Welcome to Embellence Group's quarter 3 report 2022. Throughout the call, all participants will be in listen only mode, and afterwards there'll be a question and answer session. If you wish to ask a question, please press zero one on your telephone keypad. Today I'm pleased to present CEO Olle Svensk and CFO Pär Ihrskog. Please begin your meeting. Thank you, welcome everyone to the quarterly report number 3 of this year, 2022 for Embellence Group. Presenting today will be Group CFO Pär Ihrskog and myself, Olle Svensk. Starting a little bit about ourselves. You know, repetition is the mother of learning. Embellence Group, we acquire, own, and develop strong brands in wallpaper, textiles, rugs, and other interior decoration. We want to be a leading house of brands in interior decoration with a certain focus on developing and building strong premium and luxury brands in interior decoration categories. We also want to be one of the driving forces in an ever-changing market around the world. Moving on to some highlights of the quarter then. We deliver strong quarter in challenging times that we are now in, and we are on track to build a company that can post healthy earnings regardless of economic conditions. Our net sales reached SEK 169 million, which is up 24.7%. The EBITDA reached SEK 21 million, and the adjusted EBITDA actually reached SEK 23.4 million if we look, take into consideration the one-off items we have for restructuring costs and acquisition costs. SEK 23.4 million, which is way ahead of last year. When we look at the organic currency adjusted growth, it was 0.2%, so a little bit above last year. But considering the situation we have with Russia, where we last year sold for SEK 3 million, we are pretty happy with this level. The sales growth that was driven by the acquisition of Artscape that took place in March, but also by strong organic growth in rest of the world, in U.S. and Canada and Australia. Moreover, in the quarter, we have had a firm eye on cash flow and actually prioritized cash flow over financial result. What I mean with this, that we have not built up inventory, but we want to have healthy inventory levels and also of course, reduce our net debt. The price increases that we executed earlier this year, that protects our top line and mitigates the softer demand that we see in several markets. Last but not least, it must be mentioned the cost pressure that we are under in the Nordic region, and that you can see in our report. That will require additional measures, but I will have to come back with what and how we will do it later on. Over to you, Pär. Okay. Some more details on the financial key figures. Our net sales ended up at SEK 169 million, which is an increase of 24.7% compared to quarter three last year. Our EBITDA, SEK 21 million, and our EBITDA margin of 12.4%, which should be compared to SEK 18.4 million last year and an EBITDA margin of 13.5%. Our adjusted EBITDA, SEK 23.4 million versus SEK 18.4 million last year, quarter three, and then our adjusted EBITDA margin, 13.8% versus 13.6%. And then also for net profit for the period was quite strong, SEK 20.7 million compared to SEK 12.2 million. In the net profit for the period, we had a positive impact by the write-off of the estimated earn-out of SEK 16.9 million related to the acquisition of Artscape. Also negatively impacted by the unrealized exchange rate losses amounting to SEK -7.9 million, which is related to our interest-bearing liabilities in U.S. dollar. At the end, operating cash flow ended up at SEK 28.2 million compared to SEK 16.1 million last year, quarter three. The main reason or first of all, we have a underlying better result than last quarter three, but also the positive impact from the working capital, especially inventories. If you look at the graph to the left, net sales, quarter three, as we said, ended up in SEK 169 million. If you look at the rolling twelve, the blue line, we have a steady growth and year to date, our sales growth was 14.9%. Okay, on the right side, our adjusted EBITDA in millions and also EBITDA margin, where we can see that we have slightly lower EBITDA in millions SEK compared to quarter two, but slightly better EBITDA margin. Ended up at 13.8 versus 12.8 last quarter and 13.6 quarter three last year. Our share of the premium sales in quarter three ended up at 67%. Year to date, we are at 64%. The growth in premium sales is influenced by the acquisition of Artscape. If we split up the sales development, you can see that SEK 31.1 million or 33% is coming from the acquisition of Artscape and almost flat organics, slightly positive, SEK 0.3 million or 0.2% organic growth. We also have a positive currency effect of SEK 2.1 million, which is 1.6%. Okay. If we have a look at the net debt and the net debt/EBITDA ratio rolling twelve, we can see that since Q1, where we acquired Artscape, we have an increase in the net debt. Since then we have gradually reduced the net debt, and we are now at 2.0 net debt. You should keep in mind also that our net debt is influenced by our US dollar financing. We have some negative impacts on our total net debt here, which is slowing down the decrease or the speed of the decrease of the curve. If when we calculate the pro forma net debt EBITDA where we include the 12-month earnings from Artscape, we end up at 1.7 in that ratio. Okay, let's have a closer look at our different segments, which is by region. We start with the Nordics. Our net sales first of all Nordic represent nowadays 38% of our total sales, which is quite lower than previous quarter or quarter three last year, when it was 47%, and that is related to the acquisition of Artscape. We now have a more balanced split between the regions when it comes to our sales. Our net sales was rather flat versus last year, SEK 64.3 million versus SEK 64 million in the Nordic region. Our earnings were down SEK 5.7 million compared to SEK 7.7 million, and that is related to lower cost absorption as a result of lower production volumes in Sweden, production in Sweden, and also related to some increased cost related to market activities compared to Q3 last year. Move on to Europe. In Europe, the share is 32%, which is more or less in line with last year, 33%. Our net sales was slightly lower than last Q3, so SEK 53.6 million versus SEK 54.3 million. We had strong sales in UK and Italy, two very important markets for us, but we saw weaker demand or sales in Germany. Our EBITDA ended up at SEK 9.2 despite the lower sales, and that is driven by favorable sales mix. Our EBITDA margin, adjusted EBITDA margin, ended up at 7% compared to 18% quarter three last year. Seventeen. Seventeen. Yes. Then let's look at rest of the world. Here, the share is 30%, and quarter three last year it was 13.1%. So we have increased the share related to Artscape acquisition. Sales ended up at SEK 51.1 million compared to SEK 17.2 million. This is of course related to the acquisition of Artscape, but we also have a solid organic growth in rest of the world. Our EBITDA, adjusted EBITDA, followed the sales growth, so SEK 8.5 million compared to SEK 2.4 million, and our margin stays at a level of 17% compared to 17% quarter three last year. Then finally, if you look at our financial targets and the follow-up where we are, our sales growth target is to reach SEK 1.2 billion end of 2025. Quarter three, our sales growth was 24.7%, and after the first nine months this year, we have a sales growth of 14.9%. This is our annual average growth rate to reach our target needs to be 15%. We are close, quite close to our theoretical yearly target. Of course, that growth can go quicker some years if we have acquisitions and slightly lower if we don't acquire companies certain year or certain period. When it comes to our EBITDA margin, it should be, the target is 15%. In Q3, we were at 12.4%. After nine months, we were at 13.6, so slightly below on that target. On our leverage, net debt divided by EBITDA, as I presented before, we ended up at 2.0, and that's when we include our IFRS effects. If we exclude that, it's 1.6. Our target is defined including IFRS effects. Finally, our dividend policy is to pay out between 30%-50% of the profit for the period. In early this year, we made a dividend of SEK 0.8 krona per share related to the earnings 2021. Over to you, Olle. Thank you. To sum up then, we are delivering a strong quarter in these challenging times, and it's actually in times like this where we have the chance to prove that we are developing into a quality company. Sales growth in the quarter, fueled by the acquisition of Artscape, but also strong numbers, strong growth, organic growth in the rest of the world region. As Pär mentioned, sales per region is becoming increasingly more balanced, which is healthy for us and is perfectly in line with our long-term strategy as well. The cost pressure in Nordic will require additional measures, and I'm not happy, but it is a reflection of the business model we have, where we have more fixed cost base in the Nordic. We delivered solid cash flow and reduced our net debt a bit. Last but not least, this industry is a passion-driven industry. If there is one thing you should remember after this quarter, we are on our way to build a high-quality company fueled by passion but also professionalism, and we'll be able to deliver healthy numbers even in economic period like this. Thank you. I think we then move over to Q&A if there are any questions out there. Thank you. If you 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. The first question comes from Harry Rindahi from Handelsbanken. Please go ahead. Your line is now open. Yeah. Thank you very much. I have a few. This decision to not build inventory and the fact that the contribution for working capital was positive in the third quarter. What does that say about the outlook for the fourth quarter, which typically is seasonally strong quarter, but of course, this seasonality will probably be more muted at this point. Should we still expect there to be some seasonality, some seasonal boost in the fourth quarter? That's my first question. Okay. I think that was many questions in one, but I will try to divide it. First of all, I mean, we're working to have healthy inventory levels, and I would say that our inventory levels now are better balanced than they were a year ago, first of all. Then we, you know, you know that we are mainly referring here to our wallpaper production facility in Borås, and we have that ourselves, so our reaction time is quick. But we are also undergoing Boråstapeter is undergoing since one and a half year work to reduce the SKUs, so we don't have as many active SKUs. That is also impacting this fact, so. You ask about the fourth quarter, as well. I mean, overall, I don't see any reasons why the profile or the seasonality would change over time or in this situation either. I don't know if I answer your question, but this is as much as I can give. It is a very difficult period to make predictions right now. We have good, healthy inventory levels, and we will continue to do that, but we also have quick reaction and can produce when demand picks up or changes. All right. That's helpful. About this one-off costs that you had in the third quarter, I'm sorry if I missed the details around those, but, can you give a bit more detail? Yeah around what those costs were and then this cost review that you mentioned going forward? I guess that's also related to Boråstapeter, and any additional color there would also be helpful. Yeah. I can start with the one-off. We only have two categories that we book as one-off cost, and that is acquisition cost and restructuring cost, and that is what it is. It's split between those two and the acquisition is little bit more than half of it, and the restructuring cost is mainly related to our Nordic segment. Your second question there, please can you repeat that because I can answer as specific as I can or as possible. No, it wasn't a very specific question. It was all about this, you mentioned that you are reviewing costs, I guess, related to the Nordic operations or any. Correct additional color that you can give in that respect. No, not more than I can confirm what your guess that it's related to the Nordic region and that we need to have a more flexible or a variable cost base there. What it actually means, we will have to come back to. You have and others have, of course, noted that in this period now we have, you know, three regions, Nordic delivering 9%, and the two others are almost double or around 17%. We need to bring Nordic up to a better level there. We have to balance now. I mean, we are offsetting sales with or we have done that with price increases, but we also need to address the cost better or more, I would say, than we have now up to now. Okay. That's helpful because that was my next question, which was that, 'cause the difference between Nordics, of course, as you say, is that you have higher cost base in Nordics, but you also have a much higher exposure to value segment, so. Yes. If you just read the numbers, it would seem that premium is still doing well because rest of the world and Europe are reporting good profitability, but Nordics, margin's going down. The increased competition, is that mainly in the value segment, or is that more of a Nordic thing? I agree with you that it's the balance of that it's much less premium that we have in the Nordics. I don't see really competition increasing, but I wouldn't say so that that's the driving force. I mean, it is a softer market, and we are mitigating it. We have been mitigating it with price increases. I don't have any, you know, insights that we would be losing market share, but the demand is lower. All right. A final question- Sorry, one more thing. Another thing that we see across the board, I would say, is customers are destocking as well. Sure. That we can see. Anything worth mentioning between UK and Italy? Any differences there between those two countries? Both of them are growing double digit for us. I would say that we are doing a good job, but it's surprisingly strong, I would say. It is the brands that you might expect. It's Wall&decò and Cole & Son contributing to that. It is more skewed to the contract hospitality sales and a bit less activity in the dealer side and retail sales, basically. Overall, our colleagues are doing a really good job to catch the market that is out there. Good. Finally, the net debt to EBITDA at 2x, roughly the level where it has been for the past few quarters. Now since money is no longer free, I guess investors would rather see, at least for the upcoming quarters, a stronger balance sheet rather than acquisitions. I guess that means that larger acquisitions are on hold for the time being. I mean, we're on one side. I agree. I mean, any larger one, but we maintain opportunistic, and if there is something that would show up there along the road, we would definitely look at it. A Pappelina-type acquisition you still might do, but probably nothing larger. That's the position to have. All right. Thank you very much. That's from all. You're welcome. Thank you. The next question comes from Johan Dalby. Please go ahead. Your line is now open. Hello. Regarding Artscape, you obviously didn't have to pay the earn-out. Can you give a little bit of flavor on the development of Artscape during the quarter? Yes. During the quarter, we have seen a pretty strong destocking from our larger customers there. Actually, the orders we are supplying are below the sell-out numbers that we all saw they are sharing with us. Customers are destocking right now. Sales have not been up to the level that we expected and also related to the earn-out. I mean, the earn-out is calculated as an improvement of their profitability versus last year. As we see, we don't estimate it to be improved as they did last year. That's why we have this change, as Pär explained before. Okay. Thank you. What's your view on pricing going forward, given that you are meeting a cost pressure and you could say a state of the consumer where the consumer confidence has been quite low on most markets? I mean, first of all, I would say when it comes to the cost increase on input material, that was fairly strong, very strong until summer, then it kind of went sideways. Now we have a new cost pressure that is coming, and it's more related to energy from the different suppliers that we have. It's energy driven. We will have to do more price increases beginning of next year. In order to mitigate this in a good way, as we have done previously. This is at least what we are planning to do during, I would say, first quarter next year. Okay. One final question. Can you give us a little bit of flavor on the start of Q4? Is it relatively stable like Q3, or it's like more like of a downtrend? It's a little bit depending from region to region, and market to market, I would say. The trend that we have seen here since I would say summer or spring is very difficult to predict actually. It's, I would say, definitely not upbeat, and it's not strong growth. Definitely not. Let's see. I will come back in three months to answer that more specific. Okay. Thank you. Thank you. No further questions at this time. I hand over back to you, Olle and Pär, for any closing remarks. I'm sorry to interrupt. We just received one more question. It's from. The organic growth in rest of the world is 14%. Perfect. Yeah. Yeah. Thank you very much. One final question. You have like a much higher share of premium sales in Europe this quarter. What is driving this change, please? One of the reason that is the absence of sales into Russia. Yeah. Okay. Perfect. That is clear. Those were all my questions. Thank you very much. You're welcome. Thank you. No further questions at this time. I hand over back to you, Olle and Pär, for any closing remarks. Okay. Thank you everyone for listening and for all the good questions, and I look forward to talk to you soon again. All right. Bye-bye.