Good day, welcome to the presentation of Troax Group AB fourth quarter report 2022. This meeting is being recorded. At this time, I'd like to hand the call over to Thomas Widstrand. Please go ahead, sir. Thank you. Thank you for listening in all of you. As usual, I want to report a little bit around on the figures which have been distributed today of the fourth quarter results that Troax Group AB has been delivering. I will, as usual, for those of you who have followed me before, follow the pattern then of a report that we have put on our homepage, on our webpage. You can find it under investors and you can find it under I think it says reports and obviously the fourth quarter of 2022. If you don't have an access to this, don't worry because we will be able to go through, I think, the main parts in any case. Nevertheless, I'll start then with talking a little bit about the background that, as you probably know, most of you, we are into the Perimeter Guarding business, where we then try to make our customers happy, meaning then that they could be safe and sound on solid ground. Just to introduce then the company again, we have three different business segments and, or business areas. The first one, and the most, let's call it international one, is what we call Machine Guarding, where we then supply fences or guarding then to people who are using them and guarding them for some sort of machines that are being operated, which potentially could be hazardous. You see from this picture that it's typical example then of where we put up all types of fences then around this kind of production line. That's approximately 60% of our turnover. Next one is what we call Warehouse Partitioning, approximately 30% of our turnover. For those of you who are looking at the picture, you will see then that this consists in this example of typical warehouse, where we then supply both guarding then, which are attached then to the pallet racking itself to prevent the pallets from falling down. You can also see on the right-hand corner there, we then assemble then for the customers dividers that divide and for instance, moving objects like forklift trucks then with people who are working on the other side with more administrative duties, as an example. The last one, which is the next page, we call Property Protection, and that's where actually Troax got started many years ago, where we have then what we call Storage Solutions, approximately 10% of our turnover, primarily a North European operation, where we then in a more static form of safety put in cages where we as consumers put in bicycles or skis or, you know, whatever we are keeping them for different seasons or what we don't use for the moment. We also sell and install then this kind of Property Protection cages which could be outside of the house that you're living in. It could be both ways. This is the most traditional one that is shown in the picture here. We have on the next page something which we are not really showing in figures, but it's called Automated Warehouse, which actually is a combination of what we do in Machine Guarding with a warehouse part. We've had a very good development in that, let's call it subsegment, for a few years, coming from a very low level some years ago to approximately 20% or slightly above that in turnover in 2021. As we have been indicating several times in communicating, these kind of at least the big international customers have then most probably over-investing in 2020 and 2021, which means then that they substantially reduced the projects during 2022. We were still invoicing a number of those projects during the first half year, but in practice then the new orders for new projects more or less disappeared then in the beginning of 2022. Unfortunately then, this quite interesting growing market over time, we think will be rather weak also for 2023 because these kind of customers have already clearly indicated to us that new products will not come surfacing or they will not start any new projects until 2024 or maybe even later. Before we had some ideas that maybe something could get started towards the end of 2023. I think today the conclusion is that no, not very many of these big projects will be started now in 2023. It will be postponed until 2024. Nevertheless, long term, this is quite interesting for us. For 2022 in orders, it is substantially lower than the 20% it was in 2021. Next page is just a summary of the sales per region or the geographical split, which has not really changed a lot. What you can see is that the North America part has decreased, going from 20% of the turnover in 2021 to 17% in 2022, and that is primarily because of that we were doing a lot of the big automated warehouse projects in the U.S., especially in 2021. On the contrary, mainland Europe, which is our home market, has grown a bit. You could say that it's still rather stable but a little bit lower in North America and a little bit higher than turnover figures, at least in percentage-wise, when you look at mainland Europe. On the total, just to summarize 2022, we've reached more or less the same orders received as 2021. I should remember you, or at least we should try to recall, that 2021 was the year where we had a substantial increase. We had more or less 40% organic growth. To reach the same type of figure in orders that we had 2021 is actually a good achievement, bearing in mind then that we have to go into a new costume, which is substantially bigger than before. We are helped by price increases, where I want, of course, to stress that. Nonetheless, I think that's not such a bad achievement. On the sales side, we have grown primarily because of the big orders that we got towards the end of 2021, which have been delivered and invoiced during 2022. That's why we have this higher figure on sales and in orders. Otherwise, basically the conclusion is the same. We've been increasing then the sales, with more or less the price increase. Operating profit then is slightly lower, primarily because it's been quite a turbulent year with the steel price. Obviously then we are transferring over steel price increases or other cost increases to our customers. Of course there's a certain time delay because firstly we have an order backlog that we are delivering out, which we are not really want to change. Then, of course, on top of that, we have our standing quotes, which are valid for a certain period of time. We saw during the latter part of 2022 that we were starting to get covered for these steel price increases, but we lost during the period of 2022, some margins because of this. The operating margin then, seen as EBITDA, it's done 18% compared to 21% last year, which is primarily then, coming from this with a steel price increase and a delay, let's say, in converting this to our own customers. Earnings per share following obviously the same thing, so it's slightly lower. The proposal for the annual general meeting will be to increase the dividend per share, since we have a very stable balance sheet and the equity has continued to grow and, we see then that we should adhere to that, the principle of having approximately 50% as dividends, should be valid also for 2022. Going to the next page, which has the year in brief. You can see then that there has been a substantial increase in the growth then through right in the turnover, which I already explained. We are hovering around 20% of margin, which is also our target. If we now calculate EBITDA with A, maybe it should be a little bit higher, but we are around that level. The 18% that we received in 2022 is still a little bit lower than what we should like to have as going back to the target. Nevertheless, seeing then the turbulence during the year, we think that this is an acceptable figure then for the whole year, even if, of course, we will do everything what we can to come back to the target now during 2023. Our relative market share is approximately three times bigger than number two player. We are in 45 countries, and if you look at the compounded annual growth, we've grown with some 11-12%, depending on how you calculate per year in the last years. We are normally talking about that there is a market increase of some 4%-6% per year over a business cycle, regardless of what we are doing. On top of that, we normally should take market share. Over a long period of time we've been talking about, it's probably realistic to say that we've been growing with some 8%-10% per year over a business cycle. Going to the next page, core financial targets, which is a summary of where we are simply from a figure point of view, KPI point of view. Going back to the market growth, which I just touched upon now, we've been growing organically 12% this year. However, there I must stress this is primarily price. There has been very little than real volume increases. The M&A side, which we've done during the year, are rather small. That's added 1% or something like this to our turnover, but that primarily growth is coming from the pricing. Profitability, as I said, 20% is our target. We reached approximately 18%, so we have a little bit way to go now to come back to the 20%, which I think is doable. On the capital structure, we have a very good situation. Our balance sheet is very strong. Our net debt in relation to EBITDA should not exceed 2.5x, and we are at the end of last year on 0.6. We have an excellent opportunity to finance possible acquisitions. I would say that the problem is more to get the right acquisition on the table. If we get that, I think that, within limits of course, that wouldn't be a big problem to finance the acquisition, as I said, it's more, as I said, to find the right one. Dividend, as we said, we should have a policy to pay out approximately 50%, and the proposal for this year is 52%. I go to the next page, which is some sort of summary for more directed to the quarter four. As expected, we were hampered then by the much slower activities within Automated Warehouse. We knew this, we were of course trying to reduce the variable cost in our manufacturing units. It's difficult to entirely compensate that, so we've had a little bit of a negative impact in quarter 4 then, due to the fact then that the volume going through our manufacturing units were not on the level that we actually would have wanted to compared to the first half year. Nevertheless, positive I would say is that besides the Automated Warehouse part, we haven't seen any sign of any decrease of customer demands. On the contrary, we've seen a very stable demand in all areas. I think that's whatever would happen in 23, which we will have to come back to, is nevertheless a good sign. That, short term at least, there is nothing wrong basically with the demand, except then for Automated Warehouse, which is something which we have known now for quite a long time. Sales invoice is influenced by the steel price, with approximately 10% in the fourth quarter. When you just look at the sales invoice figures, you have to deduct 10% to get, you know, apples by apples by comparing the same quarter and the same figures as last year. The steel price, which obviously is influencing this, has been much more stable after the summer period and actually been going down. I would say that during the fourth quarter we've had a positive influence then on the margin side based on this. When you look at the total margin, you could say that we have not maybe got the full effect of the lower steel prices, but we've gained a major part of that. We still have something to gain now in quarter one. I think the biggest part of the, let's say, recovery of steel price and the, and the corresponding transfer of customer price from us to our customers that have been implemented during quarter four. We had a reasonable EBITA result and also margin in quarter four, seen in the light, and as I call it, of a little bit of turbulent situation, and also the lower volume produced in our manufacturing units. We had quite a good volume in the first half year then, generally, since we had then a few of these big projects coming from 21 in Automated Warehouse to be delivered in 22. Since they were delivered then during first half-year, this of course meant that you didn't get exactly the same sort of volume to go through then the manufacturing processes in quarter 3 and quarter 4. Gross margin of steel in quarter 4, a little bit on the low side. This is then coming from this, that we had a little bit low manufacturing volumes compared to what we normally have. We were also trying to reduce, of course, the inventory since things are stabilizing from a lead time point of view. For once also, we made an accrual for obsolescence then in inventory connected then with the Automated Warehouse demand that was going away. Normally we have no problems with obsolescence or inventory valuation because we are normally quite good in planning and delivering what the customer wants, and we don't normally have high stocks. As an exception, there are unfortunately always exceptions, there were too high inventory then connected with the big orders that were expected for the Automated Warehouse, where there were long lead times. We were trying, of course, to cope with the customer demands. Since we try to be prudent, there's nothing wrong with this material. When the demand will hopefully start to come back, we can use exactly this kind of material, but we don't want to have it fully valued in our books at the end of the year. That's why we took a, as I call it, a bit of a prudent conclusion, a prudent decision and to do accrual of this, which of course also have negatively influenced on the gross margin. We've had good cooperation with our customers with the pricing, so I wouldn't say there were anything new coming up there in the fourth quarter. If you go to the different regions, I'll come back to in a little while also. You can see then that the especially in the Nordic region and what we call New Markets, we saw a market then outside of the European and North American markets, I would say. We've had a quite a good sales levels there. You can see that in those regions, the demand and the penetration of the markets are quite, actually quite positive. Earnings per share were a little bit lower. The working capital is now also on the expected lower levels. Inventory, as I said, we have reduced. We have had quite good cash flow in the quarter. You of course normally get that also when business levels are going down a little bit. I would say that, still part of this coming from that we are also reduced now the inventory and things connected with that in the process. Going to the acquisition we did 2 years ago in Poland, Natom Logistic. This quarter actually has been negatively influenced then by the substantial lower activity from the Automated Warehouse. Natom has had a very good development, and we're very happy over that. In the fourth quarter was not on the same level based on, of course, that they are very focused on Automated Warehouse. We are reducing, of course, then the number of people and working in that operation. The other small acquisition we did during this year or rather during 2022, so it was in Spain, the Claitec. They continue to develop well. Had some problems with lead times on some components, but the range check was going up pretty well, and we're quite happy with the development so far. It's early days, but this small company in Sweden, we bought Swedish Cycle Room or Svenska Cykelrum in Swedish, was also developing quite well. So far so good. Towards the end of the quarter, we started to do another expansion of the manufacturing facility in Hillerstorp. We expanded on the physical space in order to prepare for future expansion on our machine capacity. Going to the next page, the financial highlights, don't need to go through that very much. I think, you can see for yourselves that the 3 months were unfortunately in order is lower than last year, 2021, I mean. That was influenced and positively by this huge order for Automated Warehouse. The margin as referred is starting to improve now, not yet coming up to level where we want to. We can see that it's going in the right direction. The same with the EBIT or EBITDA margin that we now wants to promote more since that is showing maybe a little bit better picture over the operational efficiency. It's still a bit on the lower side, but we have good hopes that this will start to improve further during next year, meaning 2023, as long as, of course, the volume development is not too negative. Going to the next page, regional development. I've already said then that they were quite strong in the Nordic region and the new markets. The real deficit in North America, that was because then we had very good orders done in 2021 for automated warehouse. Obviously, this comes back now since there were no orders at all. We are trying, of course, to compensate this step by step. Since this is a segment which been growing so substantially during a short period of time, it's difficult to compensate that also with other customers during a short period of time. Over time, I'm convinced we will be able to do that. Totally, it was a bit, I would say, a little bit weak on the order side, whereas on the sales side, it was more or less on the same level as last year, albeit helped by price increase. Before we come over to, you know, the conclusions and the Q&A session, maybe just a few more comments more on the, on the conclusive side that many good orders still, despite then that the Automated Warehouse has been very weak. We do see that in the other segments is continuing to have good demand, and we receive good orders. That's been a reasonable development result. You could argue, of course, then that it's lower than the year before, which is correct. And I think we have a rather clear understanding why, and that we also, during this turbulent year from a CO₂ point of view, have tried in a positive way to help our customers with a little bit easier price increases step by step, so they could get used to the situation which didn't hamper them too much short term. Hopefully, this will give us some goodwill going forward. The investments that we've been doing in Natom by increasing then the machine capacity are more or less finished, and the integration of the Claitec is going on in a positive way. As some sort of summary of the summary, we see that the total development in the quarter was reasonable, but we are very clear over then that we want to continue to come back to the previous levels, both in gross margins and in EBITDA. We do think that the demand from Automated Warehouse will continue to be weak during 2023. Before leaving over to you, I can just say that when you go through growth sectors, which is the next page, it's the same as it's been before. It's driven a lot by the industrial automation, robotization. We get a little bit also some positive things from onshoring or closer manufacturing or regional manufacturing compared to before. I would say that still the trend is that the main part for us is the increased industrial automation. As for now, the growth in e-commerce doesn't really help us, we think from 2024 and onwards, it will come back, maybe not to the fantastic levels we had during 2020 and 2021. Nevertheless, we do see this as a positive growth potential and going forward. The next one are just these things you've seen before. The next one is explaining how our production units are structured and what they are producing and the volumes. The next one is showing you on the different brands that we are going to the market with. We are of course promoting ourselves as being as we are helping customers since 1955, and we're doing things then to do so since we are the market leader, and we intend to stay ahead of the competition. Going down to the safer tomorrow, we are still focused a lot of the environmental issues and as an example of that, you can now find the CO₂ consumption per main article available on our webpage, which at least is a sign for the customer that if they want to purchase something which might be sensible than from CO₂ consumption point of view. With this, I'd like to stop then just saying that we will continue now to, let's say promote our leadership. I think we will have some interesting issues to talk to you about when we meet then in after the first quarter. I think we have the telephone conversation end of April or something like that. Thank you very much for listening in. Now it's time for the Q&A session, so please go ahead and open your questions or take open your telephone, give your questions indirectly to me. Thank you, sir. Ladies and gentlemen, if you wish to ask us a question at this time, please signal by pressing star one on your telephone keypad. Please make sure the mute function on your phone is switched out to allow your signal to reach our equipment. Again, please press star one to ask a question. Now, our first question comes from Gustav Berneblad from Nordea. Please go ahead. Good afternoon, Thomas. It's Gustav here from Nordea. Good afternoon. Hi. If I understood you correctly here, we should not expect any further inventory write-downs, and this was more of a temporary thing, right? Yes. This is something I don't think we have done this during my 15 years, and I would be very surprised if we do anything more going forward. Perfect. Also when it comes to gross margin here heading into 2023, can we expect any new type of headwinds going into the year? Should we assume a further recovery in the margin as we now also get a bit of support from the steel price, you said? Yeah. I think our basic alternative or our basic know is that we should step by second back to where we have been before, and that's what we're working towards. Of course, there is a question mark with the short term over the volume development, which is of course, nevertheless crucial because if we don't get enough volume, we will not get the right recovery of fixed costs. That might be a little bit question mark for this, but besides the volume issue, we are not worried, let's say, we will not come back. Perfect. Regarding the sort of cutting of variable costs, primarily in Chicago and Poland, how much can we expect in cost savings on an annual basis? I don't think we want to give out a figure. I can just say we're trying then to, let's say, follow the volume development based on what you've seen in orders and so forth. We try to follow that at least on the variable cost side. The variable cost side should be compensated, but you will not get a full compensation if you include also the fixed costs, obviously. Okay. Perfect. Just one last one here. New Markets, solid growth in the order intake in the quarter. Can we expect any further acceleration here following the reopening in China? How do you see it? Yes. We were of course a bit hampered by the turbulence in China, not only in fourth quarter but also earlier during the year. Since China is still one of our, let's call it, not major market, I don't think I would exaggerate the influence of China. If you really compare apples with apples, yes, we are expecting, of course, an improved figures from China and other parts of Asia in quarter one and quarter two compared to what we had in quarter four. That's correct. Perfect. That's all for me. Thank you. Thank you, Gustav. Thank you. We'll now take our next question from Gustav Österberg from Carnegie. Please go ahead. Thank you, operator, good morning or good afternoon, everyone. You were quite clear on the demand, the trends and outlook within Automated Warehouses. So I was just wondering if you could talk a little bit more about the demand, the trends and the dynamics for the remainder of the business. I mean- Mm-hmm. You mentioned a decent demand level still, but how should we think about cyclicality? Mm-hmm. The larger factors, so to speak, going forward? It's good, Gustav. It's a good question. As I tried to say, we haven't seen any reduction in demand from customers. What we all write in or see in the newspapers as a potential, let's say, reduction of demand, looming somewhere in the future could very well be so. When we talk to our customers, they are saying more or less than that. Yeah, for the coming 1 or 2 quarters, we have good projects, and we will fulfill them, there's no problem short term. Of course, when we come to the second half year of 2023, they don't know how it will go with the new projects, or from a CapEx point of view. That's of course a question mark that weDeveloped. We haven't seen, as I said, any reduction of demand yet. I think there will be some sort of reduction in demand if I speculate a little bit during second half year. Our gut feeling, and you can only take it as a gut feeling, is that there won't be a substantial increase in demand. I think there were good possibilities for us to, let's say, survive this sort of maybe a little bit dip in demand during half year or whatever it can be. It will surely be difficult for us to have a substantial volume increase during 23. That's for the clear. Appreciate the call there. Just a follow-up, because we're obviously reading about trends of shorter supply chains and nearshoring or friendshoring, et cetera. Are you seeing any discussions with customers on those trends, or is it too early to speak of such activity yet? We have, I think some time heard customers or potential customers talking about that. We have seen very few real effects in orders, yet I think there will be a number of those coming in during 2023. I'm still saying the same thing I've been saying before, and that is for Troax as a whole, this won't have this major impact, because even if you transfer production from, you know, Japan or, you know, wherever, China to Europe or to North America, we are still there, we're delivering. It doesn't really change the world for us. Of course, if we really put it to test all new CapExes that customers are doing are good. In that sense, you could say it's positive. To answer your question, no, we haven't seen any substantial changes in fourth quarter based on this. Okay, thank you very much. Then, a final question on the pricing environment. You mentioned that you're now catching up with prices, and you see that in the gross margin, which obviously improved sequentially. Did you mention the year-over-year effect on pricing? Is it still around the 12% or has it come down slightly now? I think you can calculate with approximately 10% for the fourth quarter as some sort of average. Yes. the sequential development of prices is down now, right? Yeah. I mean, it's more a base effect that it's still. Yeah. Yeah. Okay. Yeah. Correct. Good. Those were all questions from my side. Thank you very much. Thank you. Thank you. Next question comes from Daniel Lindkvist from Troax. Please go ahead. Hi, Thomas. Daniel from Danske Bank. I had most of my questions answered already being a bit slow on the star one. Just to take on the some details. The obsolete inventory, is that still kept in the inventory or is it recycled? No, it's still kept in the inventory. I tried to say that it's perfectly, let's say, good quality products that can be sold at a later stage. It's just, you know, accrual from an accounting point of view that we see then that it won't be sold probably in the next 12 months, so we have to make some sort of accrual. It's kept in inventory. You said on the Automated Warehouse, you were talking about starting up orders in 2024, and perhaps early on, if we're lucky. Could that imply that there could be in the order book late 2023 for deliveries early 2024 at the best store? Yes, there could be. The messages we got now from this kind of at least the big international customers are that they won't start any new projects until going into 2024. If you compare with what they said half a year ago, they postponed it another half a year or something like that. They're saying it with more certainty now than before, so later but more certain or what's your take? This is impossible for us to have an opinion of, Daniel. We think that they've been caught a little bit with this, what I call over-investing before, and now they're waiting for the customer demand to pick up. I think that they are also a little bit in the midst how they will see this. They are trying to keep things open, both with suppliers like us that we could maybe start earlier, but it could also be that it's further delayed. Both alternatives can be viable, unfortunately. Just on the gross margin, if we take away the obsolete inventory, then you end up at some slightly below 37% in this quarter. Yes. Long-term, we're talking about some 38% maybe initially and then going for 49 or something that we had. Correct. Yeah. Yes. Still your long-term That's still our ambition. I think that's still valid. Yes, correct. Cool. Over the long term, nothing has changed with this, with the normalization of gross margins- No. The normalization of some 7%-10% or something in. No, correct. Correct. Perfect. Thank you so much. Thank you, Daniel. Have a nice weekend now. Thank you. As a reminder to ask a question, please signal by pressing star one. The next question comes from Anna Lindholm-Widström from Handelsbanken. Hi, Thomas. Good afternoon. Hi, Anna. Three questions from my side. Firstly, should we expect stable price effect from the current levels going into 2023? Should we expect? 'Cause as you mentioned, the prices are sequentially a bit down. Should we basically expect a stable level from the current levels, or do you think there is probability of higher or lower prices for 2023? No, there are rumors that steel price will go up a little bit during 2023 or first half year, depending of course on the general demand in the market. There are rumors for both versions. I think the basic scenario we're working with right now is that there will be more or less stable pricing. We could see a scenario where both we have to increase prices further, and maybe then where things are, you know, going back not to normal the way it was before, but maybe reduced from today's. It could be a scenario where we're also slightly reducing. I think most likely you could expect now similar sort of price level that you have today. Okay. If we talk a bit on the minor players within e-commerce, you say that demand is still quite good. Would you say that that is flat volume-wise, or do you see some volume growth from the minor players within e-commerce? We see some volume growth in there. I wouldn't say that the volume is very good, but we see a volume increase in that sector. Of course, those products are so small compared to the big ones, so you don't really see it when you consolidate everything. It's a good sign for the future because it means then that the market and the customer base is growing, which of course for us and others is good going forward. I'm quite positive of that. From a purely figure point of view, short term, you shouldn't read in too much into it. Okay, great. My last question is on acquisitions. Given that we are seeing a slightly weaker market if we include the bigger e-commerce. Mm-hmm. Have you seen some new interesting sort of opportunities already? Do you think that it needs to take a bit longer for opportunities to arise? Normally it takes a little bit longer, yes. It doesn't go that quick. Normally, you have to have some time of a little bit weaker demand situation. If you exclude any Automated Warehouse, it is not then reducing. I don't think you should expect that this sort of expectation and a lower demand will increase the number of potential M&A objects will come short term. It will come, I'm convinced over that. We are, you know, pretty sure that there will be a few objects to evaluate during 2023, but I can't say anything more specific than that. Okay, thank you, Thomas. That's actually all questions from my side. Thank you. Thank you. As a final reminder to ask a question, please signal by pressing star one. We will pause for just a moment just to allow you to signal. There are no further questions in the queue, I'd like to hand the call back over to Thomas for any additional or closing remarks from you, sir. Thank you very much for listening in. We appreciate your questions. I look forward very much then to, as I said, to talk to you or have a discussion, so to speak, again, after the first quarter, which will be in April. Thank you very much. Take care, and looking forward to next time. Bye-bye. Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.