Hello, and welcome to Dustin Group Audiocast with Teleconference Q3 2022. Throughout the call, all participants will be in a listen-only mode, and afterwards, there will be a question and answer session. Just to remind you, this conference call is being recorded. Today, I'm pleased to present CEO Thomas Ekman. Please begin the meeting. Great. Thank you very much, and good morning and most welcome, everyone, to our conference call, our third quarter presentation. Both welcome to our existing and potential new shareholders, and I hope you are all well. Here on our side of the call is myself, Thomas Ekman, and we have Johan Karlsson, CFO, also in the room, and Fredrik Sätterström, our head of IR as well. Good. Today we present our third quarter results for our fiscal year 2021-2022, and I think we can proceed directly into the presentation. For your reference, we have Dustin at a glance on slide two, but I think we can move directly to slide three for the financial highlights to see how we are improving and performing now during Q3. We report a very robust organic sales growth of almost 20% for the third quarter, mainly driven by strong demand for hardware and to a certain extent, price increases. Our size and our active work in purchasing has created a high degree of availability for our customers in a market that has been affected in various ways by disruptions in supply chains and an overall unstable geopolitical environment. Zooming in on our market, the availability for standard hardware, such as, computers and mobile phones, is normalizing right now, while the more advanced hardware like infrastructure, network equipment, and AV equipment, for example, is still scarce. The fact that we see a normalized availability on standard is good, given that the vendors and manufacturers logically now can produce more of advanced hardware, which in turn is good for the balance of our product mix. Still, though, there are disruptions in supply chains that create a certain unpredictability, of course, in delivery. Total net sales were SEK 5.894 billion, up 83.4% versus last year on reported level. The organic growth, as said, was 19.7%, of which SMB showed a very positive 14.2% and LCP had a very good 30.7%. B2C came in at a - 33.6% as an effect of much less campaigning there. Our SMB segment performed strongly in the quarter, and our LCP segment had a very strong growth, while slightly lower margins due to high share of sales of low margin standard hardware, such as computers and mobile phones. Overall, strong organic growth, which shows not only good underlying demand, but also, of course, our capability to make use of it and deliver, and we have clearly strengthened our position in the markets during the quarter. Gross profit was SEK 842 million compared to last year's SEK 557 million. That give us a gross margin of 14.3%. The change versus last year is mainly attributable to an altered mix with higher share of sales within LCP related to the acquisition of Centralpoint, together with the high organic growth in LCP. Our adjusted EBITDA increased with 27% to SEK 201 million versus last year's SEK 158 million, and that gave us the adjusted EBITDA margin at 3.4% for the quarter versus last year's 4.9%. The EBITDA margin was obviously affected by the current customer mix towards LCP and product mix of lower margin products within LCP. The integration of rebranding of acquired operations are proceeding as planned, gave us some extra cost in the quarter for the rebranding and the marketing. Everything in Benelux is now Dustin, which is very good, and that is, of course, strengthening our position for continued profitable growth in our markets with increased clarity, with increased efficiency, and with increased impact. Items affecting comparability was - SEK 90 million, and that's consequently giving us an EBIT of SEK 140 million compared to last year's SEK 114 million. EPS, earnings per share, was 0.75 SEK per share versus last year's 0.57. Cash flow from operating activities was - SEK 277 million versus last year's - SEK 93 million during the quarter. As EBIT improved, it could not fully offset an increase in tied-up working capital. Johan will come back on that later on in the presentation to give you details on that. Our leverage at the end of the quarter was 3.7 versus 3.4 for full last year as the increased inventory levels to prepare for large public roll-ups during Q4 and also to mitigate for the ongoing uncertainties in the supply chain. Apart from an intense quarter in general, from an operational perspective, we have continued the integration work with our Benelux companies and clear steps have really been taken in that perspective. Johan, now you can take us through the financials for our different segments. Yes. Let's move to slide four and the SMB segment in some more detail. Sales for the quarter ended at SEK 1,862 million, which was an increase of 24.1% over last year, representing an organic growth of 14.2%. Another quarter with strong sales growth despite the turbulent environment and the challenge change with the global supply chain. Hardware sales continues to be strong with good demand among especially large and medium-sized customers. Price increases have affected sales volume for the month positively with no significant negative impact on demand. On the services side, the standardized recurring services developed well in line with the overall growth of the segment, while consulting continues to be weak as we are strategically moving away from consulting. Shortage of infrastructure and AV products also affected the services sales negatively. From a geographical perspective, sales was strongest in the Netherlands, Finland and Norway. Segment results for the quarter ended at SEK 185 million, up 15.2% over last year, with a segment margin of 10.0% compared to last year's 10.7%. High share of sales coming from computers and mobile phones affected the margins negatively, while a positive sales development in private label products compensated positively. As Thomas mentioned, we continued the integration in the Benelux during the quarter with a change of the brand to Dustin for all entities. This is especially important for SMB, where a lot of the web traffic is generated by a strong brand. As we're now using the same brand in the whole group, we can benefit from the Nordic experience to a greater extent in the Benelux. All in all, a very strong sales performance in SMB for the quarter in very turbulent times. We continue on slide five and look at LCP. Sales in LCP was SEK 3,921 million in the quarter, an increase of 152.9%, of which 30.7% was organic. During the quarter, we saw very strong sales increase in both public sector and large corporates. As for SMB, price increases had positive effect on sales during the quarter, but also good supply of standard hardware such as computers and mobile phones affected sales positively. Also, software sales grew rapidly during the quarter as we are gaining ground both in the Benelux and in the Nordics. From a geography perspective, growth was strongest in Denmark, Norway and Sweden. Segment margin was at 6.4% in line with Q2, but down from 7.1% last year. The good supply of computers and mobile phones in the quarter was mainly aimed towards our largest public and corporate customers, affecting the margins negatively compared to last year. This was also the case for the software sale. The price increases during the quarter had a slightly negative effect on margins as the subsequent price increase to customers in some cases have some time delay. Segment result was up from last year's SEK 110 million to SEK 250 million, an increase of 127%. All in all, a very strong quarter by LCP, where we managed to supply our customers' demand in the best possible way. We then move to slide six and a short look at the B2C segment. The B2C sales in B2C was down by 31.7% to SEK 111 million. The main reason for the lower sales was the reduction in price campaigns as the supply of products was still scarce and all focus on delivery was put on SMB, where margins are higher. Segment margin continues to be high at 9.4% due to the lack of price campaigns affecting margins negatively. Segment result was SEK 11 million, down from SEK 15 million last year. We then continue to slide seven and net working capital. Net working capital was SEK 4 million compared to last year's -SEK 293 million. The higher net working capital is mainly attributed to the Benelux region, where we are in progress of changing the customer offerings and the working method towards the Nordic one. If we look at the details of working capital, inventory in the quarter was SEK 1,470 million, up SEK 210 million from previous quarter and SEK 862 million compared to last year. The main reason for the increase over last year was the inclusion of Centralpoint adding SEK 592 million and the higher purchase volumes to reduce the risk with shortages during summer where large LCP rollouts occur. Accounts receivable was up SEK 1,484 million, mainly as a result of Centralpoint adding SEK 1,048 million and higher business volumes. In accounts payable, which was SEK 3,665 million, slightly more than SEK 1 billion above last year. The main difference was the addition of Centralpoint. In total, we saw slightly higher net working capital this quarter, mainly due to stock built up to cover large rollouts in LCP. We continue to believe that our target range of SEK -100 million-SEK -200 million is realistic. Leverage that is net debt in relation to rolling 12-month EBITDA at the end of Q3 was 3.7, where our target is to stay in the range of 2-3. The higher net working capital and currency differences affected the number upwards. Moving on to slide eight and cash flow. Cash flow for the quarter was -SEK 380 million compared to last year's -SEK 167 million. Looking at the parts, we can see that cash flow from operating activities before change in net working capital was SEK 184 million compared to last year's SEK 136 million, mainly as a result of better operating results coming from the acquisition of Centralpoint. Change in net working capital was SEK -461 million compared to last year's SEK -228 million. Main difference being higher inventory to avoid uncertainties for the larger rollouts during summer. Cash flow from investment activities was SEK -52 million compared to last year's SEK -24 million, where the majority comes from CapEx. Cash flow from financing activities was SEK -51 million, in line with last year, and the main component there being the amortization of lease debt. We look at the investments. They amounted to SEK 67 million in the quarter, compared to last year's SEK 64 million. CapEx related to IT development amounted to SEK 41 million. That is SEK 31 million higher than last year, and it's mainly coming from project-related IT investment in Centralpoint, where we are moving the ERP system to the cloud. Investment in tangible and intangible assets decreased from SEK 18 million last year to SEK 9 million this year. Investment in assets related to service delivery was SEK 17 million, which is down from SEK 26 million last year. All in all, SEK 52 million out of the SEK 67 million in CapEx was affecting cash flow. The others were changes in lease or rent contracts. With that, moving back to Thomas. Thank you, Johan. Over to slide number nine, and let's do a little detail in our EBITDA margin development here. As you know, as we've been through before, our target, our long-term target is to be between 5%-6%, and we are not there yet, but we are on our way. The challenging turmoil in the market obviously affects us as everybody else. To give you some flavor to it, you can see the graph on the left-hand side of the slide here, showing the development in Q3 last year as a reference. What has affected the margin in Q3 now is the customer mix or the segment mix with the higher share of sales of SMB, given the acquisition of Centralpoint. That currently affects the margin with roughly 0.4%. Also strong sales to public and with standard hardware affecting also the margin with about 0.5%. We are transforming, as you know, and we are building out our SMB position in the Benelux to balance the share of sales. We're of course also growing the SMB part in the Nordics, so even more balanced share of sales, which in turn is improving the margin. However, we are not there yet. On SMB, in general, we also have had this quarter a high share of standard hardware and less of infrastructure, network, and AV equipment as an effect of the scarce supply in the world, and that affects the EBITDA margin with 0.2%. Last in this graph, as you can see, affecting with approximately 0.4% is the increased marketing distribution cost in the quarter due to rebranding to Dustin in Benelux. There are still irregularities in supplies caused by the disruptions in supply chains. It is somewhat difficult to assess the short term effects, the immediate short term effects from both lockdowns in China as well as the Russian invasion of Ukraine. I can of course assure you that we for sure have our eyes on the margins to continue to improve that given the circumstances we have in the world. I also now think, Johan, we can do an update also on the some accounting principles. Yes. Let's move to slide 10 just to be clear on the changes in accounting policies coming from the effect of the accounting board's decision on how to recognize revenue from software sales. This means that part of Dustin's software sales will be recognized on a net basis rather than on a gross basis. That means that it will be 100% margin on that sales. As you can see in the graph on the left-hand side, that had an effect in this quarter of SEK 278 million less sales compared to the old way of reporting. It has no impact on the EBITA or gross profit number, meaning that the margin increase is 0.1% on EBITA level coming from this change in accounting procedures. The change has not resulted in any changes in our financial targets. Yes. Good. Then we can continue to slide 11 to do an update. As you know, we update on our 2030 commitments regularly or quarterly. In Q3 now, we increased our share of circular revenue to 23.6%, which is really good, and we have now included all entities in the numbers. As you might know, our target is to reach 100% of circular revenue until 2030. You can see our also long-term targets there on the left-hand side on the graph with zero CO2, 100% circular revenue, and 100 actions to improve social equality. Good development there. So far this year, we have also taken back 296,000 products. Also strong development and a good number as an effect of improved work both in the Nordics as well as in the Benelux. We now can include that very clearly in our offering, and that we see a strong demand for that also increasing from the public side, but also from the large corporate side. We have also launched our carbon calculator during the third quarter to help our companies and customers to get an overview of their climate footprint of their IT products and how to reduce it. I would urge you all to go into our website and try it out and see what you can do to reduce your own carbon footprint and how to act on that. All in all, we work hard to fulfill our 2030 commitment. Before going into Q&A, let me just sum up our third quarter results on slide 12. Net sales grew with 83.4% to SEK 5.894 billion, where organic growth for the group was 19.7%, with SMB at a strong 14.2%, LCP at a very strong 30.7%, and B2C at -33.6%. Gross profit, SEK 842 million versus last year's SEK 557 million, and gross margin came in at 14.3% versus 17.3% last year. A change in sales mix with a higher share of LCP, as we've been through, and vast deliveries in standard hardware is behind the change in gross margin. Adjusted EBITDA increased 27% and came in at SEK 201 million, giving us an EBITDA margin for the quarter at 3.4%. Reasons for that is of course due to the flow through of the reasons for dropping gross margin and some of the extra costs for marketing and distribution in the quarter for rebranding in Benelux. EBIT at SEK 140 million, an increase from last year's SEK 140 million, and EPS at 0.75 versus last year's 0.78. Cash flow from operating activities at SEK -277 million and leverage ended for the quarter at 3.7 as an effect of changes in net working capital. All in all, robust growth in the quarter with the mixed effects impacting the margin. The pandemic is still present over the world, teaching us a lot, not least the new way of working. The continued escalation of the war in Ukraine also puts pressure, and we sincerely hope for an end to that. The market trends continue to accelerate with distinct changes in customer behavior. The IT service demand is there. There is an increased demand, for instance, availability online, as well as, security, mobility, and remote management. Security is obviously a big topic at the moment, and will continue to be given the overall uncertainty in the world. We have extensive experience and knowledge and can serve our customers in all our markets. For us, the last years has really meant that our position is clearly strengthened and shows that the business model we have is very robust. In short, we are very well positioned. I am, as always, very proud of everyone at Dustin Group for doing their utmost every day to deliver a great customer experience and driving our competitive edge now when we are also exporting our SMB model to new territories in the Benelux. With the rebranding done now in Benelux and the continued integration work, we have taken clear steps this quarter to build one Dustin with one brand, one culture, one platform, and a unified offering in all our markets. That's good progress on that. With that, Johan, I think we can conclude our presentation and are happy to take any questions you might have. Operator. 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. Our first question comes from the line of Daniel Thorsson from ABG. Please go ahead. Yes. Hi. Thank you very much. My first question is that I'm a little bit curious about the strong organic growth in the quarter here. Do you also see a solid organic growth in the start of Q4 as well? Or what's the latest development you have seen post Q3, which obviously ended up very strong here? Yeah, we can continue to see. I mean, there are signs of demand that it continue to be. Yeah. It continues as it has, we can say. Okay. What's your pipeline in LCP? Because that has been the main driver of organic growth in the past few quarters here. Do you have a strong pipeline in Q4 and in Q1 as well? Yeah. I think we are not significantly higher for the, let's say Q4 when it comes to pipeline. What has happened is that the order book is quite big, but that is mainly because customers are placing order further away. We have a lot of orders for, let's say, January and February already. Yeah. Okay. The order book is really a lot bigger compared to what it used to be two years ago. It's mainly coming from the fact that the time period in the order book is longer. I see. Okay. That's helpful. A second one on product mix. You say that this is characterized by your lower margin products and standardized hardware and software. What type of products do you have the highest margins in? And do you see any signs of these trends coming back, and when may they come back? I think, yes. I mean, what we sell is, of course, the traditional mix is that we sell a lot of PCs, and we sell a lot of mobile phones and peripherals around that, but then we also sell a lot of advanced hardware or what we call advanced hardware, which is typically a higher margin. That is network products for networks. It could be infrastructure products, and it could be, for example, AV equipment. Those products has been scarce in order. There has been disruption in that, mainly due to the reasons that the larger manufacturers have focused on producing PCs, given the strong demand that has been during the pandemic for moving on to laptops and PCs. It has shifted there during the pandemic. Now we see that, as you said here in the call also, the production or the availability of standard hardware is coming sort of normalizing a bit, which logically then can make the manufacturers starting to produce more of the advanced hardware. Then of course, there's still disruptions with the lockdowns in China and the war and so forth. Still the logic here says that it's. Also what we hear from manufacturers is that they can more focus on producing more advanced products, which of course is good for our product mix. Okay. That makes sense. Has this been a supply problem for you with a higher margin and advanced products rather than a demand problem? It's not that demand is lower than before, it's just that you haven't- No. been able to supply those products. Rather the opposite, I would say. I mean, the demand is there and then it is supply, it's a supply issue. Yeah. I see. Okay. Excellent. My final question is around the leverage here. It's a bit above the target range, and soon we are coming to dividend season for you, where you target a pretty high payout ratio as usual. How should we think about deleverage and also your capability to do acquisitions ahead? You have a tradition to do lots of bolt-ons. How should we think about that? I think the cash generation is still very good and we see some fluctuations, of course, becoming obvious when you look at working capital effects on the leverage number. We don't see any change in the cash generation ability and by that the model that we have used for the last six, seven years and with the fact of dividend and the leverage has worked and served us well, and we believe that will continue. Obviously, with the integration of such a big entity as the Centralpoint organization and some of the Vincere companies that we acquired two years ago. With that work ongoing, I think we will be a little bit restrictive in adding further acquisitions in any of the regions actually in the near coming future. I mean, if there is a good opportunity, we see it, we might consider it, but I think it would be relatively restricted. Okay. That's more of a management thing rather than the financial position in your view? Yes. It's clearly a management thing because we need to focus on the integration and the launch of SMB in the Benelux. That is of utmost important for our, let's say, future development. Yeah, it is. I mean, the whole idea for us exporting ourselves to new markets is to export our SMB online model, because as you have seen before, our playbook has been to move to another country by acquiring typically an LTV play because that is what is available. Rather apart from the bolt-ons that we can provide from the service part. The focus on that is of course to continue to build out the SMB online model in that and alongside growing LCP. The reason for exporting us is to build out the SMB online model. Excellent. Thank you very much. Thank you. Okay. The next question comes from the line of Mikael Laséen from Carnegie. Please go ahead. Okay, good morning. A few questions here. First of all, continuing on this product mix question. Can you explain the PC mobile phone mix? How much that part contributed to your sales in Q3 in the SMB segment compared to Q3 last year? We get an understanding of the magnitude of the advanced versus more standard PC mobile phone mix. Yeah. You could say that about, I mean, two-thirds are related to PCs and accessories to PCs and mobile phones in the product mix. That has changed in, let's say, I think double-digit numbers in change of share. That in combination. Actually, it is a combination of higher share of PCs and mobile phones, but also, let's say, prioritization from the manufacturers to give products to more larger customers. That means either larger public institutions or larger corporates. Obviously these customers might not be the ones that we have the highest margin on. In combination with more PCs and mobile phones, it's also sales to, let's say, less profitable customers, particularly in this quarter. That affects the overall margin in that combination. Mm-hmm. Okay. You can see that happens also in SMB. As you could see, we commented a bit on that the larger customers in SMB also performed better this quarter, and that is also an effect of HP and Dell and Lenovo wanting to give their most important customers a share of what they produce. Okay. Two-thirds are roughly with PC accessories and mobile phones. Yeah. -normally. Yeah. And now it's... Is it, uh, 75? It's a little bit less normally, and now it's a little bit more. Okay. You get the impression that it's a significant mix change that you have seen year-on-year. It's basically 10 percentage points, roughly. Yeah. Yes, exactly. Yeah. Okay. Got it. When do you expect this to normalize? Are you in the hands of the OEM side and supply? You just deliver what is coming in or what you see in terms of demand on your order book, and so when this could normalize? What do you expect? I think, I mean, following also what we commented on Daniel Thorsson's question there is also that we see a normalization of PCs coming from that there are more PCs available in the world in such, which of course is good, I said, because then the demand for PCs is still there, but there is more supply, which can in turn make the manufacturers produce more of advanced hardware, which then in turn is good for our product mix of course, because we have a strong demand in it, but still there has been a scarcity of supply there on more advanced hardware. We see a normalizing market, and that can come from several effects of course, given how the consumer end of the market that affects us not so much as you know, given our small portion of consumer sales. But let's see how the demand develops on that given inflation, given interest rates and so. But there's still and that can sort of provide more supply of standard hardware to the market in general and especially then to B2B. We have Okay. It's good for us that that sort of supplies on the basic and standard hardware is coming more to a normal position. Even though we have benefited. Okay. Of course, a lot from the growth of that, given that we can take on large quantities of that. Still I- How is this impacting the price situation in the market in the Nordic region, for example? You mentioned that you were supported by price increases. But Yeah. If you have more supply, it typically leads to a bit sort of less favorable situation for companies maybe having access already earlier. Yeah. I think you should count between 3% and 5% of price increases in the quarter now. That of course is, I mean, very interesting for everyone, I think, to see how that will continue to develop, given that if there comes more supply, then typically, at least when we went to school, then that typically puts down the prices. That should happen here as well. That, as you know, it has some effect for us. Typically, we can on a general level, on a high level, there's a flow through of pricing from us towards our customers. We are not that much affected of changes in pricing given that the prices in our product is fairly standardized. Do you see any price pressure in the market, increased competition, in the Nordic region and in the Netherlands? No, not really price pressure yet. We don't. I think we are, I mean, we are moving faster than we did many years ago when it comes to movements in market and how inflation rates develop and pricing, prices develop. We keep a close eye on that, but so far, no. All right. Thanks. Yeah, maybe two more, if I may. Sure. It's about the SMB segment margin. I think a year ago or so, you moved Vincere's LCP sales from that segment to the SMB segment, and also the central function cost, and that supported the margin. Now the margin is unchanged year-over-year, and the central function cost is up. So how does that work? Well, come again. Say again. Didn't you move Vincere from only being reported in the SMB segment? You split that revenue stream into the LCP part and the SMB part, and also moved the Vincere central function cost to central function cost. That had a positive effect on the SMB margin and increased the central functions cost. We really can't see any positive margin effect from this at this point. Just wondering if you can explain this, if this still is impacting the SMB margin positively, or if it's sort of neutral or a wash. Well, I mean, the move from segment cost to central cost obviously has a positive effect on segment margin. The customer moves, it's a little bit more, let's say, depending on the quarter, how it affects. You can see that we wrote in the report that it has a negative effect with 0.1% this quarter on SMB. Which means that the effect of the customer moves was bigger than - 0.1, because the cost move is always positive. Mm-hmm. Okay. Yeah. My final one is about the seasonality in your margins, if you can say something about that. How we should think about Q4 and the coming couple of quarters, Q1, Q2? Yeah. Previously, if you would go back in history, you would see that Q4 had a lower margin in Dustin because the LCP share was stronger during Q4 because of the rollouts in LCP. This, I think has changed a little bit now because we've had such a strong quarters on LCP in Q2 and Q3. I would assume that mix is not as, or the seasonality is not as strong as we've seen historically coming from, let's say, LCP increasing in share during Q4. I think it would be a little bit less than the normal. There is still a seasonality towards more LCP during the summer, but I think that difference will be smaller this year compared to other years. Okay. Got it. Makes sense. Thanks. Thank you. Good. Thank you. Thank you. We have one final question from Klas Danielsson from Nordea. Please go ahead. Thank you. Good morning, and thank you for taking my question. Most answered already. Just a quick follow-up on the kind of order backlog. Since you're saying it's increasing SEK 2.5 billion, I guess that's on a year-on-year basis. Could you maybe kind of give us some flavor on the quarter-over-quarter development from Q3 to Q4 or Q2 rather? Yeah. I think we have seen a stabilization of the backlog in the last, I would say one to two quarters. It's clearly above last year, but we don't see the expansion of the backlog as obvious as we did in, let's say two quarters ago, where it was really growing. I think that has to do with what Thomas said before, that the market is getting more and more comfortable with the fact of supply of, let's say, standard hardware is getting better and better. Then you don't have to order stuff for, let's say, next calendar year already now. You can relax a little bit. If you take the last three quarters, I would say the backlog is give or take the same quarter by quarter. Okay. That's very good. Could you maybe help us also kind of understand what's the absolute level of the order backlog at this point? SEK 2.5 billion, give or take. Yeah. Okay. It is SEK 2.5 billion in total. Yeah. That's not the absolute increase. Yeah. Okay. That's very good. No, thank you for me. That was all. Good. Thank you very much. As there are no further questions, I'll hand it back to the speakers. Great. Thank you very much, everyone, for listening in, also you on the web call. Please just get back if any more questions, during the day, or whenever. We are happy to answer everything there, and we continue to work our way forward in the world. Great. Thank you very much, and have a great day. Thank you. Thank you. Bye-bye. This concludes our conference call. Thank you all for attending. You may now disconnect your lines. Thank you.