Welcome to Sdiptech Q3 Report for 2023. 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 CEO Jakob Holm and CFO Bengt Lejdström. Please go ahead. Thank you. Hello, everybody, and welcome to Sdiptech's Report for the third quarter. Yes, my name is Jakob Holm, and as always, with me, we have Bengt Lejdström, our CFO. As always, the agenda is easy, simple. We introduce the highlights of the third quarter, Bengt, the details of the financial development, and we will end looking at the outlook for the future, and then after that, questions. As you know, our focus is on infrastructure, certain segments within infrastructure that we believe have significant good trends, drivers, being increasing consumption, increasing regulations, and also drive for more sustainable, efficient, and safe societies. Good underlying growth trends. Sales at slightly below SEK 4.5 billion net sales over the past 12 months, operating profit, EBITA star at 19.3%, and the year-over-year growth rate is 40% than since 2017. Our business model, you all know, it's very much geared towards to increase profits every year, and we have been doing so, 40%, as we saw on the previous slide. For us, it's also important not only to use our cash flow to acquire, but also to acquire companies that are high quality and that we believe will be also profitable and grow in a good way for many, many years to come. We focus very much on high margin, market positions, well-protected position versus competition. Some highlights then for the third quarter. The demand is has been strong over the quarter. Net sales increased 41%, of which about half is organic, so that's, of course, important message. To some extent, that was a catch-up from last year, but more important, the demand continues to grow. And we also think it's fair to mention Rolec, since we presented that separately last year, and Rolec grew in a good way and delivered according to plan. And that's really on the back of the business-to-business customers for Rolec in the EV charging industry. That's really where we have the important position and also the growth and also the future for Rolec. So that was really paying off in the way we expect it to be. Overall, if we exclude Rolec, then our overall growth without that was also 18%. So that's also important to mention. And sometimes we get the questions, how big is really Rolec? And it's about 10%, slightly less than 10% of our overall... Also, just to put it into context, sometimes Rolec gets a little bit too much attention. But anyway, so good demand, operating profits remain stable on the back of good cost control. We have been between 19% and 20% on our operating profit for about a year now, and we are there still. What's also happy to see that the profits grow at the same organic pace as revenue, which of course means then that the majority of our business really remains the profitability in a good way, the way we want it to be. Then also very happy to send message number three, that the cash flow is back to normal levels. 80%, we say, is a normal level for Sdiptech. We were at 94%. It's really up from 45%-33% on the previous two quarters. And so what we are putting a lot of. For now, because of course, it's important that we can translate the profits into cash. And so we are really managing down the growing receivables since we're growing organically very much. So we're really managing the receivables and inventory level, and it's paying off, and the work will continue. It continues now, and it will continue. So just to ensure that the cash flow generation is where we want it to be, at about 80% or better. We also, in August, issued a sustainability-linked bond, and that's the reason why we did that is really because we have been aiming to do this for quite a long time, actually, and we got a good window in August, so it's really part of our long-term financing strategy. We believe bonds will become a cost-efficient part of our financing mix. And really, our bond was priced low versus other first-time issuers. So that's a good sign of good creditworthiness set by the credit market, and perhaps the credit market are experts in analyzing financial risk and so forth. So that's also an important message that we want to share to other parts of or for some other stakeholders for us Sdiptech. And sometimes we get the question that's a very expensive financing to bring in bonds at this point in time. Our average financing rate is at 4.75%, and the bond added 0.25% to that. So it didn't make a big change. That's also important just to know. So we're adding this very important financing source without any significant cost increase to Sdiptech. All right, and just a final note then, I think everyone looking at our debt, the debt ratios, they decreased during the quarter, thanks to growing profits, of course, good cash flows, but also that we've had a lower pace of acquisitions than normal. We'll get back to that. Acquisitions, yes, okay, getting into that already now. Fifty so far this year, our target is at SEK 120 million-SEK 150 million acquired profits, so we are below that target. Yes, we can also mention Kemi-tech, a great company that we acquired in Denmark, but it was actually part of our presentation over the previous quarter, so we will not develop into that company particularly now. It's, it is a fantastic company that we're happy to bring into the group. Our pipeline is good, our financial position is good. The reason why our acquisition pace is slower than normal is really that on the back of the macro situation, higher uncertainty, higher interest rates, that also brings higher requirements on our return on capital. So the way we see it, the price expectations in the market are, in general, still too high. So that means that there are fewer acquisitions for us to be made, at least, to the high quality companies that we target. The price expectations there are, you know, there's higher integrity, let's say so, from the owners of those companies. So we will continue to acquire because there are always good deals to be done, but it will be done at a slower rate, as long as the macro is the way it is now and interest rates are the way it now. So expect a slower acquisition pace from Sdiptech going forward. And by that, I hand over to Bengt. Thank you, Jakob. Right. So yeah, now we get the right slide. Right, the group sales have developed, as Jakob was mentioning, very well over time. And at this quarter, it was actually increased then by 41%, all in all, and 20% of that was organic. We have gotten the question, how much of that was really currency effects then on top of that, and how much was acquired sales increase and also profit increase? And it's possible to calculate that backwards from our report. So we can say that 10% was from the currency effects and about an additional then 10% or 11% from acquisitions. So actually, the organic sales increase was higher than the acquired sales increase. That's not always the case for us since we have been acquiring over the years. Of course, very, very satisfied with that strong organic sales growth, and as Jakob mentioned, that was also turned into the same, EBITA, profit increase as well. It was really a strong contribution for most of the companies, all of the comparable units, and also the ones that we have acquired since last year. It's a strong demand, and as always, our different business segments, they really offer solutions that contribute to more sustainable, efficient, and safe societies, and that should bring a good long and increased sales. Looking on the split, sorry, the split over the countries, we can see that Sweden is actually still decreasing a bit, since we are acquiring companies outside Sweden. We haven't acquired anything in Sweden in the last four and a half years. And the part that's really increasing is what we call the other Europe and other rest of the world, which is now 20% all in all, and that means they are outside our home domestic market and represents then a quite fair share of exports from our product-based businesses. Going into the EBITA slide, we see that the profit has also increased very steadily, and as I said, it was almost the same profit increase as the sales increase this quarter, 38%. 20% was organic, so that was the same number. And also here, we had about 10% of the currency effect on top of that. Could also say that for the year to date, the three quarters, we have had a 41 increase and a 14% organic profit increase, excluding the currency effect. The margin in the quarter was 19.5%, and yeah, this EBITDA margin graph was actually on the previous slide, was 19.3% in the last twelve months. So we have been very steadily since last year on around 19.3%, 19.4%, but it's still our ambition to get up to 20%, which we think represents the situation in our companies. Also here on the profit side was most comparable units that contributed very strongly as well as acquired units. Now, we'll then come back to that in a little bit more in detail in looking at the different business areas. So, start with Resource Efficiency. It was actually the same as the group average of 40% increase, both in sales and profits. And they also had the similar profit EBITDA margin as last year, at 23%. You can see on the graph on the right side here that they've been at 21.3%. And it was mainly driven from most comparable units, especially in the power and energy and water and sanitation areas, where some specific units had really good sales. Jakob mentioned about Rolec, which increased sales significantly compared to what they had last year, even though last year they did sell products and they did have a profit, but of course, this year has been significantly better. Of course, acquisitions have contributed as well to the business area. The acquisition also we did, Kemi-tech in July, belongs to the Resource Efficiency. Taking then the Infrastructure Solutions, they obviously also then had the same both sales and profit as the group, 41% and 38% respectively. And, there were specifically in this business area, the larger units that really contributed to the increase. So for example, companies that we have that are handling insurance claims, automation solutions for container handling, imports and terminals, cooling, monitoring, and control of cooling equipment, and also cooling solutions for smaller trucks. Those are examples of our bigger companies who contributed very well during this quarter, but of course, there were many others as well. So in general, very good, good demand and sales and order intake. Acquisitions then again have contributed a little bit since last year as well. The margin decreased a little bit compared to last year. It was in the quarter 19.9% compared to the 20.4% last year. On the last 12 months, this business area have 20.6% EBITDA margin, so it was a little bit lower than average the last year. That was mainly driven by some units, some smaller units that mainly are operating within construction and real estate, that had some lower profit margins during this quarter. All in all, our scalable business model makes our sales increase to turn into profit increase, which of course, is very good. Turning to some additional metrics. We typically share these ones with you. These are numbers about the cash conversion, the earnings per share, and also some debt ratios. To start with the cash conversion, as Jakob was saying, we are at a better, this quarter was much better than the previous quarters this year, and looking for the last 12 months, we're at 70%. We should be around 80% during the quarter cash conversion compared to 59% last year. Looking at the earnings per share, that's also developed well during the last 12 months. We have increased from a little below SEK 10- SEK 11.84 now. But in the quarter itself, it was a bit lower than last year, a few öre, and that is mainly driven by, of course, the increased interest rates. If we compare the development of the EBITDA profit compared to this profit, we lose some of that increase due to the increased interest rates that we pay on our debt. There were also some currency losses in the balance sheet this quarter compared to profit a year ago, so that also makes a difference. We have an increased corporate tax rate in the U.K. from 19%- 25%, which of course, then makes that our profits in the U.K., we get a little bit less of that into our bottom line and into our pockets. But it's not dramatically, but a couple of percentage points on the whole group, this tax increase in the U.K. Looking at our debt measurements, you can always discuss how you measure this. There, it's done in many different ways, acquiring type of companies like ourselves, serial acquirers, compounders, roll-ups, whatever name you would like, have reported this in many different ways. We don't think we differ very much from most of them, apart from one characteristic, it's that we use our average debt in this ratio because we are and have been acquiring quite a lot, and then, of course, we get the full debt at the moment of acquisition, but we don't get the profit we have acquired into the profit and loss. That's why we use the average debt and then rolling in the profit as the months and quarters go by. We are, of course, as a bigger group, these different types of measuring the debt ratios become, yeah, smaller and smaller, a gap between the different methods. We are analyzing how we perhaps should change this until the year-end report for the full year. But that we will come back to in the year-end report, in that case, in February. Anyhow, the way we always have been calculating this, we have decreased our debt ratio from 1.8 last quarter a year ago to 1.68 this year. And that's counting our financial debt, that's debt to banks, and now it is also to the bondholders. If we don't take the full debt, including our earn-out debts, which have a specific characteristic that if profit doesn't increase as expected, not that full debt will become due to pay. So as a rule of thumb, we say that 40% of that debt will not be payable if profits stay at current levels. So in that number, we have estimated a future profit growth, which means a certain earn-out payment to be done in the future, up to five-six years ahead of time. And taking that full debt into the picture, we have the 3.22 now in our debt ratio. But as I said, if profits really stay at this EBITDA level, we will get below three instead. So it's always tricky with these measurements, but it has reduced quite a bit since last year, anyhow, from the 3.7 to the 3.2. Another way, as suggested, as a comparison, if we would count our debt as of the balance sheet, we would then have net financial debt of 1.85 and total net debt of 3.4. The difference isn't that big, as you see, if we were to calculate this debt in another way. But again, we will come back to this in the year-end report, and the main conclusion is that our debt leverage is going down because of what Jakob just mentioned. Now back to Jakob and the output. Okay, thank you, Bengt. Looking ahead, we haven't-- we see no obvious signs of weakening demand. The infrastructure is always needed. That's an easy way to put it, but if you think about it, it's about electrification, it's about increasing regulations on water treatments, it's about increased safety and security in transportation and so forth, and it continues to grow the demand and so forth. We are exposed, as Bengt said, to some extent to, you know, some smaller pockets within the construction and some consumer-related areas, but that has already gone down, and that's part of our numbers, and our numbers are growing fantastically. It's not really significant. So all in all, we have a good outlook for the future in terms of demand and growth. And we've repeated this for many times. You know, we are now at 19.5% in the EBITDA level. We believe that we are a 20% company, and so that is really what we are working to create. And also to continue to work with our cash flows so that we really can translate the profit into cash in a good way to continue to do acquisitions, perhaps at a slower pace, but also to bring down our debt ratio in a healthy way. And I think we've already talked about this, that we will have a lower pace, so I just, I don't need to repeat it. It's just written here. We also get some questions, you know, did you do the bond because you, you know, you cannot really get the funds needed from banks anymore? No, that is not at all the case. We have great relationship with the banks, and we have credit facilities that are easily accessible, and we have our own cash at hand. So approximately SEK 1.3 billion is liquidity that's easily available to us. So that's not, that's not the reason why we brought in the bond. It's really because it's a strategic part of our future financing mix. We just wanted to mention that also, that our balance sheet and financial stability is definitely there in place in a good way and a healthy way. All in all, we have a very, we have a positive outlook for the future in terms of growth, demand, and profitability and cash flows. Yes, and finally, as all of you know, I will hand over to Bengt as the CEO from January first. The succession is very easy. Take the leadership team, not only Bengt, but the entire team around Bengt is very strong, and the entire organization, so the succession is easy. I know that they are very committed to continue to develop Sdiptech, always with focus on that possible shareholder value. So by that, I thank everybody for participation in these kind of sessions. It was a 35, 35th presentation for me, and I'm happy to hand over to Bengt eventually. Yeah. All right, and with that, 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 Karl Bokvist from ABG Sundal Collier. Please go ahead. Thank you. Good afternoon. My first one is on the commentary you make about lower pace of acquisitions. It's something we've also heard from others regarding different reasons why, but we've heard that others are also flying a bit lower pace. I was just curious, when you assess the landscape and the discussions that you have, based on your current kind of best guess, is this more like something that you will see happening in the short term, or that for the kind of next strategic period, be it three- five years, this will be a lower pace of acquisitions? No, it's more related to the macro situation. So it's not a strategic change for us. It's just the way it is with the uncertainties in macros and the increased interest rate that really puts higher requirements on the return on capital. So that will eventually change. Understood. And is this something that you see across all of your divisions and the regions, this kind of macro uncertainty, and that good quality assets are still priced a bit too high? Yes, we see it in all geographies and so forth. So it's not specifically related to geography or segment. It's more the general macro situation and in interest levels. All right. Understood. And then, on the, on the, organic growth, 20% acceleration versus last quarter, and organic earnings also grew 20%, so in line with sales. Just overall, in terms of pricing and cost inflation and so on, do you think that you can continue to, well, at least match, growth in profits with growth in sales, so that there are certain, companies within the business mix, that means you could potentially even grow earnings faster than sales in the coming quarters? Yeah, perhaps by when it comes to price increase, we think we have caught up with the inflation that has been this year. I think we have mentioned that that we typically have a bit of a lag, and this year it has been a lot of cost increase when it comes to staff cost and personnel, and that perhaps not as much on goods and materials. But we think now we're in line with that, so we have a good price list, if you say so, for our products and services. And when it comes whether how much the different company's business model scales, so that more sales give even higher percentage of profit increase, that's of course depending on their business. So we have a number of those companies that could sell more and earn even more, so to say, in percentage, because the business models, but not all of them. But so of course, and as we have mentioned, we strongly work for that, getting up that last 0.5% in profit margin up to the 20%. So let's see if that comes from both sales or more the business mix in the near future. Understood. And then on the Rolec here, you say it grew significantly. And so, yeah, well, significantly in terms of profit, I would guess. But could you give any kind of comments on the profitability here? Just trying to do some backwards calculations here, would it be fair to assume that profits are good, but perhaps not back to the kind of previous 25%+ levels that you've commented Rolec has been running before? Yeah, we said, I mentioned also a report that this quarter is typically a little bit slower for, for the Rolec business, selling the EV chargers specifically. So, so they have a typically a bit lower profit margin in the Q3s. So it was, it was below what they typically are, but it was still, still around more or less the group average. So it's a very decent profit margin for that type of business. Okay, great. Thanks for the caller. And my final one is: you said that acquired units had earnings in line with or above expectations. So my question is just, what is the positive earn-out revaluation in the EBITDA related to in this quarter? Well, that is all connected to a more bookkeeping exercise, according to IFRS, that we have increased the discount interest rate for these debts. I mean, we don't pay any interest on earn-out debts, but we need to calculate an interest rate and do a discounted backwards counting of the debt. And since we increase the rate, the debt becomes lower. So it's, it's not that we have released any earn-out debts values, it's just that we have changed the interest rate from 3%-4%, because as we see it, this interest rate environment will go on for a little bit longer than perhaps expected a year ago. ... Okay, yeah. Okay, so but the discount rate change on continuing considerations, that is what you book in net financials. So what, what's the difference there between book above and below? It's not financials, it's, other income, so that's really the top of the- Yeah. P&L. Okay. All right. All right, I hear what you're saying. Thank you. Yeah, thanks. The next question comes from Niklas Sävås from Redeye. Please go ahead. Hi, Jakob and Bengt. Thanks for the presentation. Thank you. So, I want to ask, Q3 is typically not like a seasonally strong cash flow quarter, but you delivered solid figures in the quarter anyway. I just wanna ask about Q4, which is seasonally a strong, strong quarter from a cash flow perspective. Do you expect it to continue this quarter? Yeah, as Jakob said, we work very closely with the companies to improve the cash flows, because that has been a bit weak earlier this year, for some time. So we really work hard to get that back to the normal levels, and this quarter was good, above the average, where we took Q4 has been very often a very good cash flow quarter, because we have some seasonality in the businesses where they deliver out pretty much during this quarter. So let's see what happens. But yes, you could say, on average, typically, it's a pretty good quarter from a cash flow perspective. From a capital expenditures, it was a bit elevated this quarter. Is there something else planned for Q4 that will bring them to a similar level, or should they revert back to the normal 3%-4% of sales? Typically, we are between 3%-4% of our turnover in CapEx, both material assets and immaterial assets, like research development, IT system, and so on. Yeah, this quarter was a little bit more, but that it doesn't always be exactly the average quarter- by- quarter. It depends a little bit on when that investment is installed or finalized when it comes to hardware, for example. So for the year, we should be at our normal levels, and we are right now slightly below 4% compared to our turnover so far. Yeah. And the follow-up on the previous question about the acquired EBIT per year. So in Q2, you signaled that you will... You still intend to meet the target, SEK 120 million-SEK 150 million in 2023. But now you signal a slowdown in acquisitions, and as we only have two months left of the year, should we assume then that you won't meet the target, that you will actually come in below the target this year? And also, if you could say something around your thinking around that target in 2024. Hmm. Yeah, well, as you know, we've acquired above SEK 50 million so far, and the target is SEK 120 million-SEK 150 million, and we're saying that we're slowing down. It would be perhaps a fair assumption to say that we would not, you know, significantly acquire over the, over the, over the ending months before the year end. As always, you know, they sometimes come with a short period of time, connected to each other, or, you know, it can take several months to full between acquisitions. It, it's always a little bit up and down, but I think, you know, if you want to make an assumption, it's probably not so big likelihood that we would hit the target this year. I think what we're trying to communicate is that we will have a slower pace of acquisitions than what we normally will do, and that will also be the same way over the next year, as it's related to macro interest rates. Okay, understood. Thank you so much, and, and Jakob, good luck with your future endeavors. Thank you. There are no more questions at this time, so I hand the conference back to the speakers for any written question or closing comments. We have got some questions here on the chat. I think we have answered the one about reaching but not exceeding the M&A target. Then there was a question about how much of the organic, the 18% organic growth, excluding currency effect and also excluding Rolec, is pricing. We don't have any exact number on, on that, so it's really hard to tell. But as I mentioned, we have been increasing prices during the year in order to catch up with the increased costs. Of course, part of the organic sales growth is pricing, but it's not huge. Typically, even though we are in very strong positions, but it's, since our products are necessary for our customers and typically a small share of wallet, but it's also, customer relations where we cannot just, bump up the, too much. So it's always a balance between the very long-term relationships we have with our customers for five, 10 years, and, to compensate, for the actual inflation. So a long answer, but to say that I cannot give you an exact number of that, but it's a large part of this is volume, not pricing. And then we had also one question about, should we eliminate the, the M&A target, so that we shouldn't be forced to acquire, but we've never been forced to acquire. Exactly. No, we have the targets for M&A, but of course, it's a target, it's not a must. So we always value every situation on its own merits if we should do an acquisition or not, then as Jakob was saying, because it's macro and interest rates and everything, our return calculations, and that makes our walk away price lower than previously, and also means tougher discussions with people who want to sell their companies. So, when it comes to targets, all in all, we still have our three targets, and if we'll update those. But it's not we will not eliminate our ambition to acquire companies. Yeah. So that was all the questions that were published. I guess and by that, we thank everybody for dialing in, and until next time. Yeah. Thank you. See you then. Bye-bye