Good morning, everyone. Warmly welcome to follow the webcast presentation of, of Relais Group quarter one 2024 results. My name is Arni Ekholm. I'm the CEO of the company, and together with me, today and, always in the presentation is Thomas Ekström, our CFO.
Good morning.
The agenda for today's presentation is a few words about Relais in brief, for those of you who don't know, Relais as a company. Then, a short business review for the quarter one, what's behind the really good result. And then, Thomas will also go deeper into the financials in the financial review section of the presentation, and at the end, a summary of Relais as an investment.
Before going into the Relais in brief part, a technical information I want to make, there is an Ask a Question button on your screen for those of you following this live, and you can submit a question at any time, and then Heikki will here collate the questions in the end, and we will then answer them at the end during the questions and answers section of the presentation. Before going into the next slide, I want to warmly thank our team members. This was a fantastic quarter, and your performance was outstanding, so I'm really proud to be working with all of you.
Of course, I want to thank all the shareholders and customers and business partners for your support during the quarter one. So, very briefly, what is Relais about? We are a aftermarket specialist, specialized in the aftermarket of vehicles, and we are competent compounders. So we compound and gather bigger entities, and also compound capabilities in this sector. We are already one of the biggest and most profitable growth platforms in this sector in Northern Europe, a unique position from this perspective. Why are we focused on the vehicle aftermarket? Is because we see the best value creation potential in that market, as opposed to selling new vehicles or used vehicles.
That market, the aftermarket, is also less cyclical, so it's not so sensitive for the trends in the economy, and it's more defensive than many other markets. Also have to bear in mind that the aftermarket is steadily growing. The number of vehicles is steadily growing. A large part of our business comes from commercial vehicles. I will explain that more in detail later. That is also very important to bear in mind. How do we create shareholder value, is by delivering strong earnings growth, with a strategy based on three reinforcing themes: acquisitions, organic growth, and operational excellence. A quick glance at the aftermarket, from a value chain point of view, we call the aftermarket vehicle lifecycle, lifecycle enhancement.
From the time when the vehicle is imported or sold in the market, it's equipped, it needs spare parts, it needs maintenance, and other types of supporting services, and then at the end of the life, the vehicle is demolished and recycled. We estimate the market size to be about EUR 20 billion in the Nordic and Baltic markets, consisting of about 19 million vehicles. So we and our, let's say, customers operate in this blue sector, and that is also the scope of our acquisition targets, moving forward. How does the group look like after quarter one? It consists of two main business areas: Technical Wholesale and Products, which is two thirds, and then one third is the Commercial Vehicle Repair and Maintenance business.
And if you look at the Technical Wholesale and Products division or business area, that can also be divided into two groups: Spare Parts and Lighting and Equipment. And you can see the names of the companies within these groups. So that is split with the 67% is split, with 30% for Spare Parts and 37% for Lighting and Equipment. And also here, there's a very big weight of commercial vehicle targeted products and services, and the Commercial Vehicle Repair and Maintenance naturally is all about commercial vehicles. And the latest acquisition increased the weight of the Commercial Vehicle Repair and Maintenance. That is not yet included in these two numbers, so that the weight will go up somewhat during the quarter two.
A short look at the history of the company. Relais was founded in 2010, only having basically one asset, Startax in Finland. I started in 2015, when the turnover was EUR 54 million, and the EBITDA, local GAAP EBITDA was EUR 8 million. Now, we are having a run rate, the latest 12 months, about, EUR 300 million turnover and over EUR 30 million EBITDA. So it's been a very strong growth, not only acquisition-based growth, but also, organic growth in each of the markets. So very profitable and good growth, and that has created the platform that we now have in the Nordic and Baltic markets. Let's have a look at quarter one.
Business review continued strong and profitable growth, which is very positive. There were a lot of factors affecting this. Firstly, I would say it was not only coming from the weather, of course. I've explained that before, that the weather has an effect in this business. That is one factor, but there are also other factors. Let's say we are on a very stable level in all our businesses, but yes, yes, the cold weather contributed in this, and also the effect of the acquisitions. So the net sales grew with 20%, which is really, really much, and the organic growth was 12%, and the comparable EBITDA grew with 27% compared with the quarter one last year. And maybe a few words about the weather.
It was really exceptional, and I will explain later what does that mean for certain product groups. So, in a nutshell, the key numbers, EUR 82.8 million net sales, 20% growth, as I said, comparable EBITDA almost EUR 10 million, which is 27% growth, and return on capital employed almost 17%, which is a big growth of 5.5 percentage points versus last year's quarter one. And then the rolling twelve months, we are approaching EUR 300 million turnover, almost EUR 31 million comparable EBITDA, and ROCE was 11.3. So very strong start for the year. What happened during the quarter one in the technical wholesale and product business?
That business grew with 29%, out of which 16 percentage points was the organic growth, and the rest came from the acquisitions we made last year, Adita, Auto- Materiell, and Nordic Lift. So it was very, very strong performance, and as I said, partly coming from the weather, but not, not only coming from the weather. So we were growing, according to our estimates, faster than the market in average in the Nordic markets. The growth, very positively, was strong in both the Finnish and the Scandinavian markets, so there was not, not this kind of a difference that we have seen before in the Finnish and Scandinavian markets. And the gross profit percentage remained on a stable level, which is of course, very good. We didn't have to discount any products.
There was a very good demand for the products during the first quarter. The cold weather, what does that really mean? I mean, it is if you have consecutive days and weeks of -15 to -20, then it starts to affect the sales of electrical spare parts and equipment. I mean, minus -5 is not enough, but if you have many days and weeks, as we had in Finland and Sweden, it really kind of kills the starter batteries, and then you have need for other equipment for charging the batteries and such electrical equipment. Then the equipment product group also consists now the workshop equipment, or contains the workshop equipment that we bought in Norway in last fall.
So that is, that growth is largely coming from the acquired businesses, but also winter-related equipment that got a good boost in the start of the year. And the sales of the vehicle lighting products remained on last year's level, so that was very stable. The quarter one is not really a lighting season. So all in all, a fantastic performance by the teams in all our markets. Repair and maintenance, which is now, as I explained in the beginning, one third of our business, it's very stable, developed positively. Growth was 5%.
Gross profit levels were stable compared to last year, and the demand for our services continued to grow, as especially bigger fleet customers are looking for cost efficiency in their operations, as opposed to getting the services from vehicle manufacturer's own repair shops. So that is the kind of trend that we are starting to see in the market, and we have gained a good customer base in both Finland and Sweden, and the teams are doing a very good job in both countries. The resource situation, some of you will remember that we had a lack of mechanics in 2022. That situation has stabilized, and we are also getting back some people that either left the trade totally or went into another company.
We have invested a lot to make the, let's say, personnel stay in the companies, and we aim, of course, to take good care of our people. This is a hugely important area for us as a business, and of course, it's very labor related. So we hope to succeed also in this, let's say, HR-related matter in the future. So all in all, a very stable performance from the repair and maintenance business. Looking at both businesses together, I think what I have explained before about the defensiveness of the aftermarket seems to show that this is corroborated by the results already after last year's results and also the quarter one.
Sales by segment, very shortly, not a dramatic change versus last year. Finland and Baltics, 46%, as opposed to 45% last year, and Scandinavia, 54% as opposed to 55% last year. Scandinavia also includes, in this reporting, some export from Strands to other European or American countries. Looking at the sales by business area, already I showed this before, so it's two-thirds coming from technical wholesale products, and then one-third from a repair and maintenance business. Then, looking at the sales by product group, the equipment part has increased from 14% to 21%. This is mostly coming from the acquired businesses, as I explained, from Norway, which I classified here as equipment businesses, but also organic growth from the winter-related sales of electrical equipment.
Not a huge, huge change, but the weight of equipment has increased. Other than that, it's fairly stable. Acquisitions, that is, of course, a very important part of our strategy, and we continued also during quarter one to scan the market. There are, at any given point of time, I have said that before, discussions going on with several entrepreneurs and business owners. There are several interesting targets that have a good strategic fit with us in the Nordic marketplace. This is a numbers game. The more companies you contact, the more probable it is that you end up actually then agreeing on a transaction between the owners and us. We aim to have a healthy, large M&A pipeline, which is relevant for us.
But also we have to bear in mind that even if we have, in the long list, hundreds of companies, it's together, the long list in the aftermarket consists of, let's say, billions of Euro in turnover and hundreds of millions of Euro EBITDA. But the funnel it gets more narrow and narrow from that perspective, that what of the discussions then materialize into deals? So I would say I would be happy if we could make at least one acquisition per quarter, which is then realistic to be able to grasp from the market.
Different sizes, of course, and we are very disciplined in the way we manage the processes and, of course, aim at not paying an overprice, but paying a market price, and find companies that are in good shape and have a good strategic fit with our company and our culture, and that is the strategy. Just very shortly about the latest acquisition, I want to welcome Ahlqvist family to our family, and it is a 30-year history behind this company in Southwest Finland, focused on heavy commercial vehicles and trailers.
A very well-kept and developed company, and we are happy that the son of the previous owner, Tony Ahlqvist, is continuing as a Managing Director and also becomes a member of Raskone's management team, focusing on the trailer business development. So this is yet another add-on that we have in Raskone, which is the concept that... how we aim to grow also in the future. And this is strategically important for Raskone to expand in the trailer business, which is not yet a really big part of Raskone's business. So welcome, Ahlqvist team, to our family. Then outlook 2024.
Kind of a dualistic picture because the clouds, the gray or dark clouds that I see are more coming from the environment or the surrounding world, the macroeconomic factors, which may potentially affect the markets negatively during the coming quarters. So especially the development in Finland, as we all know who follow the media, is quite poor. The forecasts for the economic growth are very, very close to zero or, if at all, positive. Unemployment seems to be increasing, and then the rate, interest rate levels do not seem to go down as quickly as was projected.
I mean, I don't want to sound like a kind of very, very negative prophet here, but there's not a lot of light in the Finnish economy from the macroeconomic point of view. But then, of course, looking at us internally and how we are positioned and resourced, we feel that we are well positioned also in Finland to serve our customers. And then, if we look at the Scandinavian markets, they seem to be less vulnerable or not have actually the same type of challenges in the macroeconomic side as Finland seems to have. So all in all, on balance, we feel that we have a good possibility to continue implementing our strategy during 2024, despite these macroeconomic factors. Then, over to you, Thomas.
Thank you. Thank you, Arni. I continue from where Arni ended, and a bit here, focus on the kind of key income statement, balance sheet, financial position numbers. And as usual, first, we see here a bit of a longer perspective on net sales and EBITDA, and here we can really see the strong performance in the long term, both on net sales terms and EBITDA terms. And perhaps as an additional comment to Arni is that we still have slight impact of the Swedish krona exchange rate to these numbers, but much more limited now in Q1 this year than last year. So it is a bit of a better position here than last year.
When we then look at the other components of the income statement, gross profit continued to grow in euro terms quite strongly. And the kind of the gross margin then was quite stable compared to last year, and this was more all coming from the fact that it was the Technical Wholesale and Products business that grew in Q1 the most, and the sales mix was from a kind of gross margin perspective a bit different, causing this flat development in gross margin, but otherwise really good development here also.
And then you look at expenses, the operating expenses were gradually a bit increasing, but still, the kind of cost percentage came down against sales for the second consecutive year, so really kind of good cost control, also on group level here in this sense. When looking at the, like, net working capital and capital tied into operations, we see that the net working capital turnover was flat and then continued to be on a stable level in Q1 against last, the Q1 in 2023, and also against full year 2023. So the key metric is stable here, but then there are three factors increasing the net working capital, and that is mostly acquired inventories, and that's also then acquisition-related build-up of, of, of receivables, especially in, in Norway after the acquisition there in August 2023.
And then as we all know, there's been kind of strong inflation, cost inflation on sourcing prices, and that's caused the sales prices to increase, and this has an impact on the inventory and the whole net working capital value, pushing that up. But the key metric here is that the net working capital turnover is flat, so that's under control also for the last group. Cash flow due to the net working capital issues I just mentioned, the cash flow from operations was clearly lower than the same quarter last year. But then, again, the kind of profitability improved, so this is kind of an acquisition-driven fact mostly, that the cash flow from operations is down.
Other cash flow summary, no big changes in investing cash flow or in cash flow from financing activities. Really basic, normal running operations cash flows. So nothing to mention here. And then when you look at the financial position and the interest-bearing net debt, here also, no special changes, only normal amortizations on the loans when you compare to the same quarter last year, and then also normal amortization on lease liabilities. Cash was lower than the same period last year, but all in all, we had a good liquidity position and the kind of cash and unused facilities were above EUR 30 million at the end of the period. And then kind of dry powder for future acquisitions, we had also undrawn, uncommitted facilities of a bit less than EUR 16 million.
So here also really stable and predictable development. Then when you look at the net financial items in the income statement, as all know, the interest rates have continued to increase still, and they still impact the kind of net interest expenses in our P&L. And also, as previous quarters, we are still subject here to the fluctuations of especially Swedish krona exchange rate, where here in this, in these net financial items, when we kind of take in the FX change from external loans and also, internal loan receivables for the parent company from subsidiaries, we take in here a kind of bookkeeping FX impact, but that's mostly unrealized. But this, of course, impacts the net financial items you see in the P&L. Balance sheet summary, financial position: here is no special items.
I just mentioned these. The total assets are quite flat, and also total equity is increasing, so stable development here also. Events after review period, we had, of course, the AGM on the 10th of April, and then we extended the current the senior term and multi-currency revolving financing agreement at the end of April. And as already mentioned, on 2nd May, we announced the acquisition of Ahlqvist. And also, we appointed a new director for compliance, legal, and HR, also on the 2nd of May.
Welcome, Juri.
Welcome. Do you-
Yeah.
Arni will take this one?
Yeah, yeah. So, summarizing, Relais as a, as an investment, as I explained in the beginning, we are a sector specialist, which gives us a, a, an unique competitive advantage. We know this market very, very well. We have also a good track record of, of, combining the companies into bigger, bigger entities and, and having the local autonomy, driving the, the, the, the customer interface locally. We are a profitable and unique growth platform in Northern Europe. There are not many like us, if, if, if any. We have a successful acquisition track record, which is also very unique. Strong profitability and cash flow, growing defensive underlying market, which is, of course, positive during these type of times. We have own brands with growth potential, especially in the lighting business and also in the equipment business.
We, as Thomas also showed, we have a very lean and effective operating model, which gives us a competitive advantage from that perspective. Shareholder value, I mentioned in the beginning, and just a quick recap of what has happened after the IPO we did in 2019. So if you look at the dividends paid between 2020 and 2024, and also then this upcoming part of the dividend, then the total yield of, or the value creation of the share has been 83.1% with yesterday's stock rating or price. Then a few releases we also published today. Just a few words about them before going to the questions and answers.
We announced a share buyback program to enhance the capital structure, the equity structure of the company. You can all see the announcement, but it was based on basically acquiring a maximum of 85,000 shares or EUR 1 million. Then we also have a liquidity-providing agreement with Lago Kapital to enhance the liquidity of the share, and then we announced a new stock option plans for the retainment and motivation of management and key employees in the company, and also a slight technical change in terms of the 2021 long-term incentive plan. So quite a lot of things happening on this front as well.
Then over to questions and answers, and I hope you have been very active, and then Heikki here will read aloud the questions, and then we will answer.
Yes, there is quite a few questions, and we start from the fellow Heikki here.
Mm-hmm.
Hello. You mentioned in the previous quarterly report that the Q1 had started off well. Are you on the same page regarding Q2?
Well, the market, the data is still very fresh. We don't actually have... We cannot comment, of course, our own performance, but I would say that, looking at the market, the April, now the Easter is on the April side, which was last year in March, so in April there are more sales days than last year. But, it's early days to comment about the market. I mean, no dramatic changes on the market, as far as we have seen.
Good. Then we move on to Joni Sandvall, quite a few questions. "Following strong January, February, has growth normalized when taking into account timing of the Easter?
I'm not quite sure I followed the question, but I think the March, yeah, if I understand the question correctly, the March was more normalized, yes, after the cold weather did not affect the March. It was more our own performance was really strong in March month, even taking into consideration that there were three less sales days. So the weather-related boost was in January, February. March was then, from a market perspective, normalized, but we outperformed the market. I hope I answered, Joni, your question.
The next one from Joni: "Equipment sales were at the record level. How you expect this to continue, given somewhat soft outlook, if listening for OEM's outlook?
I think the team in Norway, because big part of now in the way we report equipment comes from the Norwegian workshop equipment businesses, and they have very long-standing customer relations, and it's to a quite large extent project business, and we have a good vision on the pipeline business. So it's... We do not have any reason to be negative on that front.
Super. And then Joni continues, "On commercial vehicle repair and maintenance, you note, increased demand for bigger fleet operators. Have you continued to gain market shares?
Yes, that is our understanding.
And then, "How you expect procurement and sourcing costs to develop ahead of high season, given the Red Sea situation?
Not really at all negatively. The situation is China, for the Chinese companies, is very challenging, because the volumes have gone down on a global basis. So I think it's more the freight cost, yeah, that's probably another topic, but the weight of the freight cost is not too big in the type of products that we import. But I would say that we have a good negotiating position versus the manufacturers in China.
Then a couple more questions from Joni. "M&A pipeline is healthy. Is there some particular segment you are looking for?
We are looking at the whole scope that I showed in the beginning of my presentation, so with equal weight. I mean, of course, there are some areas where we operate at the moment. It's more probable that we find suitable targets in those three areas that we operate in, but we are also looking at other targets in the universe of the vehicle aftermarket.
Good, and the last one from Joni. "Following extension in financial agreement, what is the average interest rate of your loans, and are these in floating rates?
Maybe, Thomas, you want this?
Yes. Yes, they are in floating rates, and the average rate at the moment is a bit above 5%.
Good. Then, next couple of ones from Petri Gostowski: "What do you see as the reason for your outperformance compared to the market?
It's an extremely good question, Petri. I think there's not one single explanation. I mean, we have worked a lot on operational excellence. We have very high activity with the customers. I mean, there were successes in all fronts. I would say if we take the repair and maintenance sector, small things that have accumulated during the last years on the operational side, on the utility or the utilization ratio and the customer work we do there in getting market shares. And then on the wholesale business, I think the general trend is the kind of what I've been talking about, the defensive nature of the business is supporting us at the moment, and we have taken market shares.
Also, it's not only the weather, it's a lot of good things that have happened at the same time, but not one single thing that I can lift as a reason. So it's a lot of good performance in all the teams.
And then the last question comes from Petri: "Can you quantify the impact of price increases in the vehicle repair and maintenance business?
Not directly, because it's the profitability of the repair business is not only pricing, it's also the way you operate, how you utilize the capacity that you have, the kind of would you call it, a the ratio on how effectively the machine works. It's really hard to say. It's a single-digit percentage, relatively, so it's not a huge effect, but I would say... I don't know, Thomas, if you have a better analysis than myself, but the effect on the gross profit percentage on repair and maintenance, on the price increases, I mean, it's not really huge, but it is there, maybe 1%-2%.
Yeah
... points or something like that.
Agree.
Good. No more questions.
Okay, thank you very much, and, thanks, everybody, for following this, and also, again, a warm thanks for all our teams for the fantastic performance during quarter one. Thank you.
Thank you.