Welcome to the Inwido Q1 2023 report presentation. For the first part of the conference, 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. I will hand the conference over to CEO Henrik Hjalmarsson and CFO Peter Welin. Please go ahead. Good morning, everybody, and welcome to this presentation of Inwido's first quarter 2023 results. My name is Henrik Hjalmarsson. I am the President and CEO, and with me I have Peter Welin, CFO and Deputy CEO. We will spend the coming 20 minutes or so going through a few highlights of the results, a short glance into the different business areas, as well as a deep dive into the financials. After which, there will be plenty of time for questions. First, for those of you who are new to Inwido, we are a leading window group in Europe and a clear market leader in the Nordics with a strong and growing position in the UK and Ireland. Net sales of SEK 9.6 billion rolling 12 months with an return on operating capital of 17.6%. We have roughly 4,400 employees at the end of the quarter. In the geographies marked in dark blue on the map on the right-hand side. More specifically in the white dots on the map, which are our production locations across Northern Europe. We market and sell all the fantastic brands that you can see on the bottom part of this slide. We offer five clear shareholder value propositions as a group. The first one being a strong position on an attractive market driven by the clear ambitions to reduce the high share of total greenhouse gas emissions that the building stand for in Europe, hence then driving stronger energy efficiency around the buildings in Europe, of which windows and doors is an important part. We have a strong position in our core geographies, which we leverage through setting price points, driving offerings, but also capitalizing on the resources and competencies we have. A healthy and strong proven track record through economic cycles, tackling tougher times with a good cost efficiency, as well as capitalizing on stronger markets with leveraging growth for better margins. We run a scalable e-commerce platform in a clear leading position in the Nordics, but with some strong opportunities to roll out further across Europe, most notably ongoing in our case in Germany, but with further potential going forward. Very importantly from a strategic perspective, with a clear potential to drive a European consolidation, consolidating a pan-European fragmented window landscape. Looking briefly at the highlights of the first quarter. First of all, it's pleasing to note a strong result in a tougher market with 168 million SEK EBITDA, which is the second best Q1 to date, just shy of the result last year's. We've seen the 12th consecutive quarter with sales growth, higher margins in three out of the four business areas, a positive trend, very pleasingly in business area e-commerce after a more challenging year in 2022, with some challenges following investments in the supply chain for future growth, where we've seen growth in both sales, in profit and in order intake in the quarter. We're looking at the markets where the new build side is weaker and the industrial side is weaker, also with slightly more hesitant consumers, albeit, as I'll come back to, still a healthy focus on energy conservation and energy efficiency. Looking more specifically at the numbers, sales grew by 1% in the quarter to SEK 2.095 billion. Organically, that was a 7% decline. Operating EBITDA, as I said, a, in a multi-year comparison, a healthy number of SEK 168 million, slightly down from last year's SEK 180 million. An Operating EBITDA margin down by 0.7 percentage points to 8% flat, mainly driven by sales mix, but also some clear, clearly chosen investments to drive future growth. Order intake 17% down with an order backlog that's 32% down year-over-year at just shy of SEK 1.6 billion. Peter will, in a while, come back to some more details around the order backlog. Still a strong balance sheet, creating room for investments as well as M&A with a net debt versus operating EBITDA of 0.7, including IFRS 16 of 0.4, excluding IFRS 16. If we look then, briefly into the different business areas, starting with business area Scandinavia. As you can see in the ring chart here on the right-hand side, we do have some considerable industry exposure in most notably in Sweden than in business area Scandinavia. With an industrial market that has remained weak throughout the quarter, we have seen an impact on the performance in the quarter. We see consumers across Scandinavia that are more cautious, but as I said, still focused on energy renovation and the energy conservation opportunity. In the quarter, we saw weaker sales and margins then being driven mainly by lower volumes to the factory, which is then holding back, fixed cost absorption slightly. Sales 9% down to SEK 1.073 billion, with an operating EBITDA margin slightly down to 10.8%. The order backlog in the end of the quarter is 37% down year-over-years. If we look then at business area Eastern Europe, we saw a quarter of good growth and improved margins after a second half of 2022 with a slight continued lag in getting through price increases to fully compensate for the inflation during last year. We clearly saw the full effect from this in the first quarter with higher margins, mainly in our largest Finnish business unit, but also in our Polish operation. Sales grew 11% to SEK 565 million, with an operating EBITDA margin up 1.4 percentage points year-over-year to 6.8%. Order intake down 25%, mainly driven then by the weaker industry market, which means that the order backlog at the end of the quarter is down 31% year-over-year. Looking at the business area e-commerce, very pleasingly, as I mentioned, continued progress after a challenging 2022, with both sales profit and order intake growing. We've continued to make significant marketing investments to drive future growth and strengthen our position in the core markets as well as in our emerging markets, which has then held back the margin development in the quarter. Sales grew 29% to SEK 236 million with an operating EBITDA of SEK 4 million, corresponding to an operating EBITDA margin of 1.5%, up from last year's -4.2%. Order intake in the quarter plus 12% versus last year. The order backlog at the end of the quarter, 27% down year-over-year. Business area e-commerce, Oh, sorry, business area Western Europe, where we saw continued good growth and stronger margins despite being in what a continuous following Brexit, inflation and interest rates, a slightly more cautious consumer market. Dekko Window Systems outside of Manchester, which we acquired in last year, around this time, has contributed well both with sales and profit. All in all, that means that sales grew in the quarter by 70% to SEK 223 million. The operating EBITDA margin came in 0.6 percentage points up year-over-year at 8.7%. The order intake slightly down -8%, but that is partly impacted by the fact that Dekko was acquired in the period last year, and the order backlog then taken in as order intake. Peter will come back to that later. Order backlog at the end of the quarter, -14% year-over-year. Looking at one of the important value creation drivers for us, being M&A. We obviously feel that we made good progress in 2022 with the three healthy acquisitions that have contributed well from the start with Hyvinkään Puuseppien in Finland, Westcoast Windows in Sweden, and as I mentioned, Dekko Window Systems in the UK. We are now in a situation where, as I mentioned, talking about the drivers of shareholder value, continued M&A and consolidation in the market is a clear value creation opportunity. We sit with a very healthy balance sheet, which creates considerable room for continued M&A activity in the months and quarters to come. I also wanted to take the opportunity to say a few words about our progress in terms of sustainability. First of all, not the least for me personally, I'm very happy about the continued progress in terms of reducing the number of accidents with absence in our factories. We have continued to drive a structured and preventative work where incidents as well as risk moments are clearly identified and systematically analyzed and taken action on. As an example, our largest business unit, Elitfönster in Sweden, their lost time accidents have decreased by 85% over the past 6.5 years. Making some considerable progress in the area. I'm also happy given our ambitions in terms of decreasing our footprint on the environment with the continued reduction in energy consumption, both measured per unit but also in absolute terms. Clearly some more work for us to continue to do in terms of waste and hazardous waste generation. Particularly, following some remnant effects in reality from COVID, continues to be a challenge, albeit at stable levels and more efforts are going in to address that over time. With that, I'm going to hand over to Peter, who's going to take you through the numbers. Thank you so much, Henrik. This page is showing the income statement for the first quarter, and to the right, we can see the running 12 months. The growth continued in the quarter. Sales grow by 1%. Organically, it was -7%, and number of sold units declined compared to last year. Despite lower volume in the factories, the gross margin improved in the quarter due to full impact from implemented price increases last year and also adjustment of cost in the factories. The labor costs within the factories have been reduced to meet the lower volume. However, the lower volume has a negative impact on the gross margin as well as the operating EBITDA margin when fixed costs in the productions and overhead costs have not been adjusted accordingly in the quarter. Gross margin was improved by 0.6% units from 22.8% to 23.4%, and all business areas improved gross margin in the quarter. The improvement was mostly within e-commerce with an improvement of 4% units. The operating EBITDA margin declined in the quarter from 8.7% to 8.0% due to higher overhead costs in relation to sales. The margin of 8% is an historical high margin for the first quarter. Operating EBITDA declined from SEK 180 million to SEK 168 million, and profits after tax declined by 8% from SEK 122 million to SEK 112 million, and earnings per share declined by 9% from SEK 2.08 to SEK 1.90. For the latest 12 months, meaning from April 2022 to March 2023, sales reached SEK 9.6 billion with an operating EBITDA margin of 11.3% and an earnings per share of SEK 13.56. This page shows the Operating EBITDA as well as operating EBITDA margin for the first quarter latest six years. Inwido has some high seasonality business. The seasonality has, however, been less during the pandemic, and the margin for the first quarter has been improved during the pandemic due to low seasonality. Prior the pandemic, the margin of Q1 was on a low single digits, as this graph shows. Prior to 2018, the margin in the first quarter was below, even lower than the 4% or 3%-4%, as shown in this graph. This year, 2023, the Q1, Inwido had a relatively strong order backlog in the beginning of the quarter, thanks to a relatively strong order intake end of last year, as described in the Q4 report. A relatively strong order backlog in combination with full impact from price increases, more stable material prices, and control of variable and semi-variable costs in productions, including labor costs, gave a relative high margin in the quarter of 8%, still below last year. Scandinavia had a lower margin and results in the quarter compared to last year, whereas the other business areas showed a positive development, both in the result as well as the margin in the quarter. This page shows the sales development. To the left, we can see the sales development for the first quarter the latest six years. To the right, we can see the order intake for the first quarter latest six years. We start with the sales, compared to last year, sales grew by 1%. Organically, it was 7%. Scandinavia and Western Europe had a negative organic growth of 9% and 8% respectively, whereas e-commerce in Eastern Europe had a positive growth in the quarter. E-commerce grew by 24%. Eastern Europe had a growth of 2% in the quarter. You look at the order intake, the order intake declined by 17% compared to last year. Adjusted for acquisitions, the order intake declined by 20%. If you look at the graph for 2022, we can see that we have a slightly yellow mark on the graph, and that indicates acquired order backlog. When we make an acquisition, the acquired order backlog is calculated as an order intake. Adjusted for acquisitions, the order intake declined by 20%. E-commerce had a positive order intake in the quarter of 12%, whereas the other business areas had a lower order intake compared to last year. Scandinavia - 19%, Eastern Europe - 25%, and Western Europe - 8%. For the group, the order intake was more negative within the industry segment in the quarter compared to the consumer segment. The order intake for Q1 was below last year, but as you can see in this graph, it was higher than previous years. Even adjusted order backlog as order intake, and adjustment I mean, we've adjusted for acquisitions as well as price increases, the order intake for this year, the first quarter, was above the level pre-pandemic. This page shows the order backlog end of March latest six years. During the pandemic, the order intake improved quite rapidly. Inwido was then in 2022, not able to improve the capacity and or sourcing so quickly to meet the higher order intake. Thereby, the backlog grew and the delivery times increased in more or less all markets, in all channels, and all brands. This year, the order intake declined in Q1 more in volumes than in values, and thereby the order backlog has decreased and the delivery times are today on a normal levels. Still, the backlog end of March this year is above the level prior the pandemic. Compared to last year, the backlog is 32% behind, and adjusted for acquisitions, the backlog is 34% behind. All business areas have a lower backlog compared to last year. Compared to March 2020, prior the pandemic, the backlog is +53%. This page shows the return on operating capital development since Q3 2018. The target set in 2021 is to have a return on operating capital above 15%. The return on operating capital has been improved every quarter since Q3 2019 up until Q4 2022, from 10.2% to 18.3% in December 2022. In the beginning of this year, the return operating capital has declined from 18.3% to 17.6%. We have a lower profit. EBITDA declined in the quarter by SEK 10 million, which has impacted return operating capital by 0.2% units. At the same time, we have a higher debt and thereby higher operating capital due to IFRS 16 working capital and acquisitions. In December 2022, the IFRS 16 debt increased by about SEK 90 million due to higher interest rates and thereby higher rents, and also due to prolongment of agreements. The IFRS 16 debt end of March was SEK 107 million higher compared to last year, which have a negative impact when calculating return on operating capital. At the same time, working capital has increased in the quarter due to seasonality and also to a short-term impact from the lower volumes, and acquisition have also impacted operating capital. The latest acquisitions have now fully impacted operating capital for the latest four quarters. This page shows the net debt as well as the net debt in relation to operating EBITDA, both including as well as excluding IFRS 16. You can see on this page that the level of IFRS 16 debt has increased during the last quarters, and in Q1, it's an increase from SEK 363 million last year to SEK 470 million this year due to higher rents from higher interest rates and prolonged agreements in Q4 2022. The net debt excluding IFRS 16 has increased in the quarter from SEK 294 million in December to SEK 485 million in March, an increase of SEK 191 million. It is normal for the business to have a higher and increased net debt in Q1 due to seasonality and also due to customer bonuses. The customer bonuses from last year is paid in the beginning of this year. This year, the increase of net debt was higher compared to last year due to higher working capital in the quarter. Net debt in relation to EBITDA is still far below the target of maximum 2.5. Net debt in relation to EBITDA was end of March, 0.7, including IFRS 16, and 0.4, excluding IFRS 16. Still a strong balance sheets and liquidity that can be used for further expansions. The net debt plus EBITDA is below the level of last year. In summary then, we've achieved a good start to the year with a strong result in what is a more challenging market with an operating EBITDA of SEK 168 million, best Q1 to date. Higher margins in three of four business areas. As mentioned, a lower margin overall, driven by sales mix, somewhat lower volumes, increasing energy costs, and very importantly, increasing marketing investments for future growth. We've seen a continued positive development in business area e-commerce with growth in both sales, profit, and order intake. We do see an industrial and new build market that continues to be weak, and consumers that are slightly more cautious and obviously not immune to the ongoing development. At the same time, the desire to continue to invest in a good life at home, and very importantly, to continue to invest for energy conservation and efficiency is still high and does create opportunities for us. With that, we thank you very much, and we 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 Viktor Hässelgren from Nordea. Please go ahead. Thank you, operator. Hi, Henrik and Peter. It's Victor Hässelgren here from Nordea. First question. In your CMD, you highlighted the seasonally normalizing margins, but they were very strong here in Q1, as you mentioned, Peter. And this is despite the low margin in e-commerce also. I'm wondering here, what's driving this still very strong margin? Is this some mix effect or? Yeah. Hi, Victor. I mean, I think overall, looking at a multi-year comparison, the biggest driver of the margin is still the overall top line, which in a multi-year comparison is strong in the first quarter. Obviously, only quote-unquote up 1% year-over-year. If you look in a several-year perspective, it's strong. That is one key driver. Yeah, I think that's the key driver of it. The second one is, as we mentioned also in Eastern Europe, that finally, if I phrase it a bit bluntly, getting full impact from the price increases that we've done continuously during 2022 to meet the considerable input with air inflation. With that coming through, that then supports margin development in Eastern Europe, more specifically. Okay, great. Second question here. You took a hit to working capital in the quarter, payables declined and receivables increased. Should we expect this to normalize? Yeah. We, I mean, obviously, with lower volumes coming through the system, which we also saw in the first quarter, obviously, with taking into consideration price increases, organically, volumes were down in the first quarter. Volumes then coming down slightly, so does the purchase of goods, which then impacts negatively payables. It then does take a little bit of time to fully adjust the inventories for those reducing volumes, We do expect over the course of the coming months or no more than quarters for that to normalize again. Okay, great. Yeah, you mentioned the volume part here. On your order backlog, it was down 32%. If I use your sales pitch for M&A and FX and then also remove pricing, as you mentioned here, which I believe is close to 10%, then I get nearly 50% on organic volumes. Would you say that is fair? I mean, without having a fully consolidated picture across the group, it's there or thereabout, yes. As I mentioned before, I think it's important also looking back to what Peter mentioned around historic order intake is we come from a period a year ago where the delivery times were unnaturally long, basically across the board, and that has normalized, which is one big driver of that impact. Yeah, there or thereabout. Yeah. Yeah. Okay. Can you say anything about how orders have started in April? I mean, the only thing we can say about that is basically that the industry activity remains across the core markets where we are active in industry remains weak. Consumers are in general, I think fair to say, more cautious, but we continue to see opportunities on energy efficiency. That's it, basically. Yeah. Yeah. Understood. My final question here, I'm wondering if you could give some color on your M&A pipeline. Perhaps, wondering if sellers have adjusted their expectations due to the weaker macro, or is there still some way to go? I think that the picture varies a lot between geography, actually. As we have made quite clear, we have ambitions in several European geographies. The outlook for the market is also very different in different geographies, not the least because the pace of energy renovation is quite different in different geographies. In the markets where we have seen more impact, particularly on the industry side, we also see that reflecting on expectations on enterprise value, and in the markets where the outlook is more benign, less of that impact, obviously. Where outlook, where the outlook and the activity has been impacted negatively, some of that has also come through in expectations, is our view. Okay, great. Thank you. Thank you. The next question comes from Rasmus Engberg from Handelsbanken. Please go ahead. Right. Hi, guys. Hi, it's Rasmus here. Just trying to get down to sort of margins here. Obviously, you have a clearly lower order backlog going into Q2, but, you know, we had anticipated that Q1 would have a lower capacity utilization or clearly lower capacity utilization. That didn't really happen. Does that mean that it will happen in Q2 and have a material impact, or do you think it's a thing that happens in next year's Q1 instead, or how do you think about this management going forward? I think it's probably a combination of the fact that given the development of the order backlog during Q4, that impact was a little bit less than maybe we had anticipated in general. Secondly, I think that the way that sort of the shape of the order backlog and the way the winter developed, maybe that impact came a little bit later than usual. I would say yeah, those are probably the two things we see. I think the biggest driver was still the fact that the order backlog developed in a way during the fourth quarter, which we carried momentum into particularly in the start of the first. Do you anticipate significant effects from underutilization of capacity in Q2 now that the backlog is lower or not? Typically, I mean, looking at the shape of the order backlog and comparing to previous years, I think it's one thing to note very importantly is the fact that our lead times are back to more normal levels, which means also that our foresight into the full development during a quarter, whereas we came from an unnatural situation in 2022, where basically the full quarter was sold at the start of the quarter. That is not the situation anymore. We are back to more normal, you know, between four to eight-week lead times, which makes it a little bit hard to answer your question in any given detail. I still think looking at the multi-year comparison, if you look at the volumes that are in the order backlog, that yes, year-over-year, there is an impact, if nothing else, definitely in terms of the lead time, but too early to say, in our books whether it will have any material impact on capacity utilization yet. In the quality of the order backlog, I assume that is quite strongly tilted now to consumer orders, or is that correct or? It is fairly so, yes. It's become more and more clear. Whereas we've carried a big historic momentum on the industry side, which typically also has longer lead times, now we see a stronger and stronger shift towards the consumer side. Does that impact the gross margin as well as the overall margin positively or is it just on the EBITDA side that it impact? Must be on the gross margin. No. I mean, in, how should I say? In isolation, it actually probably impacts gross margin even more than EBITDA margin. Mm. There is one more thing to take into consideration, obviously, which is the fact that we then have a mix between, i mean, the different business areas have slightly different margin structures. Obviously-. Mm there is a sort of business area mix to take into consideration. In isolation, the consumer, the overweight on consumer will impact both gross margin and EBITDA margin positively, everything else equal. Mm-hmm. Sorry, I lost the question. I had it written down somewhere, but forgot all about it. I'll jump back in line and try to figure it out. Thanks. Thanks very much, Rasmus. As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. The next question comes from Kenneth Tøitt Johansen from Carnegie. Please go ahead. It's Kenneth Tøitt Johansen here from Carnegie. A question on the overhead costs. You had very strong gross margins, but the EBITDA margins were a bit softer than last year. You also say that you are sort of adjusting labor in production in order to adapt to the current demand levels. Are you doing anything on the overhead cost side? You talked about extra marketing costs in the first quarter, but looking forward, there might be some wage inflation and so on affecting those costs. What are your thoughts on those costs? Thanks, Kenneth. A relevant question. There were a few things to take into consideration. There's a slight mix impact that is impacting that a little bit across the group, that's one thing in the first quarter. Second one is acquisitions, obviously driving that up. Third one is indeed inflation. Then the most important one is some really conscious choices in the first quarter to continue invest behind initiatives, driving up most notably sales costs and marketing costs in the quarter. Going forward, however, I mean, we I think have demonstrated historically that we are quite proactive in terms of monitoring development and taking action. We will continue, if we see them, to leverage opportunities to invest for future growth. Should the development continue to be more negative on the industry side than driving down overall revenues and impacting that negatively, then we will take action to take down the overhead costs as well. In reality, some of those actions have already been put into place, so some of that impact will come through. We stand prepared to do more if we need to, depending on the development. Okay, great. That's all for me. Thank you. Thanks. The next question comes from Rasmus Engberg from Handelsbanken. Please go ahead. Yes. Hi. Hi. I now find what I wanted to ask you about. I was wondering about if your backlog is down 40%, how much is it roughly down on the consumer side? I assume the industry backlog is down quite a lot. Can you give some sort of breakdown on that? Okay. Off the top of the head, I think the only granularity we can give you is that it's that consumer is down less and industry is down more. Mm-hmm. without being able to answer that more specifically than that. Okay There is a lesser impact on consumer and more on industry. Okay. All right. Fair enough. The final question I wanted to ask you is, can you talk a little bit about the prices, the price effect year-on-year? Is that, you know, is that around 10% maybe in this quarter? Does that make sense to you? I know it's hard to give an exact figure for this, but if you No. Obviously it is because there's a lot of mix and everything, but it's, yeah, let's say it's some way into the double digits. Whether it's exactly, you know, 10.5 or it's 12.5. Mm-hmm That's, but it's into the double digits. Yes. How are prices now sequentially? Are they stable or going further up or going down, or how are they developing now? At this specific moment, sequentially, prices are fairly stable. Okay. Our sales prices are fairly stable at the moment. Your input costs are coming off a little bit now or? Well, we started to see some impact, yes, of input costs coming off. Most notably on timber and lately also some on glass and aluminum. That's correct, yes. It should also be one of the drivers, and I think that came across one of the drivers of the margin improvement in Eastern Europe year-over-year has been that fully impact from the price increases and then easing off on input material prices. Very good. Thank you. Thank you. There are no more questions at this time. I hand the conference back to the speakers for written questions or closing comments. We have seen, we have received some written questions. The first one is if you could please elaborate on the magnitude and possibilities on demand and sales related to increased focus from consumer on energy efficiency? It's really hard to give any specific number, unfortunately. The opportunity varies a lot by geography also across Northern Europe. There is an increasing interest. There is a clear opportunity. We see it in two dimensions. Number one, driven by the price spikes short term that we saw on energy, particularly during the fall, last fall, but also increasingly the European Green Deal ambitions and counter the activities that are taken to counter the fact that 40% of the EU carbon dioxide emissions are linked to the buildings. We are seeing that come through more and more in not the least political initiatives. It's really hard to quantify, unfortunately. A second question from a private investor. He had two questions. One was related to the order backlog that has already been asked from Rasmus and answered. The second question is related to the weather. How did a cold and snowy weather across the Nordic impact sales and orders in the first quarter? Yeah. Also relevant question. As we mentioned, typically, we do see an impact from that. This year, still on a multi-year comparison coming into quarter one, we did come in with a fairly strong order backlog which supported sales. In some parts, we have seen an impact on order intake in the quarter from the snowy weather, which is, however, not atypical because as I mentioned before, we do typically see a seasonality variation. That was all of them. Okay. We thank you all very much for your interest, and, we hereby close the call. Thank you very much, everybody.