Good morning, and welcome to the Haldex Q2 2022 earnings call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Jean-Luc Desire, CEO. Please go ahead. Thank you, moderator, and thanks to join this call. For this call, Lottie Saks, the CFO of the company, is with me as well. I am right now on the slide number two, regarding the agenda of today. I will start by presentation about the sales overview for Q2. What are the key items we can keep in mind for Q2? Lottie will present the financial overview and the financial position. I will conclude this presentation with a business update and some type of outlook we have for the future. After this presentation, we will open up for a Q&A, as mentioned by the moderator. Let's go now to slide number four. What are the key items for Q2 2022? First element, 40% organic growth, which means that we exclude here the currency impact. What we can say about this growth, it has been across the segments. You know that we have three main segments, truck, trailer, and aftermarket. We have growth on the three segments. In terms of regions, we have growth in all three regions as well. We can highlight as well that we've been able to maintain an aftermarket sales above 50% of our business, which is one strategic direction for our company. If we go a little bit deeper on those statements, you can see on the right side what I just mentioned. + 9% on the truck, +9% on trailer, and + 19% on aftermarket, which is year-over-year organic growth, again, excluding the currency impact. On the bottom right, from a regional point of view, the Americas +21%, then followed by APAC +12%, and then EMEA +6%. APAC, the +12%, was fueled by the end of the COVID situation in Shanghai, especially in June. If we go now on slide five, where we have the year-to-date situation, it's more or less the same story in terms of key highlights. 12% organic growth on a year-over-year basis, mainly driven by price increases, and we have to say that. Sales growth across all segments and across all regions. On the right side, again, truck +4%, trailer +14%, aftermarket +15%. Bottom right, from a regional perspective, Americas +18%, Europe +7%. For APAC, it's -5% year to date because we had a negative growth in Q1, compensated somehow partially in Q2. Having reviewed the global situation of Haldex, now let's go region by region. Let's go on to slide six and start with the Americas. Pretty strong organic growth of 21%. If we go directly on the bottom right of this slide, we can see that the market year-over-year has been going up by 6% on the truck side and it's been going down from a trailer market side with 4%. On the top right, we see our performance. Aftermarket +24% and trailer +21% on the declining market and +8% on the truck versus +6%. Clearly we can see from those numbers that we're gaining some market share and that the continuous focus on aftermarket is somehow paying off for this region. Let's go now to slide number seven. Like for the Americas, let's go to the bottom right to see the evolution of the market. This is something that we observe with a very high level of attention is the trend going down for trucks. - 6% for Q2 year-over-year and - 5% for the trailer. In those declining markets, what we've been doing on the truck side, +8%, trailer +4%, and aftermarket +9%. That's here as well performance versus market, which is interesting. Beyond the figures, two things we would like to highlight for EMEA. We signed a multi-year agreement with the number one customer for trailers, number one player in trailers in EMEA, Schmitz Cargobull. A multi-year agreement on this brake, quite significant contract. The other contract we want to highlight is a contract with a start-up in EMEA related to EMB. We'll see how this particular contract could turn into a serial contract moving forward. Having said that, let's go to slide number eight and the APAC region. The markets, bottom right on the truck side, -51%. Strong negative evolution for the truck and a flat market for the trailer in APAC. In those market conditions for us, aftermarket +19% on the relatively low revenues, +9% on the trailer and +11% for truck. Strong performance in declining markets as well for APAC. What we would like to highlight for APAC is that we're continuously working on our footprint to reduce, you know, the fixed cost impact on our business, and we've taken some decisions in China in Q2. With those sales performance indications, I will now hand over to Lottie for the financial highlights. Please, Lottie. Thank you, Jean-Luc. Moving to slide 10. In the second quarter, we achieved a strong adjusted operating margin with sales growth across all regions and customer segments. Net sales amounted to SEK 1,434,000, 000, in comparison to SEK 1,138,000, 000 in the previous year. Sales was positively impacted by changes in currency rates, primarily the U.S. dollar, and included price increases to customers. In the quarter, we reached the highest sales since the split of the group in 2011. The organic growth of 14% was largely driven by price increases introduced during the previous and current year to mitigate the increased cost within supply chain. Gross margin reached 28.5%, which is an increase of 1 percentage point compared to Q2 2021 and 0.8 percentage points compared to Q1 this year. It's evident that we have been successful in balancing the impact of the increased raw material prices and higher freight costs, and that our actions taken have had desired effect. Management of pricing towards customer compared to changes in supplier cost to balance this impact in the value chain will remain a key focus going forward. The adjusted operating margin amounted to 8.2% in the second quarter compared to 7.2% in Q2 2021. Compared to Q1, the adjusted operating margin increased by 1.9 percentage points. Items affecting comparability amounted to SEK 18 million in the period, to be compared to SEK 3 million in previous year. During the period, as Jean-Luc mentioned, production sites in China have been consolidated to better leverage resources, and additionally, measures have been taken to reduce fixed costs in EMEA. Restructuring costs amounted to SEK 11 million, and SEK 7 million was related to advisory costs in connection with a public takeover offer from SAF-HOLLAND. The reported operating margin amounted to 6.9% in the quarter, which was at the same level as in previous year. In terms of cash flow, increased accounts receivable as a result of the increased sales, together with a reduction in accounts payable, tied up working capital, which led to negative cash flow. The cash flow from operating activities in the second quarter amounted to - SEK 63 million, compared to SEK 19 million in previous year. Earnings per share amounted to SEK 1.07 in the quarter, compared to SEK 1.11 in the second quarter last year. Moving to slide 11. The sales increase in the quarter resulted in an EBIT increase of SEK 130 million, of which the majority, approximately SEK 115 million, relates to price increases to customers to mitigate cost increases. We had a slight positive impact of segment mix, and we achieved our ambition to keep aftermarket sales of at least 50%. The aftermarket share accounted for 53% of sales in Q2 compared to 50% in the same quarter last year. Supply chain constraints led to increased manufacturing costs, of which the majority related to direct material and freight. In the quarter, we have seen some improvements in raw material indexes, but we also experienced higher energy costs. The margin impact amounts to SEK 83 million and is net of direct material savings initiatives we have achieved through ongoing negotiations with suppliers. It's clear that a large part of the increased cost for material and freight have been mitigated through the price increases implemented during both this year and last year. Recently, we have initiated a program to reduce cost level for freight that already start to show initial results. The fourth generation EBS is no longer capitalized as we have gone into production, which have a negative EBIT impact. Changes in currency exchanges has a positive impact on operating profit. The other item is net of this. Items, again, affecting comparability amount to SEK 18 million. Commenting on the restructuring initiatives that we are doing, we have seen historically that we have very good results from assessing and optimizing the footprint. This work will continue. Moving to slide 12. Looking at the year to date number, we have very much the similar pattern as in the second quarter. The sales increase resulted in an EBIT increase of SEK 223 million. Again, which the majority relates to price increases. We had a slight positive impact of segment mix, where the aftermarket accounted for 51% of sales in the first six months, compared to 50% in the first quarter of 2021. Supply chain constraints led to increased manufacturing costs, of which the majority related to direct material and freight. The margin impact of this cost increase amounted to SEK 188 million year to date. The items affecting comparability amounted to SEK 23 million year to date. Moving to slide 13. Looking at the quarterly financials in perspective, we're pleased to see that revenue continues to increase, and that we reached the highest sales since the split of the group 2011. Both the changes in exchange rates as well as our implemented price increases had a positive impact on the sales. When it comes to profitability level, as we have shown before, it's evident that our savings initiatives during 2020 and 2021 have proven effective, and that we can deliver a profitability that is on a very good level, put into historical perspective. Our gross margin increased to 28.5%, and it's evident that we successfully have mitigated the pressure on our margin brought about the temporary challenges in supply chain. As said before, we have raised prices not only for raw material, but also related to increased freight cost. We can see that this have impact not only on gross profit, but also on the operating profit. In general, the financial development on a quarterly basis showed very good progress for the past years, and this is very satisfying to be able to report. There are many activities and hard work by the whole organization behind this progress. Moving to slide 15. In terms of financial development, what is not as good, but is very similar to what's happening with all our industry peers, is that we continue to be impacted by the supply chain constraint. Working capital increased both compared to previous year and compared to previous quarter. The quarterly increase is driven by the increased accounts receivables, primarily in the U.S., following the increased sales in combination with decrease in accounts payables. The cash conversion cycle was 99 days compared to 86 in previous year. Inventory days amounted to 81, which is an improvement compared to both previous year and previous quarter. Just to repeat what we have said before, with our size, we have the advantage of being flexible, which allows us to react quickly to change. We want to maximize this potential, and we are reviewing what changes to implement to become even more agile. We aim to continue to optimize our business, and we see further opportunities within our operations. Through several initiatives, for example, introducing the role of regional operations manager and improving inventory management processes, we've taken steps to improve our operational efficiency. It's evident that we still have work to do when it comes to our working capital management. Moving to slide 16. As mentioned several times, the supply chain challenges and also the sales growth impacted our cash flow during the quarter. Cash flow was negatively impacted by increase in working capital, driven by increased accounts receivable and accounts payable. The investments amounted to SEK 23 million in the second quarter, compared to SEK 59 million, of which SEK 6 million are related to the capitalized development expenditures for our EMB product. Total research and development expenditures, including capitalized development, amounted to SEK 48 million during the quarter, corresponding to 3.5% of sales. In the second quarter, 2021, total research and development expenditures amounted to SEK 50 million or approximately 4.4% of sales. Again, as we have moved into commercial production for our EBS Gen4 product, the expenditures are no longer capitalized from this quarter, as the investments have begun to be depreciated. Net debt amounted to SEK 1,351, 000,000, which is a decrease compared to the second quarter, 2021, but an increase compared to previous quarter. Our net debt was positively impacted by our earnings, but negatively by the cash flow. Valuation of pension liabilities enlarged due to higher interest, reduced net debt by SEK 328 million. During the quarter, we have refinanced our debt, which, now including possible extensions, matures in April 2024. In summary, the second quarter 2022 was strong with several milestones reached despite the constraints and the continued impact or challenges in supply chain. We are very pleased with the outcome. We want to extend our thanks to all employees who have contributed with a dedication to the company. By that, I hand over back to Jean-Luc Desire. Thanks, Lotte. I would suggest we go to slide number 18. As presented before, we have two legs for our strategy. The first one focused on the, I would say, the relatively short term until 2025, and then a second leg related to the introduction of new products for 2025 and beyond. For this first chapter, this first leg, we have three pillars. The first one is to grow aftermarket, the second is to be in line with the shift in terms of technology from brake adjusters to air disc brakes. The third one is a link to the launch of our EBS Gen4. On the three pillars for this particular quarter, what we would like to highlight is a signature of a long-term agreement with Schmitz Cargobull. I've already talked about that for the EMEA region, and I think it's a good sign, you know, in line with our strategy. On the second leg, related to the introduction of new product lines for 2025 and beyond, we're pleased to talk about this, you know, prototype contract we have with the startup in EMEA. We see that as an interesting step forward for this introduction of new technology. At the same time, you know, I would like to remind all of it that we also have a prototype contract with the traditional OE. So to have mixed customers for that, we believe it's a good strategy. Having said that, let's go to slide 19. If we want to wrap up this call. Q2, it's a strong Q2. Strong sales across, you know, all segments and all regions. Records since 2011. Pretty happy about the sale. Good work done by the team, as mentioned by Lottie, about the mitigation of the increased cost. The third bullet point is the confirmation from our customers that our strategy is well understood and well in line with the needs of the market. Of course, we have this cash offer from SAF-HOLLAND, which is taking place as we speak, and we'll see how it goes. For the time being, and from a business point of view, it's business as usual for us. Moving forward, two things we would like to highlight. The first one is the market is still extremely uncertain in many aspects, and the volatility is pretty high from the two ends. I mean, from a market and supply chain perspective, it's very difficult to give an outlook or a forecast of what's going to happen. In those very unstable conditions, we want to continue to be extremely agile and flexible, and we're working on different volume scenarios to be prepared for whatever would happen. Point number one is of the outlook. The second point is independently from the day-to-day operations, we still want to grow faster than the market and to gain market share based on strategy we have highlighted and presented. We as well, something which is very important for us is this aftermarket above 50%. With this, I would like to end this presentation of our Q2 and open up the call for any question. We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. Our first question comes from the line of Kenneth Toll with Carnegie. Please go ahead. Yeah. Thank you. Some questions. I'll take them one by one. First, you take some restructuring, in Europe. Can you explain a little bit what you are doing in Europe more practically, and maybe if we should expect some more restructuring in Europe going forward? Lottie, could you please answer this question? Yeah. I would say that this is not part of a broader program as the ones that we have been launching and running before, but we are gradually assessing the organization. We want to ensure that the global functions that we have, like global IT and that type of part of the organization, that we scale as much as possible on those resources. That means that also roles will be reallocated globally to optimize the cost level, but also to have the optimal competence within the team. The activities that we have been doing now, I would say, are more of a selective character along that line. You mentioned, and we all know, of course, that there is a bid for... from SAF-HOLLAND. I was curious a bit, what your customer reactions have been, to this bid, if any. Also if you think that it will be able to sort of keep up the internal work and work with efficiency and, product development and so on. I mean, sometimes when there's a bid, energy in the company could, sort of slow down a bit. What are your experiences in running the company under a bid so far? I think, Kenneth, you have two questions. First internally and with the customers. Internally, really what we've been stressing out is business as usual for us. You can see, you know, the performance in Q2, record sales, you know, good profit. I guess it speaks by itself. The other thing we can say for, you know, internally is the staff. We'll see what's going to happen with the SAF-HOLLAND bid. The CEO of SAF-HOLLAND made it clear that he wanted to keep a specific Haldex organization should the, you know, the integration happen in the future. The structure of Haldex, at least for a while, would remain, you know, as such. This sends a strong signal as well inside the organization that we need to stay focused and energized to serve our customers. That was internal part. For the external part, vis-à-vis our customers, I think the customers understood the rationale. I mean, they understand that there is some consolidation happening in the market. They are pleased to see that the board is supporting that. They are pleased to see that the commitments that we've taken will be maintained whatever happen in the future. For the time being, I mean, it's nothing negative related to that. I mean, it's the customers we've been talking to continue to talk to us the same way. Okay. Great. I'm a little bit curious about this new product, the EB+ 4.0. You're all ramping up production now. You're delivering it to customers. What are your early experiences? Is product quality good? Is it easy to produce and scale up? What are experiences there? Yeah. That's a good question. It's a complete new generation of our EBS platform. You know, it's a lighter plastic, new ECU, is new. It's a complete change. It's not just an evolution. It's a complete change. We indeed started the production in March, and we're ramping up the production. What I can say is that quality-wise, it's going pretty well. I mean, we. You know, the customers is happy. We talked about Krone as being our main customer for the ramp-up. From a quality point of view, we're good. We're ramping up. I have to say that the ramp-up is a little bit slower than expected, you know, because of supply chain issues. We're happy and we have customers lining up to get this product, so which is good. Which is good. Big focus from the team to accelerate the ramp-up to satisfy our customers. Great. The final question. I get the feeling that the business activity through the quarter sort of increased, that there were more activities, more deliveries towards the end of the second quarter compared to the beginning. Is that a fair assumption on- Yeah. No, I mean, it's a n absolutely fair remark. I mean, if we talk about APAC. Yeah. For example, I mean, the beginning of the quarter Shanghai was under lockdown. The sales of APAC in April was pretty low. In May and June, in the second part of the quarter, it was much better. APAC, absolutely. EMEA, no. No, EMEA, we cannot really say that there's been a change over the quarter. The Americas, a little bit, yeah, it was strong, maybe all over the quarter, but with the acceleration of Q2, which is true as well for the Americas sales. Okay. APAC for sure. I think the big APAC is the big change between beginning and end of the quarter because of COVID. Yeah. That could explain part of the cash flow performance in the second quarter as well with them. I guess and also we get some signs from other suppliers that maybe the supply chain issues are easing a little bit going into the third quarter and in the end versus the beginning. Let's hope that materializes. Yeah. Absolutely. Yeah. Great. That's all from me. Thank you. Thank you, Kenneth. Thank you. The next question comes from the line of Mats Liss with Kepler Cheuvreux. Please go ahead. Yeah. Hi. Thank you, and congrats on a nice set of figures in the second quarter. First, I mean, coming back to Kenneth's question there about demand picking up in June. My question is, sort of, is the reason also that you have implemented further price increases here at start of the third quarter or is it normal sort of business activities picking up? I'm sorry. Not sure if I understood exactly the question. The question is the business has been picking up in Q2 and how do we relate that to price increases? Is that the question? No. Yeah. I guess the question is sort of if you have experienced pre-buy impacts ahead of the potential price increases. Yeah. I understand. Well, if we talk about the Americas, for example, which is, you know, in terms of growth, as presented before, the number one driver of the organic growth, you know, quarter-over-quarter. The main price increases happened before Q2. There is no major price increase, you know, to come in Q3 and Q4, at least for the time being. Is there a pre-buy, you know, behavior or something like that in the Americas? No. We know. I wouldn't say that for the APAC as well. I mean, yeah, maybe a little bit because we had some price increase in the quarter. I think for the EMEA, what we can see, and again, I'm not talking about the future because I don't know about the future, but for the past, what we can say that we start, you know, we can see that the market has been going down, you know, from the truck and the trailer side. Basically, long story short, pre-buy behavior to explain higher volume in Q2, no, I don't think so. I do not see it like that. Okay, great. I mean, we have seen steel prices easing off there quite substantially. How will it impact you? I mean, you have the contract clauses, which sort of balance those issues, but will there be a supporting factor in short term here? Specifically on steel, Mats? That's your question, specifically on steel? Yeah, yeah. The game we are in now is to make sure that we can pass on the price increases coming from the raw material from the suppliers to our customers. As mentioned by Lottie before, we've been doing pretty good on that. We really try to match as much as possible the contract cycles today between suppliers and customers. That's been an extremely high level of focus for the complete team, and I want to thank the team for that, by the way, because they've been doing great between suppliers and customers. What I can say moving forward is. Again, I don't want to give forward-looking statement, but the fact that we can see all of this in some indexes in EMEA, for example, starts smoothing a bit. I mean, you know, scrap metal, if we talk about this specific quantity, scrap, you know, metal scrap starts, you know, to get to a plateau. It seems like it's getting to a plateau. We'll see in the weeks and the months to come. For us, we continue to monitor that very precisely and to see how to again adapt as much as possible a good balance between what we do with the suppliers and what we do with the customers. Have I answered your question, Mats, or? Yeah. It's good. Thank you. I mean, Kenneth also asked about cost related to restructuring, and you also booked some cost there regarding the SAF-HOLLAND offer, and should we expect more of that to come going forward? Lottie, could you please take that question? Yes. Exactly. This is the cost that is occurred to date, so there will be additional costs going forward. Yeah. For the SAF-HOLLAND offer. Yes. More specifically, is it sort of external help or? Yeah. It's in advisory costs. Yeah. Yeah. Okay. Fine. I guess the cash flow was hampered there a bit about working capital and then again, do you expect to see a release already in the third quarter or is it more towards the end of the year? Lottie? Yeah. In terms of the accounts receivable part, we have initiatives and projects going on to optimize the efficiency of the collection process. Here we do hope and expect improvement during the third quarter. When it comes to other parts of working capital and then primarily the inventory that we have been mentioning before, that's a more long-term initiative that we have a target to gradually reduce that throughout the year, and that means that also including by the end of the year. That's an ongoing work the whole time with various measures. Part of it is moving to consignment stock. Other parts are actually improving the planning processes and also taking a holistic perspective of our various inventories throughout the company and that type of initiative. We can say that we expect those improvements to come later in the year. Okay, great. Thanks a lot. Once again, if you have a question, please press Star then One. There are no more questions at this time. I would like to turn the conference back over to Mr. Desire, CEO, for any closing remarks. Thanks. Thanks to everybody who have joined this call. Thanks for the questions. On behalf of Haldex, let me wish you a very nice summer period and a very nice day. Have a good day.