Hello, and welcome to the Concentric Interim Report January to March 2021. Throughout the call, all participants will be in listen-only mode, and afterwards there'll be a question and answer session. Today, I am pleased to present David Woolley, CEO, and Marcus Whitehouse, CFO. Please go ahead with your meeting. Hi. Good morning. Let me add my welcome for David Woolley and Marcus. Yeah, very busy and interesting quarter. If we would move then to the next slide, we'll find the agenda. The agenda carries no surprises. What we're going to talk about is the normal format of information. I will talk about the summary for the Q1 2021. Then I'll hand over to Marcus Whitehouse, who will talk about the financial results for the quarter. He'll come back to himself to give a brief outlook on how Concentric sees Q2 2021. After that, then we'll open up for the Q&A and look forward to some interesting questions. If we go to the next slide, we'll see an introduction to the summary to Q1 2021. If we then go to the next slide again, we'll see the highlights for Q1 2021. First of all, looking at the net sales. The first quarter of 2021 was extremely interesting, extremely exciting, and overall, quite successful. If we start off by looking into the demand from our end markets, basically if we look at quarter-on-quarter, then we see good increase in sales. Europe and rest of the world up 15% and the Americas up 3%. We have spoken many times. Clearly we have a denomination or a concentration on the truck industry, we have very good presence in construction and ag. If we look at Q1, we will see that the truck has led the strengthening demand. Of course, now the construction and ag is starting to catch up a little bit. All of this very good demand and very good sales also wants to take us to talk about the supply chain. I don't think we're talking or we aren't giving any surprises. Globally, the supply chain has very much struggled to keep up with the increase in demand. I think a number of our OE customers have gone out before us to explain how their quarter one sales have been somewhat limited by the supply-demand dynamic. What can I say about Concentric? We feel those same pressures. Critically, and people who follow Concentric may anticipate my next comment, our team have done a fantastic job to actually keep our customers fed with parts to keep their factories moving during this very challenging quarter. People will follow our progress know that we acquired Allied Enterprises at the end of Q4 2020. This is the first quarter where we include the results of Allied, and we're pleased so far with the integration of this business, which fits very nicely in our business between high and low pressure pumps. If we look at the Q1 sales, year-on-year, then we can see that they're actually 5% down. We started to compare our results now with pre-COVID 2020. Sales came in at SEK 432 million against the prior year of SEK 456 million. If we start making the adjustments for the strong SEK, the currency impact had a negative of 10%. Allied offers us an increase of 5%. If we look at sales on a constant basis, then sales are actually flat. Good news is we're back to pre-COVID levels. The book to bill, if you look at the table at the bottom, we can see that the book to bill is looking yet more positive. At the end of Q4 2021, orders were 112% of sales. If we look at Q1, orders are now at 127% of sales. It bodes well as we'll talk towards the outlook later. It bodes well that this strong demand is set to continue for a while, we think. If we go to the next slide, we'll look at the highlights for the quarter in terms of earnings. Perhaps not surprisingly, we were fairly pleased in terms of operating income. For the quarter, we arrived at a final result of SEK 95 million against the prior year of SEK 87. Operating margin moved up to 21.9% against the prior year of 19%. A strong result, clearly benefiting from the extra sales, clearly benefiting that we did quite a lot of restructuring during the COVID period in 2020. We don't often talk about it, but the Concentric Business Excellence tool was used in an extreme sense to make sure that whilst we were restructuring the business, we didn't cause harm and we prepared ourself for the recovery. The cash flow, again, from the operating activities were strong. SEK 73 million against the prior year of SEK 81. Marcus will talk later, clearly as we go into a stronger growth phase, even with our very tight management of trade working capital, we're absorbing some cash into the growth curve. Net debt reduced to a negative SEK 90 million. It gives us a gearing ratio of - 7%. That includes the pension liabilities that sit on the balance sheet. If we take away those pension liabilities, our gearing is now down to - 34%. When we look at some of the changes, it is a note, and again, Marcus will talk about it later, but the changes in discount rate that applied to pension liabilities went in a positive direction, giving the company a notional gain of SEK 150 million. If we look at the table at the bottom of this curve, we can see how Q1s we expect to be not bad quarters, and this then has been no particular surprise for us, and it follows the trend that we might have predicted. If we go to the next slide, then I'd like to spend a few moments talking about the strategically important subject of electrification of our world. We know that there is a huge amount of pressure from governments on legislation to reduce CO2. The ambition to get to CO2 neutrality, get to zero emissions, we've spoken about it now for really three, four years. As a company, Concentric has invested heavily in this sector. We don't see diesel engines for trucks and tractors and construction going away for the next 10 or 15 years, but we do absolutely see that rapid growth in terms of the electric vehicles, be they battery electric vehicles or hydrogen fuel cell vehicles. Clearly, driven by legislation, the on-highway is the vanguard. It's making the most progress. Talking to the people that follow Concentric, we need to talk about the off-highway business. We need to talk about static applications. This slide is telling us that we've now made 15 strategically important press releases about electrification. As we'll talk about later, individual numbers of sales are not dramatic, but the compass is clearly pointing in a very strong direction towards electrification. As I said earlier, inner city truck and bus opportunities lead our way in terms of EHS, electro-hydraulic steering, eOil pumps for the traction motors, eWater pumps for the batteries, typically. The inner city utility vehicles, the trash collectors, the fire engines, and off-highway machines are starting to follow. Again, that new opportunities, brand new sector for us, energy storage and distribution. The graphic is quite busy, but let me try to take you through the key. Going down the page, we're talking about time. Moving to the future is going down the page. The color coding, those pink bubbles very much are looking at the eOil pumps. Again, those are typically the E products that go into those large electric motors that push vehicles along. Again, whether it's battery electric vehicle or fuel cell vehicle, the oil pumps are those pink bubbles. If you look at the green bubbles, we're looking at the electro-hydraulic steering. Again, taking the engine away from the vehicle requires power on demand for steering. We've made numerous press releases. We're making great progress in this area. The blue bubbles, the electrically driven water pumps. These are typically, but not exclusively, the pumps that look after the batteries to keep the batteries at stable temperatures. They warm up the batteries when they're cold. They cool them when they try to overheat on charge and discharge. Again, a good coverage. Left-hand column is truck and bus. As I said, that's leading the charge because there is most stringent legislation in this area and in the cities. The orange bubble at the bottom is quite interesting for us, too. Another new customer, another new application, this is basically diesel engines need to get cleaner, too. This stop-start system that's going on to a diesel engine to make it cleaner is significant. Second column, you see the utility vehicles, trash collectors, fire engines coming through. Off-highway is significant in terms of we're getting off-highway now and energy storage on the right. If we go to the next slide, it's more words rather than graphics, but important. As we said earlier, the trend is set. The trend is set, CO2 neutrality and zero emissions. If I could talk about the five most recent press releases, the first one there is the electro-hydraulic steering into the U.S., a U.S. OEM on a battery electric bus that we're providing the steering system. By the end of March, again, it was a refuse truck traction motor, the main electric motor needing an oil pump. Coming to April, electro-hydraulic steering again, emergency utility-type vehicles, fire engine type of vehicles. As we came into April, there's an electric water pump. Again, significant because it was our first off-highway vehicle. As half of our business is looking at construction and ag, this is also strategically significant. Lower values, but strategically significant. Even yet this week, we had that diesel stop-start pump, basically an oil pump to try to make a diesel engine cleaner. Another first application, first customer. If we go to the next slide, if the graphics would work. There is an important point that this slide is trying to make, and that is that the contracts that we've announced have now, even though each one of them on its own had quite small value, we've now announced orders worth SEK 500 million over a five-year period, all based on ePump technology. If we then press one more time on to the next slide, the second takeaway point is we're trying to guide our investors, we're trying to guide the people who would follow us to say that it's a fairly crude yellow splash, but it's important. What it says is by 2025, 20% of Concentric's group turnover will be coming from electrified products. Our base pumps are pretty much the same. Our oil, water pumps, hydraulic pumps, the same. The electrification, the software, the controllers, the IP that we're building in, the diagnostics that we're providing to our customers and giving our customers a huge access to digital information from their systems is significant. If I go to the next slide, what I'd like to do now is hand over to Marcus. Super. Thank you, David. If we go to the next slide, it should be the quarter one 2021 market data. A slide that most will be familiar with in terms of its graphic, and pleasing to see what story it portrays. It shows that all of our end regions and pretty much all of our end applications within those regions are showing growth year on year. We've seen that recovery continue as we've touched on during quarter three and quarter four, and that recovery from the global pandemic continues on in the first quarter of this year. As we've already touched on, it's been led by trucks. We first saw that market start turning in quarter three, and it's continued to recover, particularly in Europe, during the first quarter of 2021. Been really pleasing to see that the off-highway sectors have recovered, most notably the agricultural machinery sector, which has been particularly strong during this first quarter of 2021. Market indices, again, suggest that this recovery will continue on, but obviously just not at the level of growth indicated within the indices. For the full year, is now predicted to be +9%. Down a little on what they were reporting for the fourth quarter last year, which was +12%, and probably reflects some of the supply chain constraints that companies have experienced during this first quarter. Next slide, please. This is a table with our quarter one 2021 results, looking at our trading performance. David already touched upon our net sales. Yes, we've reported at SEK 432, down from SEK 456 by 5%, but really pleasing to see within there that our year-on-year sales in constant currency are flat. They are back to pre-pandemic levels. Really important. We've got the additional sales that we got from our acquisition of Allied, which is a +5, we enjoyed or don't enjoy the FX headwind of a strong Swedish krona of 10%. Our operating income is stronger than the first quarter of last year, reporting at SEK 95, up from SEK 87, +9%. Part of that is the recovery within the market that we are continuing to enjoy. I suppose just as equally important, it has been the continued strong cost control that we've deployed throughout the business in reaction to the pandemic that is helping us to report a strong margin for this first quarter at 21.9%, up from 19.1% last year. Next slide, please. When we break it down into our two reporting regions, geographical regions of Americas and Europe and Rest of World, we do see two slightly different pictures. Europe and Rest of World has had a better recovery during this first quarter, with sales in constant currency and excluding Allied Enterprises of 8% year-on-year, while the Americas is down 4% year-on-year. Once I've said that, I have to draw your attention to the book to bill ratio. In Europe and Rest of World, at the end of quarter four, that ratio was 117%, pretty much flat at 120% by the end of that first quarter, showing that the orders that we've been able to take, we've been able to pass through into the market in Europe and Rest of World. America is a slightly different story. Book to bill ratio at the end of quarter four was 102%. At the end of quarter one, it's 141. While the sales are down, the order intake that we've received during that first quarter in the Americas has been stronger and hopefully will help support and drive our quarter two results. Margins again, in both regions, pleasing. Americas is back to its normal 15% return on sales, and Europe and Rest of World is back at 22, both up on the first quarter of last year. Next slide, please. Q1 2021 results, cash flow and gearing. Our first quarter, we had a strong operating cash flow reported at SEK 73. We carried a little bit of extra inventory during this first quarter to help mitigate some of our supply chain issues that we faced. Again, a really pleasing performance. The net debt is the notable item that's moved. Minus SEK 90 in this first quarter, down from SEK 27 the first quarter of last year. A huge movement year-over-year explained pretty much predominantly by that pension remeasurement gains and into the discount rates. We watched the discount rates drop as we went through the pandemic last year. They bounced back up to a more normalized level in that first quarter. That has swung our pension liabilities by more than the 5% of equity that we usually judge as a reporting event. At 8%, we've had to adjust within the first quarter. That's taken our gearing ratio down to - 7% versus 2% in the previous quarter. Next slide, please. Quarter one results, just an analysis now of our cash flow from operating activities and working capital and net debt and gearing. As we've touched on, good performance overall, given some of the challenges that we faced during this first quarter. We still have our working capital at low levels. We're only 0.5% of sales. While our net debt and gearing, as we've touched on, has dropped to SEK -90, gearing ratio of - 7. Also important to state, to reinforce this robust financial position that we still enjoy, we have no external debt within the business, and our cash position that we have on the balance sheet at the end of the first quarter is SEK 578, pretty much in line with where we were this time last year at SEK 582 and up from SEK 505 from the end of last year. A good performance, strong margins, some headwinds with our supply chain that we have, but we've been able to convert that profit to cash, maintain our working capital at low levels, and still maintain a good, strong cash position taking us into the second quarter. Next slide, please. Okay. Thanks, Marcus. That brings us to the separator slide, talking about Concentric view on how Concentric sees Q2 2021. If we go to the next slide, we'll see the detail behind the outlook. Hopefully, we've guided you fairly well towards expectation. It is clear that the economic recovery is well underway. The COVID-19 vaccine rollout, without doubt, has helped us. Clearly, we think there is something of an increase in sales of end products like trucks and agricultural and construction equipment. We obviously do feel there is some attempt to restock the supply chain that was completely depleted during COVID. We exercise some form of gentle caution. As we've spoke about a couple of times during this presentation, the global supply chain is working very hard, and it feels like it's at its reasonable limits. Trying to find containers, trying to get onto shipping lines, basically trying to get capacity out of supply base is hard work. I compliment our team. I think our global team around the world has done a fantastic job to get parts, materials, timing, spaces on ships and freight, and to keep our customers moving. We keep a careful eye also onto India, as is much reported in the press. The latest wave of COVID is wreaking havoc in that country. Us and many other of our customers take a lot of products out of India. We're working very hard there and keeping a very close eye to make sure that we can keep managing that situation well enough. If we talk about the market indices, the indices are quite buoyant. The indices talk about the market full year will be up by 9%. Basically talking about that the recovery seen in Q1 2020 will continue across the entire 2021. As we've listened to some of our larger customers, not to try to emulate too much what they're saying, but it makes a lot of sense. Some of the supply constraints in Q1, which have meant sales went up, but we could have got higher without the constraints. Probably that feeds into a more balanced view that what we can't make in Q1 2021 will supplement the other 3 quarters of the year. The positive view, again, it's the crystal ball, but we can talk about the next quarter. We are expecting that the supply chain tension will remain, but we would like to think that during this quarter, there might be a rebalancing of that dynamic equilibrium, that the supply chain will try to catch up with demand. Some of the extreme measures that we have to do would start to ease back a little bit. If we talk about the demand for our engine and hydraulic products, again, we expect them to improve quarter-on-quarter. We've said many times before, and it is true in our world, we say that the engine customers are more to do with the leading indicator. They're earlier in the cycle. We see engines still strong, hydraulic products, construction and ag still catching up, still getting stronger. We expect the demand in North America to continue to improve during this quarter, particularly off-highway and industrial application for the reasons I just gave. There is a catch-up going on. Key points, the factual point for us, I guess. If you look at the level of orders we received in Q1, indicate basically the sales that we're going to have in the second quarter will be somewhat significantly stronger than the first quarter. Same rules apply. We are working like fury to get material into the factories and converting them. We're on a program of increasing the number of employees to match that demand, and that's going quite well. Positive outlook into Q2. The final comment, the financial position, as you've seen or heard from Marcus, the financial position for Concentric remains extremely solid, extremely strong, very busy. Again, it's working very busy on the electrification side of our life, and I'm sure that there's more to talk about in the coming quarters on the electrification. That comes to the end of our scripted part of the presentation. If we turn to the next slide, we'll basically come to that slide that asks for questions, and then we would like to open up if there are any questions out there that we would like to help with. Thank you. If you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. There'll be a brief pause while any questions are being registered. Our first question is from Mats Liss of Kepler Cheuvreux. Please go ahead. Yeah. Hi. Thank you. Can you hear? Yes. Good morning, Mats. Great to hear from you. Hi, Mats. Yeah, from the rainy Stockholm here, but good morning report. Yeah. Just a couple of questions there. First, you talked about the supply chain constraints and so on, and I guess you have had some extra costs during the quarter. Could you quantify them to some extent, or I mean, the margins are good, but could it sort of have a material impact? No. A good question, Mats, I think one that we're pleased to say that the cost that we are taking on, we are passing through into the end market. Those margins that we've reported are not suppressed in any way with additional freight cost or air freight cost that we're taking into the business. That is being passed on to the end customers. I guess we see a quite substantial increase in raw material costs like steel and so on. Is it something that you will feel during the second quarter or are able to pass those on also? Okay. Hi, Mats. In terms of all of our major customers, we have ongoing contracts where we have metal and material escalators. As metals, raw materials increase and we do have a contract that we would again pass those forward at cost. In reality, those escalators are reviewed every either typically six months, sometimes three months, sometimes 12 months. There may be a lag insofar as we are absolutely picking up those material cost increases. At the next point, it is the first of July, typically or first of January next year, those metal escalators are passed forward. There may be a lag, but we are protected in a very neutral way. Good. The order intake seems to be very strong, and you indicate that things in the second quarter looks to improve. I guess, should we expect all of the order book to be delivered? I mean, it's a quite large step change. I guess, I mean, we have this concern among customers that semiconductors are a problem, especially in the vehicle truck segment. Could it sort of affect this sales for you or you also indicated there are some sort of safety measures that try to restock the supply chain as well. Will that help you? Could you say something about that? I think there's a very high quality of conversation between Concentric and its customers. It is a fact that in terms of the orders received, that tension in the supply chain is absolutely constraining us to actually achieve what we might be able to achieve if that tension wasn't there. Again, it's the intimacy with our customers. We've got an awful lot closer to understand what the customer might term real needs. We know that they're trying to fill the distribution chain. We know that they can't satisfy all of their orders. The focus in it is how do we make sure that Concentric is that business that keeps the customer moving, even though we are struggling to get every order fulfilled. How do we make sure that Concentric strengthens its reputation as the solution provider that keeps the customer moving? I'm pleased to say, again, and compliments to the team, they've done a great job. We've got a building order bank. We'd like to shift more, but that will supplement what we do in Q2. We've got customers who have planned a great part of this to make sure that we are sending exactly what they need and sharing in the cost of those expedited expensive freight costs. Excellent. Just finally about your sort of progress in the electrification area. Do you feel that you are sort of gaining market share in that area? I mean, could you say something about competition? Okay. It is a very, very busy sector. Again, there is a timeline that applies to all of this as we try to indicate on highway first, inner city first. The opportunity spreads wider as we look at battery electric vehicles becoming hydrogen fuel cells, as we look at tractors, as we look at construction machines, as we look at energy storage and distribution. I will always remain very respectful of competition. There are some very good players out there, and a lot of those bigger players are focusing on passenger car electrification, which is about three years ahead of truck and tractor and construction. We are seeing typically the same type of competitors in the E-sector that we see in our conventional sector, very good players. Do I think we have total market share? Of course, we don't. Do I think we have a good market share? Absolutely, yes. Critical to this, Mats, is that it's our reputation. What is the signature of Concentric over many years? That is products that you will fit and forget, product that will work immediately out of the box and will deliver absolute reliability. As a lot of our OE customers who are typically quite conservative, and because they are constantly looking to protect their vehicles, that when they get to the market, they work well. That protectionism to make sure that the product they put out there is constant. What we've done is we've built that reputation very quickly, and I think we said in the past, our ambition was to produce product that would last for 30,000 hours. Since the launch of that product, we've seen now applications at 40,000 hours and 50,000 hours. I think our customers recognize that coming to Concentric, the product will work straight out of the box, will be fit and forget. I'm very pleased with our progress, and I think our engineering and sales teams are going further, farther, and wider, and spreading that very good message. Okay. Thank you very much. Thank you. Thank you. Just as a reminder, if you wish to ask a question, please press zero one on your telephone keypad. There'll be another brief pause while we have any further questions. Our next question is from Johann of Berenberg. Please go ahead. Good morning, gentlemen. Johann from Berenberg here, colleague of Matthijs. On your impressive margin improvement, could you tell us a little bit about how much was driven by lower, let's say, COVID costs, lower travel costs, less holidays taken, and net debt for, let's say, extra costs you took for protecting your employees? Yeah. Thanks for the question. Yes, it's down. I can't give you an absolute number on the call as to what it is. If you look at the numbers that we've got, we have got lower costs overall within our organization. The head count is down. As followers of Concentric will know, we reacted quite quickly to the pandemic last year. We put a SEK 20 million provision into the quarter two results, and during quarter three and quarter four, we did some restructuring of the business to take out head counts. We are starting to enjoy some of that lower cost base that is helping to boost our margin. Again, if you're a follower of Concentric, you'll have seen that we are typically in that range of margin of 20%-22% over the last couple of years. What we're starting to see is our margins normalize now to where we prefer them to be. Okay. Thank you. Maybe a follow-up on the e-pumps. Where is the operating margin in that segment? I guess it is below group average. Where do you expect it to reach, for example, group average, and what kind of volumes do you need to get there? Well, if we take the overall sort of what we call CB-1 contribution margins, the margins that we enjoy on the electrification business are broadly in line with the margins that we enjoy on the today business, which is pleasing. There is another aspect to that, which is we are obviously investing heavily into the ePump market, both for management time and with R&D. That probably means the bottom line at the moment is lower than what we enjoy on the rest of the business. We will see that come up over time as the volumes start to come in, and that's why we've given that guidance that the percentage of our sales will increase, and not linearly, over the next few years as more and more of those programs that we've won start to come production on stream. That will lift our bottom line on e-pumps. In terms of our contribution margins, yes, they are in line with the margins we enjoy today on our mechanical pumps. I think Marcus explained it quite well, and it's one of the challenges we have in the business communicating with investors. 15 press releases in a quite a short time individually because of the volumes on the EV is actually quite low. Individually, the end stack amount is not significant on its own. It is strategic what we're winning, but the numbers, yes, are not life-changing, which is why we keep pointing towards 2025, and this is where legislation really starts to bite in terms of how you measure and report CO2 emissions from fleets. It moves from a nice to do to a need to do. Again, as Marcus explained, I think we're up to now production line number three. We're looking at production line number four. It's the expected heavy investment cycle at the start of a significant change to the market. This is quite a certain historical movement, as we all know, from the diesel doesn't die, but electrification is going to be born and will grow quickly. Got it. Okay, thanks. On the type of contracts on your ePumps with the OEMs or other customers, are they different than from the conventional pumps? Are there any differences in it? In form, no. We would typically look at three- or four- or five-year contracts. The thing which is significant is clearly we've had to be quite aggressive on the costing. As Marcus said, the margins are okay to the business, but we have to look to the future, can see more volume coming. We, as a business, are very good at finding productivity, and what we're promising to our customers is productivity. We're quite aggressive pricing contracts. We're working with our suppliers on the same level to say we feel that margins are easily sustainable, but it's what Concentric does well on Concentric Business Excellence. We've set out the challenge. We've promised savings to customers, and we need to deliver them, and track record says that we will. Okay. Thank you very much. No, thank you for the questions. Thank you. There'll be another brief pause while we register any further questions. Oh, we have another question from Mats Liss from Kepler Cheuvreux. Please go ahead. Yeah. Hi. Thank you. Just a quick question about. You are in positive territory regarding the cash or negative regarding debt, and will this sort of change the share buyback and so on going forward? Do you feel it is more a temporary impact of the discount rate and so on? No, I don't think, to answer your very direct question on buybacks. No, we won't change the overall amount of what we do over the course of the year. We're probably unlikely to do any buybacks during the second quarter. We'll probably be selling shares to satisfy some of the LTI metrics that we need to do. We will probably be doing SEK 75 million a quarter during quarters three and quarters four to get back to the very typical SEK 150 million that we do over the course of a year. Yes, we'll continue on as we've done before, but unlikely to see any own shares being purchased in the second quarter. Okay. Thank you. Okay. Thanks, Mats. Thank you. There are no further questions at this time, so I'll hand back over to our speakers. Okay. Thank you very much. Again, thanks everyone who's gone on to listen to the call, asking the questions. Again, we're looking for yet a more exciting Q2, and we look forward to the next presentation. Thanks, everyone. Have a good day and good rest of week. Thanks, everyone. Bye now. Bye-bye. This now concludes our conference call. Thank you all for attending. You may now disconnect your line.