Hello and welcome to the Bufab Quarter One 2023 earnings call. My name is Caroline, and I'll be your coordinator for today's event. Please note this call is being recorded, and for the duration of the call, your lines will be on listen-only mode. However, you'll have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your questions. If you require assistance at any point, please press star zero, and you'll be connected to an operator. I will now hand over the call to your host, Mr. Erik Lundén, the CEO, to begin today's conference. Thank you. Good morning and good afternoon, everyone, warm welcome to this us Q1 2023 earnings call. My name is Erik Lundén, President and CEO of the Bufab Group. Together with me here today, I have Marcus Söderberg, Group CFO. I will start this call with a short summary of the quarter. Then I will leave the word over to Marcus for group highlights. Then I will take you through the different segments and a short summary at the end. Then we'll have time for Q&A. If we start with the summary of the quarter on page three, we have a strong start of the year. We're actually delivering our best quarter ever in terms of sales, operating margin, and earnings per share. We show a strong growth in quarter of 20%, mainly driven by the latest year's acquisitions. If you look at organic growth, it's 0%, impacted negatively by comparative figures last year, but also weak demand in Segment East and U.K. and North America. We can see a very strong momentum in West, with the organic growth of 13%. Looking at order intake is slightly lower than our net sales for the quarter. If you look at profitability and starting with the EBITDA, sorry, starting with the gross margin, it's somewhat higher, explained by positive business mix. I'm pleased with the cost control we have in the group, and also see that we have good contributions from recent acquisitions. Looking at the EBITDA level, it's strong, improvement of 33%, ending up on operating margin of 13.5%. If you adjust for items affecting comparability in comparative Q1 last year, our margin was 13.6%. I was also pleased to see the improvement in terms of cash flow, and we expect this to continue. If you look at operating cash flow in the quarter was SEK 336 million, and that corresponded to a cash conversion ratio of 99%. Good to see that we have a strong momentum when it comes to the cash flow. I will now leave the word over to Marcus for some highlights for the group. Please, Marcus. Thank you very much, Erik. If you please turn to page number five, you'll see the table of financial highlights for the Group, like Erik said. We start from the top. Order intake increased with approximately 14% year-over-year or quarter-over-quarter, but it was slightly lower in net sales in the period. Net sales increased with almost 20%, where 14% came from acquisitions that we made during last year. We also saw a favorable currency effects of approximately 5% and organic growth came in around 0. Organic growth in the quarter was actually positively impacted by a very healthy performance in Segment West and North, which Erik will be talking about more in a moment. It was offsetted by strong comparable figures in mainly Segment East and U.K. and North America. On the gross margin side, on the other hand, it came in strong, a couple of, 0.3% above previous year. Stable gross profit, very nice to see. The increase is mainly driven by slightly stronger, business mix versus previous year. Operating expenses, as you can see, in percentage of net sales, came in, considerably lower, versus previous year. If you adjust for, one-offs or, comparable disturbing, figures last year, which summarized to approximately SEK 38 million, the operating expenses in percentage of net sales increased slightly. The one-offs in previous year's quarter, it was SEK 6 million impacted by the divestment of our Russian entity, that was divested in the first quarter. It's also due to remeasured additional purchase consideration, approximately SEK 50 million as well, as well as we had acquisition costs of SEK 8 million in that quarter, as well in connection with last year's acquisitions. Still solid and good cost control despite the increased pressure from the inflation worldwide. All in all, solid top line, stable margins, summarized in a very nice development in terms of EBITDA. EBITDA increased with 33% to SEK 323 million, corresponding to an operating margin of 13.5%. If you adjust for those one-offs in the comparable quarter, as said, we delivered 13.6% in this quarter and 14.0% in the comparative quarter. As you can see, most of this profit increase actually also falls down to earnings per share, which increased with 21%. Of course, there are some increased financial nets in terms of interest rates that cuts in between some additional costs to say, but it's nice to see that the development, much of the development in terms of increased profit falls down to the earnings per share. If we turn page to page number six, we have two graphs, one showing the growth development of Bufab for the last 30 consecutive quarters. As you can see now, we have been showing healthy growth in 11 consecutive quarters, and if you exclude the second quarter of 2020, we actually have been seeing total growth for more than 40 consecutive quarters. In most of them really helps the organic growth as well, except for the first two quarters in 2020 and as well in this quarter of 2023. If you look on the right graph, you can see that we're still seeing a very strong momentum in terms of profit delivery as well as in growth. It's really nice to see. We had a couple of quarters previous year where for an example, U.K., North America really contributed well. They are struggling a bit now, as said, with more stronger comparable figures like I said, but instead, we're seeing that Segment North and especially Segment West has really picked up speed and delivered really solid results during the quarter. It's really nice to see. It's also quite a good example of the nice diversity in terms of businesses in Bufab that when certain industries are having a weaker demand, others are picking up speed, and that's also what you can see in terms of the development in the each segments of Bufab. We turn page to page number seven, and we have a look at the development of our operating cash flow and our cash conversion. The blue bars in the left graph shows the EBITDA of Bufab, and the blue line shows the operational cash flow. As you can see, we were struggling a bit during late 2021 and during 2022, basically, with quite low cash flow. Main reason for that was due to that we grew a lot organically and tied up some money in the balance sheet due to that. As well, lead times were basically doubled during that period of time, which also forced us to use our balance sheet a bit extra, making sure that we could deliver items to customers. Since a couple of quarters now, that fact has changed. Lead times are basically down to the same level as before the pandemic period. We are now, as you can see, starting to re-normalize our net working capital and mainly talking about the inventory. That's also the explanation for the solid cash flow in the period. Strong underlying result development as well as inventory decreases explains the very strong cash flow development in the last quarter. As Eric said, we expect this to continue also going forward. If we look on the right graph, that shows the debtness level of Bufab or our net debt versus EBITA adjusted in terms of multiples. As you can see, we took quite a big leap downwards with approximately 0.5 multiples in this particular quarter, which is very strong. Of course, that's a direct result of continues continuously profit increases together with strong cash flows, which made it possible to pay off debt. We're looking forward to continue this development also going forward. Really nice to see now that cash flow is picking up speed and that we can use it to deleverage so that we can come back to a situation where we can continue making acquisitions. With that said, we turn page to page number eight, and this is just a quick bridge showing the contributors in the profit increase quarter by quarter, 2022 versus 2023. As you can see, Segment North, given that it's the biggest segment, contributed with an profit increase of 26%, of course, partly fueled by the acquisition of Pajo-Bolte. West had a very strong quarter, driven mainly by increasing demand and also increased margins. Very solid development there as well. East, U.K., North America, struggling a bit more from a demand perspective, contributed also well, you have to say, mainly given last year's acquisitions. We turn to page number nine. We'll just have a couple of words regarding acquisitions. As you know, we, during the last two years, have been quite active in terms of acquisitions. We have performed six of them during the last 18 months and approximately three of them during the last 12 months. We're now working with landing those acquisitions or those companies and those organizations within the Bufab organization, making sure that we make it possible then for to continue grow and hopefully also grow a bit faster. That work is going according to plan. We're starting to see positive synergies over here and there, but that takes time, but it's going in according to plan. The companies have had a good development since they went into the Bufab Group, so to say. We are now working on a daily basis basically to continue making sure that we have an organic pipeline of potential new acquisition candidates. That work is ongoing, and strategy has not changed at all. If we can just make sure to continue releasing cash flow, we will also be able to come back to an acquisition agenda in hopefully not too long time. With that said, I leave the word over to you, Erik, again, to talk a bit about the individual segments. Yes. Thanks, Marcus. We jump over to page 11 and start with Segment North. It was a quite good quarter for Segment North. We had a total growth of 18%, mainly driven by the acquisition of Pajo-Bolte last year. Also, if you look at organic growth, was up 4%, and mainly driven by the Swedish operation. Looking at the margins, flat gross margin, we had good cost control in the segment during the quarter. The both operating margin and the profit increased in the quarter. If jump over to Segment West, page 12. It was really strong quarter for Segment West. Total growth was up 20%, 13% organic, and was driven by underlying demand and increased market shares in the segment. You can see that Flos in Netherlands and also Czech Republic was really strong in the quarter. Somewhat higher gross margin, good business mix in the segment and also lower share of expenses. Same here with the good cost control and good operational leverage in the segment quarter. As a consequence of this, both operating margin and profit increased in the quarter. If we turn to page 13 and Segment East, here we have a total growth of 5%, driven fully by the acquisitions and positive currency effects. Looking at organic growth was -6%. Here we're up against strong comparative figures, compared to Q1 last year, but also weak development in mainly Poland and in Asia and in Singapore. Gross margin in line with the last year's number and, somewhat higher expenses compared to last year when adjusted of course for the discontinuation of our operation in Russia. Operating profit and margin declined, but still on a high level, I would say for the segment. Similar picture when it comes to U.K. and North America, page 14. The segment reported strong growth of 28%, this is driven by acquisitions and the currency. If you look at organic growth was 13%. Same thing here, up against strong comparative figures, also lower demand. Here we have the stainless steel business in U.K., but also RV industry in North America is the main driver behind that. Lower gross margin due to TIMCO, but higher share of expense due to lower volumes in the Segment. Overall operating margin increased with the margin decline versus last year's Q1. If we then sum up the quarter and go to page 16. Overall, a strong growth in the quarter, of course driven to a big extent by the acquisitions. We saw that organic growth was hampered by weaker demand in some segments and strong comparative figures, really good development in Segment West mainly, also strong numbers in Segment North. The acquisition helped us to deliver the strong results also with a little bit higher gross margin, they have been good in taking care of the cost and managing the inflation pressure that we had during the quarter. I'm pleased with the EBITDA of 13.5% and, of course, also with the operating cash flow, and we expect the strong cash flow to continue in the coming quarter. If you look at the market and outlook, there's still a lot of uncertainty out there. We can see that in certain industrial segments, especially down the ones that had a strong momentum during the pandemic, they still struggle with the low underlying demand. On the other hand, we have other industries that are doing very well right now, for example, energy, defense and automotive. I think that's the beauty with Bufab that you have a well-diversified customer and ultimate portfolio that helps us in times like this. Looking at the short-term priorities, they remain the same as we had now for a few quarters, to continue to be aggressive in the market and take market share. In a little bit lower, tougher times like this, it's a good opportunity for us to be aggressive and take market share when the cost pressure is high on our customers and they often start to look at the consolidation of the C-parts suppliers. Continue to work on the margins, of course, secure cash flow and reduce our debt level. Of course, we have work ongoing all the time with efficient improvements and managing the inflation pressure that we see and of course also integrate our recently joined sister companies into Bufab Group. All in all, a good quarter. I will leave the word over for Q&A session. Sure. Thank you. As a reminder, if you would like to ask a question, please signal by pressing star one on your telephone keypad. We will take the first question. Your line is open now. Kindly introduce your name and company name, please. Thank you. Hi, your line has been opened for question and answer. Hello, can you hear me? We hear you fine. Yeah. Hi, it's Karl Norén here from SEB. Just firstly, congrats on a strong quarter here. I must say I'm very impressed by the margin and the good cost control there. I have a question related to that and the number of employees and the cost base, basically. I mean, what should we expect here going forward? Because here I know that the number of employees was, I think, flat from Q4 to Q1 and down a bit from Q3. Have you stopped hiring? Should we maybe expect that you will even decrease number of employees going forward? You say that you will work with efficiencies, but can you give some more color on that would be, would be helpful. Thanks. Okay. Hi, Karl Norén, thanks for your question. Yes. When it comes to FTEs, how it works, as you know, in Bufab is that we have more or less 50 companies with their own P&L. All of them are in different phases right now. Some of them are in a phase where they need to adapt to a new type of market. Here we see clear decline in terms of number FTEs. In others, where we have strong demand and we see a very healthy future, we're actually increasing number of FTEs. It's a mixed bag. What we try to do is to, you can say, adapt us depending on the local market situations. On the all-in-all level, I mean, I would say that we expect the FTEs to remain on a similar level as we have today, if nothing specific happens in the market that we need to act on. In general, we're following the plans that we have in place for each of them, of the entities. Okay, that's great. A question on price, on the price contribution to organic growth, and specifically maybe to the Segment West. If I remember it correctly, Segment West were a bit late with the price increases, so I was wondering if they're still having a large maybe price component than the other divisions. Is it also that volumes are really strong in Segment West? Yes, it's, of course, it's a good question. Just like you say, very strong development in Segment West over the last couple of quarters. It is basically like this, that the strong organic growth is built by, I would say, mainly three components. The two biggest portions is a strong underlying demand in the industries that they are that they are more weighted towards, so to say. As well as they have really brought in new businesses. So they have been taking market share, and that also explains the strong organic growth. There is, of course, a slight price effect as well, but not as big as you might have expected. They were a bit more late when it comes to pushing price increases through, but they did a good work during the second half of last year, but also during the second quarter of 2021. There is the price effect, but not that big. It's not, it's not what's driving the strong organic growth. It's not price. It's mainly strong underlying demand and new businesses brought in, but there is a certain level of price increases as well. We're talking about single percentage. Okay, that's great. I guess the last question on sort of outlook or if you can say anything, because if I remember it correctly, you mentioned in Q4 that January started relatively strong after a weak December. Is it possible to say anything regarding how the trends were during the quarter? Did it end strongly, or what did you say? Was it relatively stable, so to say? Yeah, it's right that January started off a bit stronger than the weak December. That's right. The development throughout the quarter was quite solid, you have to say. At the same time, I mean, if you look at the order intake in the quarter, it was slightly lower than net sales. As we have said historically, that kind of gives you a guidance of what to expect at least for the coming quarter. Based on the order intake in the quarter, we expect the second quarter to continue to be a solid quarter in terms of demand. We don't really guide more than that, other than what Erik said, that there are certain industries that are going stronger than others, so to say, as we speak. That tend to, you know, it can change between one quarter. Yeah. The second quarter, and that's why it's hard to guide. Yeah. when it comes to what the future brings, so to say. Really keep quite solid, I guess. Yeah. Great. That's all from me. Have a good one. Thank you very much. Thank you. Thank you. We will take the next question. The line is open now. Kindly introduce your name and your company name. Thank you. Hello. Can you hear me good? Yes, we hear you fine. Thank you. This is Johan from DNB Markets. I have a detailed question on your earn-outs. A large portion is now labeled current liabilities. Are you able to specify a bit more about the timing of these payments? Is it Q2 or later? Regarding the short-term payments, you mean? yes, exactly. Okay, yeah. Most of that is supposed to be paid out during the second quarter, but it can also, due to that, you know, there is always a certain level of negotiations and there is a timing and you need to get figures approved from the other party and stuff like that. It might be pushed for another quarter. We expect or forecast it to be paid out during the second quarter, the majority of the portion. Okay, thank you. For my last question. With the decreasing leverage ratio, you mentioned the M&A agenda could restart in the near term. Could we expect this to be already in 2023? I don't think I said near term, but I said that we hopefully quite soon would be able to come back to a situation where we can start doing acquisitions again. I stand behind that. If you put it like this, I mean, everything. It's basically like this, that, you know, making acquisitions, that's something that you should deserve, right? We have been having a slightly better cash flow over a couple of quarters during 2022 due to certain reasons that we have talked about earlier. It's no strange thing behind that, so to say. I mean, we want to come down to a leverage level which we in the first place have guided the market to somewhere between two to three and have it there solidly, and then continue doing acquisitions. I mean, so far we have never had to say no basically to an acquisition due to that we didn't have the balance sheet or money supporting it, so to say. If we would bump into something that would generate very much shareholder value, so to say, then we would try to find a solution for that. Our strategy is to make sure that we grow organically, that we keep steady profit levels, that we have a solid cash flow, and that we use that excess money to finance our own acquisition journey. That's exactly how we have done it historically, and that's exactly how we want to do it also going forward. Also on top of that, we never guide really whether we are supposed to make this or this amount of acquisition in a certain year. Acquisitions happens when we have a very good case up on the table that we really want to do, that we think will generate long-term value, and that we will do also going forward. If that happens in the fourth quarter or in the first half of 2024 or the second half of 2024, that's secondary for us. If it pops up on the table, we will act accordingly. We never guide when it comes to numbers of acquisitions or the timing of it. I'm sorry. Okay, very good. Thank you. That was all for me. Thank you. Thank you. There's no further question at this time. Okay. thanks a lot for joining, and have a good day ahead. Thank you for joining today's call. You may now disconnect.