Welcome to Instalco Conference Call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now, I will hand the conference over to the speakers, CEO Robin Boheman and CFO Christina Kassberg. Please go ahead. Hello, everyone, and welcome to this presentation of Instalco's report for the third quarter, 2023. My name is Robin Boheman, and I'm the CEO of Instalco, and with me today, I have our CFO, Christina Kassberg. Instalco is one of the leading installation groups in the market, Sweden, Norway, and Finland. Our main business area is installation of electricity, heating and plumbing, and ventilation, along with solutions for the industry and technical consulting. We are a highly decentralized company, running through 130 subsidiaries, specialized local companies within the Nordics. We have over 6,000 employees, and we are driving the green transformation with a strong underlying market. So these 130 subsidiaries are run locally, and I will come back to that a little bit later in the presentation as well. Going into some key financials for the last 12 months, we were just shy of SEK 14 billion in net sales for the last 12 months. We have an order backlog of SEK 9.2 billion. We are a bit above SEK 1 billion in EBITDA, and an EBITDA margin of 7.6%. Cash flow from operations was SEK 943 million, and we have annual acquired sales of almost SEK 1.3 billion for the last 12 months. Jumping into some highlights for the quarter, we turned over SEK 3.3 billion, and we had an EBITDA margin of 7.4% and SEK 246 million in EBITDA. Last quarter, we mentioned the short-term uncertainty in the market. Despite this, I'm very happy to say that last month's of the Q3 ended up on a very strong note for us. For the quarter, we improved across the board on all parameters compared to a year ago. Growth in sales, both organically and through acquisitions, improved EBITDA margin, and significantly improved cash flow, and a solid order book sums up the quarter. And I would like to hand over to you, Christina, and take us through a little bit of those developments in more detail. Thank you, Robin, and I will now take you through the numbers a little bit more in details. On this slide, we can see the increase in net sales with a comparison of Q3 present and prior year. In Q3, we continued generating robust growth. Acquired growth represented 15.7%. While organic growth is slightly slower than previous quarter, it is still at a healthy 3%. Segment Sweden was flat, while segment Rest of Nordic picked up the pace. We have divested one non-core asset, representing -1%. In total, net sales increased by 18.7% and amounted to SEK 3.3 billion. This slide shows the quarterly trend of EBITA in both millions and margin. Q3 is usually a weaker quarter for us in terms of net sales and profitability, and this is due to the vacation periods and reduced activity. July is the most common vacation month on Instalco's markets, and this was, of course, the case also this time. But however, we picked up well after the summer, and we recorded a strong September. As I mentioned on the previous slide, net sales grew by 18.7%, and I'm pleased to say that in Q3, our profitability grew even more. EBITDA increased by 22.7% to SEK 246 million, and this corresponds to a higher margin at 7.4%. So all in all, improved profitability in the current market. This slide shows the quarterly progression of the order backlog. We have a substantial order backlog, which grow by close to 13% compared to a year ago or 0.5% organically. In absolute numbers compared to Q2, it is essentially flat, and this is in line with the normal seasonality effects for Q3 that I've just mentioned. We feel comfortable with the level of the backlog. Quality and mix is good, with varying types of projects and contracts form that spreads our risks. Over to the slide that summarizes segment Sweden in Q3. Sweden held up well to a slower market. Although the underlying need and demand for our services as regards both new construction and renovation is generally high, the rate of new orders for installation assignments has slowed down due to the interest rates and the overall macroeconomic situation. We can especially notice this in the south of Sweden, while the north and west, as well as our industrial disciplines, reported good development during the quarter. Overall, net sales increased in Sweden by 5.2% to SEK 2.2 billion, while organic growth was essentially flat. In total, this corresponded to a stable EBITA margin of 8%, roughly in line with last year's, as well as the margin we saw in Q2 of this year. The segment still maintains a strong order backlog at more than SEK 6.5 billion. Also summary for the segment rest of Nordic. The market in Norway remains at a high level without much change from last quarter. Development of the market in Finland has been stable in recent months, but however, this is at a relatively low level. High interest rates have resulted in more cautious behavior in the construction industry, but in other areas, such as service and industrial operations, they are progressing as planned. For Instalco, this translated to a net sales growth of 60% in Q3, while 15% organically. The strong growth for the segment was equally distributed between our two countries. However, I'm pleased to say that profitability grew even more, with an increase of EBITDA at over 130% to SEK 68 million, which corresponds to a margin of 6.2% compared to 4.3% a year ago. We are seeing positive results from our profitability focus in combination with strong acquisitions. Especially Finland delivered improvements, primarily due to focus on operation and project management. So, as a summary for the group as a whole, our dedicated efforts are paying off. During 2023, we have maintained our focus on profitability, and we have intensified our emphasis on working capital. This is, I'm happy to point out, this has been successful. We are tying up less working capital in the operation than before. I'm also pleased to say that we have improved invoicing net. This means contract assets minus contract liabilities. This translates to the fact that we, for Q3, we can report solid growth and margins best in class, and also a strong cash flow. So by that, over to you again, Robin. Thank you. Going into some acquisitions, when looking at the table, you can see that we completed nine acquisitions so far in 2023. One of them I will come back to on the next slide. Our near-term focus, however, is on integrating these companies into the group. In total, we added slightly above SEK 1 billion in estimated annual sales through acquisitions. Due to the high pace of acquisitions this year, our net debt through EBITDA ended up this quarter at 2.6, slightly above our target. We still have good and healthy headrooms to the stated bank covenants, and we will be at 2.5 at the end of the year. For our reported leverage does not include pro forma EBITDA. However, if doing so, our leverage would be at 2.3 x. So all in all, we remain secure with the rate of acquisitions, our strong cash flow, and our balance sheet. Looking at one of the acquisitions we did in the quarter, we're happy to welcome Urd Klima Sandnes to Instalco with annual sales of around SEK 85 million. The company offers installations within ventilation, heating, and cooling systems for both new construction and renovation. This also broadens our geographical footprint in southern Norway, with an exposure to the Stavanger area, where we see a lot of investments expecting going forward. Urd Klima Sandnes is a well-organized and highly profitable company with a very stable financial history and a wide network also in the area. So I think that is a good match for Instalco. Looking into one of the projects that we took during the quarter, we have three different Instalco companies working together on the project design for a new emergency hospital in Västerås that is being built together with NCC and Region Västmanland through a partnering project. Around two years ago, NCC and Region Västmanland agreed to build a new emergency hospital through partnering. The work of project design is now underway to produce a detailed plan of what is to be built. And we're happy to say that the project design for ventilation and sprinkler has been awarded to InstaAir and Sprinklerbolaget in close collaboration with our technical consultants, Intec. Together, and these Instalco companies have... extensive experience from successful assignments, both when it comes to hospital, but especially also when it comes to partnering projects. A new hospital like this will be a very large area that needs a lot of ventilation and active fire protection, and comprised of approximately 75,000 m² of new construction to meet the future care needs for Västmanland. Very exciting project in phase I. The theme for this quarter is resilience, and I wanted to take a closer look at the resilience that we have shown and also that we have proven once again. Our performance in Q2 is a testament to that strength. I don't think anyone has missed the fact that the market is currently somewhat uncertain, and yet we're still able to deliver improvements across the board, which I'm very proud of, of the team effort that has been done. And let's deep dive into a few of these reasons. First of all, targeting the attractive mid-size project. We've talked about it before, and we will come back to it many times more. The attractive mid-size projects are large enough for scale, but has a lower risk than the mega projects and it's B2B focus. Key success factor is quality, lead time, local presence, and relationship, and that is some of our core experience, and we also have a very strong position in the local market through our local subsidiaries. However, when it comes to market uncertainty, we will have to remain on our toes, just like everybody else, but we believe that our truly decentralized model gives us a severe benefit in this regard, and now more than ever. We have a unique culture. Installation is not a national market, but a local market, and we are local market leaders with our subsidiaries. We have a decision-making by those that are locally best in class and know the market best. I think it's very important here to be close to your customer in this type of market environment, something that we are due to our specialization, and we can also collaborate with local players within the market. We have been working systematically in Instalco and making it a more stable and resilient company. This slide may be familiar to some of you that I've shown previously, that we launched a few years ago. In addition to working constantly improving our core business, we have put significant effort into expanding our footprint into new geographic geographies, sorry, as well as branching out into new discipline, as shown here, the industrial discipline and the technical consultant, both that I've spoken to you about before. If you're looking at this page, that has really paid off. We are today a much more diversified business. As you can see on this slide, we have reduced our reliance and are today more spread out when it comes to customer groups we serve, as well as areas we provide service for. So referring back to the focus area, if you look at 2022, our net sales, for instance, for the industrial discipline, was only 3% and has grown to 17%. And back then, technical consultants was not even part of the offering. Today, represents 3% of net sales, and the journey has been done primarily by organic growth. Once again, a testament of our resilience. Then I'm going to try to explain this slide to you as well. And compared to the construction industry and sector, that the installation business is less cyclical and less affected by general economic trends. Our market is more late cyclical, and our project portfolio is categorized by high level of visibility in terms of the future project. A large portion of revenues are derived from recurring assignments, and we have a low level of dependence on individual customer and contracts. This means that we have a better potential to bridge the gap, when we see a dip in number of projects. What this slide kind of tries to illustrate here is the lower cyclicality of the installation market. One of the main key things here is to try to not take too many projects, so to say, in the dip, but instead, to try to find those more local projects that are going on with less risk and not be stuck, so to say, with projects taken in a bad market that you have to live with for a very long time. This is something that Instalco, once again, has proven that we can handle. If we then also go and look at the long-term market drivers, which I think is also good to emphasize on in times like this, is that energy efficiency and the green transition, we haven't really seen the full effect of that yet, but the installation business is the leaders here. We will be the ones that are going to install for the next generation. So this is something that makes me very excited. Whether you look short or term, maybe housing isn't a shortage at the moment, but house shortage is a big driver going forward. Just looking at Sweden, we need to build 60,000-65,000 apartments every year. We are definitely not at that rate at the moment, but eventually we will come back to that level. We are also seeing—we also have aging building stock in the northern parts of, or in Scandinavia overall, which needs renovation, which needs to be refurnished to be able to cope with the energy efficiency demands that are coming into legislation eventually. Also looking at digitalization and increasing building complexity within the projects that we are doing and the installations we are doing. Looking at historical numbers, installations may be 30%, 35% of the total cost of a construction. Now, we're looking at much higher numbers in the 40%, 45%, even sometimes 50% of the total cost of construction. Installation takes a bigger chunk of the total cost. That is basically due to that we want it to be more digital, and it is much more complex than it was historically. These are a few of the key points when it comes to how we can stay resilient and also how we can deliver this type of result in the market we have. Taking you back a little bit to Q3 to sum up the key takeaways from this quarter. Overall, a strong result with high profitability that grew more than sales. I'm also glad to see that Sweden held up well, and especially, of course, I'm very happy to see the strong result in rest of Nordics, a segment that shows that our profitability focus and strong acquisitions has paid off. There are several underlying megatrends, such as the green transition, which makes me incredibly excited about our business long term. In shorter perspective, there's no denying that the market is a little bit uncertain, though we still have a solid order backlog that we can continue to execute on for the coming quarters. And our main and unique business model gives us a very strong position at the time, it's like this. We are more diversified today, serving a broader customer base through more technical disciplines, and our decentralized structure keeps us close to the customer, with decision making closest to those that has the best relations to the market. And with that, I would like to thank you for joining this call, and I will now open up for questions. If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Karl Norén from SEB. Please go ahead. Good morning. A couple of questions from my side, and maybe if we start on the margin improvement in the rest of Nordics, which is quite impressive here. So I'm just wondering how much of that is organic initiatives making results, but how much is driven by M&A, we have acquired high margin businesses? Thanks. Hi, Karl. I think there is obviously a combination of both. The exact split, we don't have. However, we can see that we obviously track all our subsidiaries. And what we can see is that there has been significant improvements in those companies where we have struggled in the past. As I've mentioned in the calls previously, we have done some organizational changes. We have also put in place some additional area managers, especially for Finland. So we have grown the organization a little bit to be able to take care of the companies in a more professional way as well in the last two years. So it's a combination of both. I don't have the exact split, but we can definitely see some improvements in local companies, especially in Finland at the moment. So that's, it's very, very nice to see that those initiative pays off. Yeah, sounds good. Then just one other request on the M&A contribution. I tried to do some math here this morning on the... If you look on the report on page eight, you state that the M&A contribution year to date, and it looks like that if you deduct the acquired earnings, the earnings is down a bit from last year, organically. I'm just wondering if you could maybe put some comments on this and maybe also explain a bit what is driving the what it seems, at least to me, the continued margin pressure in the, let's say, existing business. I don't 100% follow. I'm gonna take up page eight. Just give me a second. Not the presentation. We're gonna look at the report. Sorry, give me a second. Hi there. Yes, we, the, all the acquisitions we have made this year, as is lying on a very good profitability level, slightly above, the general margin in, in rest of our group. That's sure. So- But I think that was it. Can you take the question again, Karl? Sorry. Yeah, I'm just looking here at it because it has impacted POC or the operating profit. The impact from acquisitions has been SEK 178 million? Yeah, correct. If you look on EBITA year to date, it's up by SEK 151 million. So then I guess, like for like, so to say, EBITA- Yeah. Seems to be down. I was wondering, what if, like, the margin. Because I guess it's margin, because organic growth seems to be quite good still. Yeah, you understand the question now, I guess. Yeah, sorry. Yeah, yeah. No, I fully understand. No, I mean, like I said, there has been a little bit of margin pressure on existing companies, obviously, like you calculated. And we still have some companies that are struggling in a market like this, obviously, but we're still happy to be able to report 7.4% profitability in a market like this and show we're resilient. But yes, we have companies that are struggling, obviously, yes. That is correct analysis. Yeah. Just wanted to check that. And then cash flow here is quite, quite good on improving year over year. One of your peers saw a bit weaker cash flow, some of it's company specific, but I guess some is also related to that, a weaker market for customers are trying to pay later, et cetera. Are you, are you seeing that as well, or are you expecting a continued good cash flow going forward? I mean, typically, Q3 is not our strongest quarter when it comes to cash flow. So, typically Q4 historically has been quite strong when it comes to cash flow, so we don't see any near-term big changes in that seasonality either. Yes, there are some maybe issues in the, so to say, society overall today to get paid, so we're not any different there. However, we have improved our processes. We have been working on this, and Christina, especially, and with her team, have been working on this together with our local subsidiaries to be on top of invoicing, to be on top of customers that are, so to say, delaying their payments a bit. So, I mean, we follow the overall trend in society- Yeah. But I think this is something that we always have to work with, you always have to be on top of. We're happy that we can approve once again that our decentralized model also works in a tougher environment. So yeah. Yeah. I agree. It looked good here in Q3, so it should, it should look better in Q4. Sounds good. And then there's a last one on the cash flow again, which is cash flow from acquisitions and divestment was a negative, I think, SEK 222 million, but you did not really do any larger M&A in the quarter. Can you explain that? Yeah, yeah, of course. And it has to do with that, as we have explained in some calls before, we have some minority shares and stakes from minority shareholders in, for instance, startups. We've also acquired some companies that we don't own to 100%, and we were in the quarter able to buy a few of these so to say minority stakes. So that is why you see. So we bought up some minority stakes in some of the companies, so we're also been able to own more in those subsidiaries. So that is the reason why the so to say outflow cash is a little bit higher- Yeah ... compared to maybe the number of acquisitions we've done. Yeah, understood. That's very clear. That's all for me. Thank you, and have a good day. Thank you, Karl. The next question comes from Carl Ragnerstam from Nordea. Please go ahead. Good morning. It's Carl here from Nordea. A couple of questions here as well. Looking at your backlog, it grew again, 8.5%. How does that, would you say, compare to the market currently? And could also perhaps shed some light on your strategy here if you look on cost plus or index clause price contracts versus fixed price. And also maybe on that a little bit, maybe if you look into your backlog, which I, of course, know that you do, what is the quality of the backlog currently, you say? I mean, given the volatility in raw material prices, and raw material prices are still, to some extent, at least continuing to tick up, or at least the components. Yeah. I think as I mentioned on the slide there, it's hard to explain on a graph. We tried to do it a little bit in the theme for the quarter. I think it's very important in the market today to take the right type of project for the right customer. And here it is a focus on margin. So we don't want-- We want to make sure that our subsidiaries don't take too many projects at the moment. So yeah, we grew the order book a little bit. That has to do with a few little bit larger orders. However, we are quite so to say we don't want to push our subsidiaries to take on projects at this moment. We want to make sure that we take on the right projects. So I mean, quality of the order backlog is, as Christina mentioned, we are quite satisfied with what we've seen and what we have taken into the order book so far. And next question from you was more on the, so to say, strategy when it comes to pricing and so forth. I mean, as you see, we have gone, so to say, prices hasn't gone down for raw material and so, so we are trying to push in index clause. This is something that as I mentioned in a few calls before has not been very, so to say, used in the Swedish market, and especially not in Finland. In Finland, it's still hard to get. In Sweden, it is much more common nowadays, and I think it is important to continue to push in index floors, even if we in the future might see, so to say, a price drop in the future. However, I think it is important that we are supposed to make our money from good installation, not from speculating whether index is going up or down, that we leave to you guys on the bank side, but we make our money on installations. The strategy is to get index clauses in most of our longer term contracts to minimize risk. Mm-hmm. Was that- A little bit. Uh, but- No, it's very clear. Very clear. And also by that, entering Q4, I mean, when a lot of these or a lot of projects are obviously finalized- Mm. I mean, how would you say that your POC is looking currently entering Q4? Obviously, if you have more index clauses, I guess you have less of an, perhaps, an earnings cushion entering Q4. Is that correct, assumption or? I mean, typically, it's always hard to talk about the future, but we can always talk about the history. Typically, historically, Q4 is a good quarter for us, and it has mainly to do with that. Once you finalize the projects, you can take away, so to say, the cushions that you might have brought in. And there is typically also some additional work that needs to be done to finalize the project that was maybe not part of the scope in the beginning and so forth. So typically, finalizing a project is typically a good earnings when you finalize projects, because at the end, there is always a little bit of extra orders coming in and so forth. So that is typically why Q4 is better than other quarters as well. When it comes to POC, I mean, we are looking more and more on the POC to make sure that we are also on top of things with Christina and her team is of business controllers, and also especially our local CEOs are more and more getting used to the way of calculating POC and so forth. So- Mm ... we feel confident about the order backlog and the project we have at the moment. Sounds very good. I perhaps joined the call a little bit too late, but did you give any comments on September development, or maybe I misheard? No. September was a really strong. Typically in the quarter, we make most of the result in September, and that was the case this year as well. I mean, we are, at the end of the day, we sell a service, so, I mean, we charge for the hours and the material we install, and obviously, in Scandinavia, we go on vacation during July and August, so that's typically not the best month of the year, so to say. So, but- So if you adjust for seasonality, was it same, same as last year, or better or worse? Because... Well, I, I guess what you're describing is the seasonality, but if you try to adjust for seasonality. No, it was the September this quarter was better than September last quarter. Not the September last year. So Q3, 2022, September was not as good as Q3, September 2023. Yeah, sure. Okay, very good. Okay, that's all for me. Thank you so much. Thank you, Carl. As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. The next question comes from Johan Skoglund, from DNB Markets. Please go ahead. Good morning, Robin. Good morning, Christina. This is Johan from DNB here. Good to see that profitability is holding up. So I have a few questions from my side. We again saw quite CapEx step up in the quarter. Assuming, I'm assuming this is related to the industrial end market expansion, but what can we expect going forward? Is this a run rate we could assume, or is there any other way we should consider this? Sorry, you got chopped off in the beginning there. Could you please repeat the question? Yes, okay. So we again saw a CapEx step up in the quarter of, I think, SEK 35 million. Are these CapEx related to the industrial end market expansion, and what can we expect going forward? Should we think about this as a run rate, or is there any other way we should consider this? Yeah, the CapEx is definitely related to our expansion into the industry, as I showed you in the presentation a little bit earlier. I mean, we've gone from 3% in the industry to almost 17%, so we are increasing the CapEx a bit, goes all the way from, yeah, scaffolding to other types of machines we need to be able to provide services for the industry. So I think you should looking long term, you need to look at the percentage a little bit and adjust for the growth in the industry. That's correct. Okay, good. Then perhaps a detailed question on industrial services, when you acquired Boas in Södertälje. We noticed that they're focused on a wide range of services, but they also seem to have a share of contract manufacturing in there. Are you able to quantify how big that share is, and how should we view this? Is your plan to expand further within contract manufacturing? Nah, that is not the key area. Obviously, I mean, for this type of entrepreneurial business, these are entrepreneurs you have to understand, and they are then obviously trying to do business where they see a possibility. They are very strong when it comes to, for instance, Scania and AstraZeneca. And the likelihood here is probably that these two have asked for more, more products from one, one provider, and therefore they have grown the business. So this is not a move into manufacturing at all, but it's more of that they are providing help for existing customers. Okay. Yeah, that's good to hear. And then third question is if you could comment anything on the technical consulting side. You say that demand has declined a bit, but I'm happy to hear any additional color you might have. So on technical consultants, during the quarter, we have added, like, I think almost net, I think it was 30 new consultants. So we are almost at 400 consultants, where I think it's around 390 consultants at the moment. They have broken through, so they are around break even, but they are on the profitable side, so similar to Q2. But obviously, as I've mentioned before, every time we bring on new consultants, we will obviously sort of say that with a little bit of cost on the margin. But once again, this is done organically, so we think long term this is a very profitable way for us to grow. And we have also signed a few new consultants that will start around New Year's as well. So probably around 400 when we close the book for this year. Okay, good. Thank you. That was exactly what I was asking for. And then as a final question, I was thrown out of the conference earlier, so apologize if you already addressed this, but another company with similar exposure to you was out citing price pressure in certain areas and regions. I mean, which regions do you believe this could be? And are you seeing similar things? Is it mainly south of Sweden, or are we seeing it spread across the country? As I mentioned before, I mean, there's always price pressure, I would say, in this market. The competition is always high. You need to provide a good service with high quality, and that's also why we focus maybe on these mid-size projects as well, where we see that quality and lead times and so forth are maybe key factors, and relationship is very key. But yeah, we are seeing absolutely some price pressures in areas. Once again, these are local, I would say, and as you mentioned, if I were to give some more flavor, I would say it's more in the southern parts of Sweden, I would say. It is not the case in the whole market, and it's also in some segments that might have more price pressure than others. So you need to once again find the right customer with the right type of project. That is key at the moment. Okay, perfect. So that was all questions from me. Thank you so much, and good luck with Q4. Thank you very much. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments. Yeah, thank you all for listening. We have run over time a little bit, but it was nice to talk to all of you, and I wish you a great day, and thank you for listening in, and have a nice weekend eventually as well. Thank you for us. Thank you, and bye. And bye-bye.