had a strong overall growth in the quarter. Mainly driven by the latest year's acquisitions. The organic growth in Q4 was hampered by the weaker demand, the end of the quarter, also strong comparative figures in end of 2021 then. Strong results in the quarter due to acquisitions and somewhat higher gross margin and also a lower share of expenses in the group. Looking ahead then and outlook, given the situation in the market, the political situation, the macroeconomic growth situation, there's a lot of uncertainty ahead of us now for 2023. We have seen in the quarter there is higher caution noted among customers in certain segments. We have, of course, continued to be preparing ourselves for more difficult times, and lower demand in some segments. What's important to note is that we have a very well-diversified customer article portfolio in Bufab Group, with good diversification. That, of course, helping us in tougher times. If you look at the short-term priorities, we've continued to focus to take market share. A weaker market and tougher market conditions overall is actually opportunity for a strong player like Bufab to take market share. Our customers, they will feel a lot of cost pressure and consolidation of C-part suppliers will increase. This open up opportunity for us to be active and take market share, and that is a big focus for us for 2023. Of course, also we will continue working to protect our margins, working on our cash flow and our inventory to be able to reduce our debt going forward. Of course, we have many different kind of efficient projects ongoing to improve our productivity, also our utilization overall and the net working capital. That was my final slide. Now we leave the word over for a Q&A session. Operator, please open up for Q&A. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. A voice prompt on the phone line will indicate when your line is open. Please state your name before posing your question. Again, press star one to ask a question. We will take our first questions from our participant. Your line now has been opened. Please go ahead. Hello. Johan from DNB Markets here, and congratulations on the strong quarter. You have some cautious guidance for development in 2023, but could you please give some more detail regarding the magnitude of this and the different end markets you see going forward? Are these the same segments as already flagged? Yes. Hi, Johan, thanks for your question. Yeah, as I pointed out, we see some caution that's coming from customers in a few industrial segments. As I mentioned also before, if you look at starting with the segments that have a favorable impact during pandemic, here we see a clear lower demand like outdoor, for example, but also kitchen and the bathroom. We expect that to continue to be on a lower demand level also going forward. If you look at also geographical aspect, U.S., also and U.K. to some extent, we see a little bit of a lower demand in some segments. The RV industry also had a positive development during the pandemic. We have seen in the quarter, lower demand, and the same thing then go with stainless steel in U.K.. That is what we expect. We can say that the combination of some cautiousness coming from a few different industrial segments, but also you can say geographical diversity here as well with both East and U.K., North America as the main contributor when it comes to uncertainty. Okay. Thank you. Just a follow-up question then. We see the inventory is higher, but the trend is getting better. Now that you talk about potential working capital release during the next year, could we expect the M&A agenda to resume during the year to compensate for a possible then organic decline? We will continue looking, as I said, for interesting M&A targets during the year. We have, as I say, I would say a healthy pipeline of companies we could acquire. Having said that, we are also coming from a, you can say 12-18 months of quite aggressive M&A agenda. We added three companies during 2022, TIMCO was a major contributor, it's a big company in U.K. We are occupied of integrate those company as well. In a market situation like we are facing right now and also with our balance sheet, we will most likely expect low activity on M&A market in 2023 compared to what we had in the past. Our strategic agenda has not changed. We'll continue to look for attractive targets. If something comes up, we will find a solution to acquire that company. Of course, we don't expect the same activity as we had in the past. Okay. Very good. Thank you. Thank you. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. We will take our next questions from our participant. Your line now has been opened. Please go ahead. Yes, hello. It's Karl Norén from SEB. Have a couple of questions here. Maybe if we start on the organic growth side. I think it's been clear that we've seen the acceleration of organic growth here recently. I'm just curious about what you can say regarding the upcoming two quarters, because I guess when we roll into a new year, is it to be expected that we should see negative organic growth for Q1 or what's your best guess? Also if you could comment anything on, let's say, the development in January year-over-year would be interesting. Thank you. Thank you for your question, Karl. Marcus here. Yeah, I guess the question you're asking is the question everybody would like to have a very good answer on, so to say. It's like looking into a crystal ball, of course, when it comes to demand in the more long run, so to say. When it comes to the demand in the more short run, I will say that, I mean, demand dropped in Q4, we should also remember that we are now, I would say, mainly from the fourth quarter and onwards, facing very, very strong comparative quarters, that we should have that in mind and bear that in mind. We should also know that, quite a big portion of the organic growth, throughout 2022 is not volume-driven, it's price driven as well. That effect is, however, becoming, less and less, throughout 2022, and it was not that much in the quarter, actually. What we expect or what we saw in the fourth quarter, that stands out a bit was that December was a particularly, weak month, and that's not really uncommon when there are uncertainty in the market. We saw that some of that, came back in January. You need to look at those two months together, so to say. It's basically like we said in the report that the uncertainty is there, but to say where in the long run is hard. At the same time, you know, the order intake was slightly up in the fourth quarter versus net sales, not much, but slightly. That normally gives us quite a good view of at least the coming couple of months, so to say. We also know that when volumes slow down and if it continues to slow down, we will normally get hit a little bit more in the short run due to inventory reductions from some of our customers. We saw that in the fourth quarter as well, and it might be so that we see that in the coming quarter as well. To speak frank, it's very hard to say anything about the future outlook other than that there is an uncertainty and now we are starting to see lower volumes. The order intake in the quarter was strong, so it's not like falling out of a cliff or anything like that. It is actually like Erik said as well, there are certain industries that stands out with particularly lower demand, but there are also those who are favored by the actual climate and those are going strong instead. You see that basically when we look at our segments, some are strong, some are not strong. The reason for that is that the individual companies in Bufab Group are in many cases more weighted into- Yeah. -specific industries, than on an average level, if you put it like that. Okay. That's a good answer. Thank you. If we look on the margin side, another hot topic here, I mean, if I look historically, I mean, Bufab before the pandemic, you did slightly below 10% in EBITDA margin during the last years, and then you did kind of a cost reduction program during the pandemic and an efficiency program, et cetera. I'm just curious on what you think on the margin side. I mean, even in a weak year now, if this turns out to be a weak year, are you confident that you will be able to maintain a margin above 10% given that during or before the pandemic actually did not really reach this level? Or is Bufab now at a, so to say, new normal level? Would be interested to hear your thoughts on that. I think you can put it like this. When it comes to guiding margin-wise going forward, that's nothing that we normally do, and we will not do it in this case either, so to say. To answer your question, I guess you can put it like this, that we have put up a target saying that we should reach a 12% EBITDA margin at the end of 2023, set in more of a long-term perspective, if you understand what I mean. That should be 13 in a good year. It could maybe be 11 in a worse year, if you put it like that. That's what we are guiding for. We are looking forward to delivering 12% sustainable going forward. That's what we can say. If we now go into a market which is weaker, of course we have some actions that we can do and also are already working and preparing with when it comes to reducing costs, et cetera. That's basically what we can say- Yeah. -about, that. Yeah, super clear. Just a final one from my side. It's on the financial costs or the financial net was a bit higher than I expected at least, at around SEK 47 million this quarter. Is that a level we should expect going forward or was there anything, you know, impacting or i t seems like a quite high interest rate on your loans. Yeah. Just to elaborate a bit on that then. Yeah. It's a good question as well. First of all, I mean, all of you know what's happening with underlying interest rates during the year. I mean, in many cases, they have not only doubled or tripled, and sometimes they're also quadrupled, so to say. When looking at Bufab's Financial costs or interest rates, so to say. You should bear in mind that we are an international company, and we have made a lot of acquisitions also in other countries. Then we, of course, loan in local currencies, and those currencies, well, are having higher underlying interest rates. US dollar, for example, you have the sterling, and the Danish krona, et cetera, et cetera. The interest rate that we report in the quarter, it is the run rate as of now. Of course, in terms of interest rates, we are a bit indebted multiple-wise. Of course, that is affecting margins on the- Yeah. ... the interest rate that we pay. The focus going forward is to do exactly the same thing that we have done several times before, one being in kind of the same balance sheet situation. That is to continue focusing, delivering cash flow, making sure that we land acquisitions we have made, that we profitable, that we profitize on synergies, et cetera, and that we bring down the indebtedness level to a level where we can pick up the acquisition strategy and the acquisitions agenda again. Yeah. Just one more if I may on that, you know, releasing cash flow, et cetera, getting down the net debt. Is it possible to give, like? Now during the last couple of years, it's been quite volatile on the net working capital compared to net sales. What is kind of a sustainable normal level for Bufab now? It's been so many acquisitions, it's hard to look at, I guess. It's been around 35%. Is that? Yeah. A normal level, you would say? It's been, yeah, it's been around... If you go back, let's say, to, Yeah. A normal year so to say. Of course. Yeah. ... let's say 2018, 2019, it was around 35 or slightly below. During the, the pandemic, so to say, and the strained supply chain, et cetera, we lowered our inventories quite much, and we were down below 30. Now, given long lead times, et cetera, et cetera, we are a couple of percentage points above those 35%. I would say that there is no big change in the structure of Bufab in terms of net working capital. We should be definitely able to get down to the level where we were before, if you put it like that. From that level, we should, in the long run, be able to be even better, so to say. At least get down to where we were before the pandemic. Yeah. Great. That's great. Thank you. It seems like it's a lot of, lot of capital to be released there going forward, so that's nice. Thank you. Thanks. Thank you. We will take our next questions from our participant. Your line has been opened. Please go ahead. All right. Morning. This is Robert at Carnegie. I just wanted to ask, you know, two maybe follow-ups on that comment for a weaker December and better January. How far do you think that the process of customers reducing inventories, how far do you think that process have run, as per December or January? Do you think there's still a lot to go on that? Yeah, that's also, it's a very good question. You know this very well, Robert. We have, like, 15,000 customers. It's impossible basically to have statistics of this. We have a feeling because we talk with the customers on a daily basis. I think we can put it like this, that it has, for quite a long time now, been a discussion that that market will decline going forward in the overall industry. We expect that inventory adjustments from a customer perspective has been ongoing for at least the last couple of quarters, or three quarters, actually. Not, you know, big changes month by month or quarter by quarter, but smaller reductions, so to say. Now in this quarter, as the demand fell, especially in December, we think that of course, part of the negative December effect is coming from inventory drawdowns from customer. It is a bit hard to say also because as we also guided for, the beginning of the year was slightly better, so to say. You need to look at this thing too. It's hard to answer the question, but normally when market goes down, we see inventory adjustments, and we expect to have portion of that in this quarter and possibly also in the coming quarter if the demand stays at the same level or so. All right, perfect. Then you said something about prices not being such a positive contributor to organic growth in Q4 as before. What are the trends there in the market? Were there still price hikes in many product segments and customer segments being implemented in Q4 or- It was, yeah. It's a good question. I can put it like this. ending. Yeah. Of course, there were a certain level of price affecting the growth in the quarter as well, but not at all on the levels that we have seen in earlier quarters, so to say. As we also have talked about in earlier quarterly reports, the price effect is going down. You should see it from this perspective, that the price has really started to go up for us in the beginning, mid-2021, I guess you can say. The vast majorities of the price increases that we have been making was done during the second half of 2021. Of course, we have been continuing doing price increases where necessary at certain areas throughout 2022 as well. Most of the price increase effect is now being watered through, so to say, at least when you're looking at it, quarter-by-quarter or year-over-year, so to say. Is the cost development and demand development now such that prices don't go higher or? From a raw material perspective, it's a bit up and down. A couple of months ago, the price then was down, but we also see some trends that some prices are also going up. When it comes to transportation costs, et cetera, those are considerably down. They are basically down on the same level as they were before the pandemic. That you should know. You know, it's complex because even if those things that I just talked about could cause your price pressure on Bufab, at the same time, you know, we have currencies going the other way around. When it comes to this, you need to look at it by customer and to see what kind of situation you're in. In some certain extent, it's price increases, and in certain extent, it's price decreases, so to say. If customers turn to us wanting to have price decreases, of course, you know, they have been sending us forecasts for a long period of time. We have an inventory that we have bought. Of course, we need to solve that in some way. Historically, we have been good in doing that in cooperation with our customers. All right. Okay. Thanks. Thank you. It appears there are no further questions at this time. I'd like to turn the conference back to our speakers for any additional remarks. Please go ahead, sir. Okay. no, nothing else from us. Thanks everyone for, joining and, have a good day ahead. Thank you. Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.