Good morning and welcome to Inwido's Q3 Earnings Call 2022. 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. We have with us on call today, CEO Henrik Hjalmarsson and CFO Peter Welin. 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 like to turn the conference over to Henrik Hjalmarsson. Please go ahead. Thank you very much. Good morning, everybody, and welcome to this presentation of Inwido's third quarter results 2022. I'm Henrik Hjalmarsson, President and CEO, and with me, I have Peter Welin, CFO and Deputy CEO. We'll spend the coming 25-30 minutes going through a few highlights on the third quarter, including a deep dive into the different business areas, some details of the financials, as well as a short outlook going forward. After this, there will be plenty of time for questions. With that, next page, please. Page two. Before we get started, just a brief introduction to Inwido. We are a leading window group in Europe, a clear market leader in the Nordic region with a strong presence in the U.K. and Ireland. We have net sales of SEK 9.1 billion, rolling 12 months now up until the third quarter, and a return on operating capital of 17.9%. We have roughly 4,900 employees in the geographies you see marked in dark blue on the map on the right-hand side. The white dots that you see on the map are our production locations, and we market and sell all the fantastic brands that you can see on the bottom part of the slide. Next page, please. Page 3. Before we dive into the details of the third quarter, a few remarks on what we see as an emerging new era in terms of the energy landscape around us. Driven not only by the geopolitical developments that we see, but also the combined efforts to decrease our carbon footprint in line with the agreed treaties. We believe that we're likely leaving a period of abundance of cheap energy. As you know, the fastest way to lower the prices is to reduce demand, and the best way to do that is to improve energy efficiency. The EU, as a part to reach the ambitious 1.5-degree target, so the Paris Agreement have launched a Green Deal, and one very important part of the Green Deal is the Renovation Wave that aims to double the annual energy renovation rates in the coming 10 years. We also see, as you can see on the right-hand side of this slide, some large campaigns across basically all our markets, driving for energy efficiency. This is also a key topic on media's agenda. One example is the Swedish Energy Agency, Energimyndigheten, which states recently in a report that up to one-third of the heating in a Swedish villa actually evaporates through windows and doors. In conclusion, I think it's fair to say that it's never been a better time to replace old windows and doors with newer energy efficient ones from Inwido. Next page, please. Page four. Highlights for the third quarter. Well, I'm pleased that we're posting the tenth consecutive quarter with organic growth and for that matter, organic growth on a high level. We see a quarter where we continue to stay above the trajectory towards our long-term targets, both in terms of growth and in terms of profitability. We also see good development in three of our four business areas, where the business area e-commerce has a weaker development in the quarter, mainly as a consequence of some lingering effects and some lost momentum from the supply chain disturbances we've seen in the first half of the year, which in turn then was a consequence of some troubles we had in implementing growth-promoting investments in the supply chain. We've seen continued increases and quite rapid increases in glass prices, which are very dependent on the European price for natural gas in the quarter. However, we've started to see wood prices soften, albeit from high levels. Next page, please. Page five. If we look at the numbers then, sales growth was 26% to SEK 2.386 billion. Organically, that's a growth of 15%. Operating EBITDA increased by SEK 22 million to SEK 297 million, which is the highest ever in a Q3 and on par with the highest quarterly result ever. Operating EBITDA margin down by 2 percentage points, mainly as a consequence of mix and the challenges that we've seen in business area e-commerce. The very high natural gas prices during the quarter, which has then substantially impacted the price of glass, one of our key material components, as well as obviously the impact from the high price of electricity. Order intake down 1%, - 1% with an order backlog increase of 6% to SEK 2.42 billion at the end of the quarter. Thanks to continued strong cash flows, we continue to decrease the leverage with a net debt versus Operating EBITDA of 0.8, down from 1 last year, or 0.5, excluding IFRS 16. Next page, please. Page six. If we summarize the development of the first nine months, the development is strong also in that perspective, with a sales growth of 25% to just shy of SEK 7 billion, an organic increase of 16%. We see Operating EBITDA growing by SEK 112 million to SEK 775 million, with an Operating EBITDA margin slightly down to 11.2%, down by 0.7 percentage points from last year. EPS continues to grow up to SEK 9.62 for the first nine months. Next page, please. Page seven. Looking a bit at the business areas, starting with business area Scandinavia. As you can see, on the charts on the right-hand side, we continued with good growth in the quarter, and we've seen improved profits in all the countries, with further strengthened positions in our core markets. Most of the business units have done a successful job in adjusting prices to the higher input materials to compensate margin. We've seen a good contribution already from the start of the recent acquisition of Westcoast Windows that has contributed positively both to sales and to profit. Sales is up 27% to SEK 1.265 billion, with Operating EBITDA margin strengthening slightly by 0.1 percentage points to 16.2%. The order backlog at the end of the quarter is slightly down, 9% down year-over-year. Next page, please. Page eight. If we look instead at the business area Eastern Europe, we continue, as you can also see on the chart on the right-hand side, a strong growth, particularly pleasingly in the consumer segment. The largest business unit in Finland grew very strongly with increased profits. Pleasing, we're also seeing continued good development in our Polish business with strong sales and good profit development. Sales grew 36% to SEK 656 million, with an Operating EBITDA margin slightly down by 0.2 percentage points to 9.0%. The order backlog at the end of the quarter, very strong, up 28% year-over-year. Next page, please. Page nine. Looking at business area e-commerce, as I mentioned previously, we have lost our positive momentum a little bit after the capacity constraints that we saw in the first quarter. These capacity constraints, as I said, were linked to a strategic capacity-enhancing investments for future growth. We're also seeing consumers that are slightly more hesitant in the e-commerce DIY market than we did during the COVID boom. Looking at where we are at the moment, capacity is no longer a constraint for us, and the efficiency is improving week by week, albeit from poorer levels. Sales is 9% down in the quarter to SEK 232 million. The operating EBITDA margin coming in at 6.3%, down from 22.8% last year. The key drivers of this being a negative operational leverage with lower volumes, somewhat higher costs as a result of continued investments for strategic long-term growth, but also poor efficiencies due to the supply chain disturbances that we had earlier in the year. The order backlog at the end of the quarter is 6% up versus same time last year. Next page, please. Page 10. Lastly, looking at business area Western Europe, as you can see again on the top right-hand side in the chart for net sales, we've seen strong growth and improved profits, but we also see some weakened margins, mainly due to mix in the quarter. We see a very positive development in Ireland, where we are continuing to strengthen our position and achieve both stronger sales and higher profits. It's also very pleasing to see that the Dekko Window Systems that we closed the acquisition of earlier in the year is continuing to contribute very well with good sales as well as profits. Sales is up 46% to SEK 241 million, with an operating EBITDA margin, however, slightly down at 9.9%. The order backlog for Western Europe at the end of the quarter is 19% up versus same time last year. Next page, please. Page eleven. A few words then on the environment around us and the external factors impacting the business. Starting then with the obvious tragedy in the Ukraine, which is obviously a humanitarian catastrophe and a tragedy for those affected. However, for Inwido, the impact is limited. We have no operation in Russia, in Belarus, or in the Ukraine, and we have no direct sourcing from any of these countries. We are, however, impacted in the sense that the price of glass correlates very strongly with the natural gas prices in Europe. As you may be aware, these prices have been at unprecedented levels during the third quarter, which has then impacted the prices that we pay for glass, one of the most important input materials for us. That, however, is slightly offset by the fact that we're starting to see timber prices come down. However, most other materials remain on stable levels, albeit high historic levels. As I mentioned earlier, energy savings are on top of the agenda, both politically in the media, but also among consumers and households. Next page, please. Page 12. As I mentioned many times before, M&A is one very critical value creator for Inwido and a key long-term growth driver. We evaluate, implement and execute M&A based on the eight criteria that you see on the right-hand side of this slide. I'm happy that we've made good progress so far in 2022. We've closed three acquisitions with Dekko Window Systems outside of Manchester in the U.K., Hyvinkään Puuseppien in Finland, and Westcoast Windows in Trollhättan outside of Göteborg in Sweden. All of the three have come off to a good start with good contributions, both in terms of sales and profit, as well as some clearly identified synergies with the rest of the business. What's also very pleasing is that thanks to our good continued work with strong cash flows, we have a very healthy balance sheet that leaves plenty of room for further strategic growth and value-driving acquisitions. Next page, please. Page 13. Another very important part of the Inwido strategy and a key priority for us is the sustainable development of our operation. Partly, and very importantly, because we see that we can contribute critically to the energy transformation in society with our energy-efficient windows and doors. Also because we are acutely aware of the need for us to consistently decrease the impact that we make on the environment around us. One part of this sustainability work is to report and follow up on nine sustainability KPIs that you can see here on the left-hand side of the chart. The last one is a new one for this year, but the previous eight, you can see that some are reported on a quarterly basis and some on an annual basis. Looking at the latest reporting period, we made progress on six of the eight KPIs, and our ambition is very clearly that we want to make progress on all eight for the long strategic future. Looking at the KPIs that are reported quarterly, you can see those on the right-hand side, where it's pleasing to see that we are continuing to make progress on creating a safer place to work, although we've set very high ambitions in this area and are continuing to invest considerably to make this a safer place to be day by day. It's also pleasing to see that we're making progress in terms of decreasing our hazardous waste. However, it also shows that we still have work to do. Our energy consumption per produced unit is actually going up on a rolling 12-month basis versus the period before. The key driver actually being a cold winter this year, but nevertheless shows that we need to continue to develop the very good initiatives that we have in this area. Mainly due to the quarantine rules around the COVID pandemic, we see that short-term sick leave is going up. Always it's pleasing to see that we're making some continued progress on decreasing the long-term sick leave. Next page, please. Page fourteen. With that, I'm going to hand over to Peter, who's going to go through the details of the financials. Peter, please. Thank you so much, Henrik. We turn to page 15, please. This page is showing a summary of the income statements. To the left, we can see the Q3. In the middle, we can see the year to date. To the right, we can see rolling 12 months as well as last year. If we start with a quarter, sales was +26% compared to last year. Organically, it's +15%. Volume plus price increases gave a growth of 15%. The gross margin declined from 27.8% to 24.5%, mainly due to mix. We have a lower degree of consumer e-commerce sales in the quarter compared to last year, and as well as the e-commerce had also lower gross margin this year compared to last year. We have the glass prices, which are impacted by the gas prices, as Henrik mentioned before in the quarter. We have also higher energy costs compared to last year in the quarter. Operating EBITDA was improved by SEK 23 million, an increase of 8%. EBITDA was higher in the quarter compared to operating EBITDA, SEK 298 million compared to SEK 297 million. The reason for that is a one-time repayment of AFA insurances in the quarter. We also had some acquisition costs in the quarter. Further on the income statement, we can see that tax cost was +10% compared to last year, and earnings per share was +9% compared to last year. Year to date, we have an increase of sales of 25%. Organically, it's +16%. The gross margin is also down compared to last year. Year to date, the operating EBITDA has been improved from SEK 663 million to SEK 775 million, an improvement of SEK 112 million or 17%. We can also see further down the income statement that profit after tax was +40% and earnings per share is +12%, an increase of SEK 1.05. Rolling 12 months, sales is now up to SEK 9.1 billion. Also glad to say that operating EBITDA for the first time ever is above SEK 1 billion. It's equal to SEK 1.09 billion, a margin of 11.2%. Earnings per share is today rolling at SEK 13.34. If we then turn page, we go to page 16. This page is showing the order take development as well as sales development to the left for 2020, 2021, and 2022 in Q3. If we start with sales to the left, sales is +26%. Acquisition has increased the sales by 6% and the currency has also increased the sales by 3% and organic sales volume plus prices is +15%. Scandinavia had organic sales growth of 20%. Eastern Europe was +30% in the quarter. E-commerce was -14% and West was -1%. The order take to the right declined by 1% compared to last year. Excluding acquisitions is -7%, still above the level of 2020 and also above the level of previous to the pandemic. Looking at the business areas in the order intake, the total order intake in Scandinavia was -2%. East was -14%. E-commerce was -8%. West was +68% thanks to the acquisition of Dekko as well as good improvement in Ireland. We turn page, we go to page number 17. On this page, we can see the operating EBITDA in the quarter as well as year-to-date, also for the margin in the quarter as well as year-to-date for 2020, 2021, as well as 2022. The operating EBITDA of SEK 297 million is the highest operating EBITDA in Q3 ever for Inwido. The margin declined from 14.5% to 12.5%. If we exclude e-commerce, the margin is more or less on the same level as last year. We have the negative impact from the gas and glass prices as well as energy costs. The margin in 2020 was 14.4%. Year-to-date, we have higher result ever of SEK 775 million. The margin has declined compared to last year from 11.9% to 11.2% due to e-commerce as well as inflation and energy costs. The margin is still above the level of 2020, an improvement of one percentage unit thanks to the strong quarter one this year compared to quarter one 2020. Quarter one this year, we had a margin of 8.5%. In Q1 2020 was 3.3% due to the strong backlog we had end of 2021. If we then turn page, we go to page 18. This page is showing the order backlog end of each quarter since Q3 2018 until Q3 2022. The order backlog declined compared to Q2. However, we're still +6% compared to last year and +85% compared to 2020 and considerably higher compared to previous years. Still strong order backlog compared to previous year from the historic of Inwido. Excluding acquisitions, the order backlog is +1%. Scandinavia is -9%. Eastern Europe is +28%. e-commerce is +60%, and Western Europe is +19% compared to last year. If we then turn page, we go to page 19. This page is showing the return on operating capital. Return on operating capital is defined as EBITDA rolling 12 months in relation to operating capital at the average operating capital latest four quarters. We have improved since Q3 2018. We have improved from 9.5% to 17.9%. Operating capital decreased from beginning of 2020 to end of 2021 by SEK 690 million thanks to improvement in working capital. This year, for the latest two, three quarters, the operating capital has increased due to acquisitions. Working capital in relation to sales has stayed and is stable on a lower level. We have, during the period, improved EBITDA. At the same time, we have reduced operating capital, and thereby the return on operating capital has improved to 17.9% and is still above the target of 15%. If we then turn to page, we go to page 20. This page is showing the net debt at the end of each quarter, including as well as excluding IFRS 16, also showing the net debt in relation to EBITDA, including as well as excluding IFRS 16. Net debt decreased in the quarter by SEK 241 million. We have the strongest cash flows in the second half of the year. Compared to Q3 2019, the net debt has decreased by 1.4 billion, and the net debt to EBITDA has decreased from about 2.5 to 0.5 excluding IFRS 16. Including IFRS 16, we are on 0.8. The IFRS 16 debt has increased the total debt by SEK 383 million. Inwido has today low leverage, and we have thereby balance sheet as well as liquidity to make acquisitions. If we turn page, we go to page 21. This page is showing the development since the IPO. Inwido made an IPO in 2014. Since the IPO, sales have been growing up until today rolling 12 months by 85%, a CAGR of 8%. Operating EBITDA has been doubling during the period, and the earnings per share has increased by 4x or 300% from SEK 3.1 to SEK 13.3. I'll hand it over back to Henrik to make a short summary and outlook, and thereby we open up for questions. Next page please, page 22. Very briefly, in summary, we closed the quarter where we remain above the trajectory in both terms of growth as well as profitability towards our long-term target. We see a strong order backlog that supports sales in the near term, but some more uncertainty in terms of the order intake. On the one hand, we see a high inflation, increasing energy costs and rising interest rates that reduces the consumer's disposable income. On the other hand, we continue to see a strong focus on the home and the home environment and a rapidly renewed interest for energy efficient solution, which creates clear opportunities for Inwido. Either way, we have a proven track record of rapidly adjusting our operations up or down to fluctuations in volumes and remain prepared for any demand development while continuing to protect our margins. Next page, please. Page 23. Before I open up for questions very rapidly, just want to remind you that on the eighth of December, we will host the Capital Markets Day in Stockholm. You are cordially invited, and please sign up on our website. With that, we will open up for questions. I hand back to you, operator, please. Thank you very much. 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 these 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 will pause momentarily to assemble our roster. The first question comes from Victor Hansen from Nordea. Please go ahead. Yes. Hello, this is Victor Hansen, Nordea Equity Research. Hi, Henrik and Peter. My first question here, what's the price effect in your order intake and your order backlog? It's the price impact. It's a bit hard to separate price from mix, as you know, given the complex setup and environment, but it's in the range of 10%-15%, year-over-year. Yeah, that makes sense. When do you expect your e-commerce efficiency to be back to normal? We expect a gradual supply chain efficiency recovery here during the fourth quarter. We should be back at, as I said before, from a capacity perspective. There is no longer a challenge for us. From an efficiency perspective, we expect to be sort of fully back on track either at the very end of the fourth quarter or early in the first quarter next year. Yep, got it. Finally, what's the margin hit from higher input prices such as glass? Yeah, it's a bit hard to answer directly, obviously again, because of quite a substantial mix. Given the spikes in energy prices, given that high 40% of revenue is actually input material costs, and given glass is the biggest input material, we obviously have a considerable hit there. On top of that, we then have general energy prices that are impacting. In the quarter, input material prices alone probably net impacting the margin by around a percentage point. Okay, that's great. One final question. Would you say that you paused or slowed down your M&A pace here due to turbulent markets or what's your outlook here in terms of M&A? We continue to remain very active in the M&A space, spending a considerable amount of time and energy on finding the right targets, and developing those jointly. I think it's important for us to take a long-term perspective on this, which means that the targets that we're looking at and working together with are targets where we are in a sense, less worried about any short-term fluctuations and see clear long-term joint value creation. Our activities continue. We do see some pockets of sellers being a bit more cautious given that a fear that the uncertainty in the market outlook will impact their valuation multiples negatively. Overall, we see continued progress on the M&A front. That's great. Thank you. That's all from me, and see you in December. Thank you, Victor. Thank you. Our next question comes from Fredrik as a private investor. Please go ahead. Good morning. My name is, Fredrik Gretland. Do you hear me? Yes, we hear you. Good morning. We hear you. Good morning. Good morning. Yeah, I have three questions. I wanna go back to regarding the demand. I mean, you're growing quite heavily in all your regions. I was just wanna know, you know, do you see an increased demand now that, you know, private buying more windows now to mitigate the energy prices? I mean, if we look at the order intake, as you see, which is our demand predictor in a sense, you see that was slightly down in the quarter. In reality however, the mix impact there is quite substantial, where we see slightly more hesitant activity levels on the industry side and also on the e-commerce side, a bit more hesitant activity levels. However, in other pockets, we see opportunities from the energy renovation focus that obviously comes as a consequence of the very high energy prices that we've seen. It's a little bit of a mixed bag, and that's also why I mentioned from an outlook perspective that on the one hand, we obviously recognize that consumers are squeezed by rising interest rates, higher inflation. On the other hand, they also have strong opportunities for good ROI investments in their homes with, for example, them changing windows and doors to more energy efficient products. Okay, thank you. Regarding the natural gas prices, you know, affecting the glass prices. If and when the gas prices comes down, how long is the price lag till you see it? It's shorter than it used to be. Given the very turbulent environment, we normally work with somewhat longer periods of locking in prices. In this current natural gas and glass price environment, we have not done that. Any reduction in natural gas prices will have impact already in the quarter, clearly. In some cases, it might even have within just a few weeks. In effect, it's energy surcharges that will be coming down quite rapidly. That's how we've structured that given the turbulent environment. Okay. This is more of an IR question, but how actively are you working against institutions and larger funds regarding your ESG profile? I would say that we are continuously increasing the activity levels. We have over the past couple of years internally very clearly highlighted and invested behind the ESG area in the broadest sense. As I said, we're very aware of both the way that we can impact this positively from a European perspective, but obviously also the responsibility that sits with us. I would say more and more. Given the relatively high taxonomy alignment that we expect to be able to achieve, we also see an increasing interest level in the sustainability aspect of our business and the ESG aspect of our business. Okay. That's all for me. Thank you very much. Thank you very much. Thank you. If you have a question, please press star then one at this time. In the meanwhile, we have received two questions over the email, and then we can take these two questions here. It's from Daniel Butterbeck. Henrik, question number one, it's regarding the impact of timber prices. Do you have any idea on how much your input costs are made up of timber and how much of reducing timber prices will impact the cost of window frames? Yes. We obviously have a view on how much of our input cost is timber prices. And we can say that, to give some sort of size here, timber is our second biggest material category in terms of value following glass. As I said before, roughly 45% of our revenue is actually input material cost. We expect, as I also said before, timber prices to be coming down during the fourth quarter and also into the first quarter of next year. I guess a way to size that, to give a bit more specificity around it, is that 45% of our revenue is materials, and roughly 50% of those materials are made up of wood and glass. Glass is a bit more than wood? Correct. Second question from Daniel. It's, are there any specific markets where you are looking at acquisitions, or do you see a reduction in the prices of private companies? We obviously see an opportunity to continue the consolidation with what will be likely smaller bolt-ons in the Nordics, given the strong positions that we have in several markets. We see a clear opportunity to continue the consolidation in the U.K. and Ireland. We've also been quite clear about the desire to make inroads into at least one larger continental European market in the near term. We do see some clear opportunities there. As a bit of a teaser to the capital market today coming up, then we will talk a bit more in detail in terms of both the opportunities there and the activities we have to drive that. In terms of valuation, it's a bit of a mixed bag, to be quite honest. We do see a market where, given the uncertainty in outlook, multiples are starting to come down a little bit. On the other hand, given the recent high activity both in our space but on the economy in general, obviously the trailing financials are at fairly high levels. It's a bit of a mixed bag. Any further questions, operator? Thank you. There are no further questions, sir. Okay. We hereby close the call. Thank you very much for your participation, and see you next time. Thank you. Bye-bye. Thank you very much. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines. Thank you.