Good morning, and welcome to the Q2 2022 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Pål Warolin. Please go ahead.
Thank you very much, and welcome to this presentation, Fasadgruppen second quarter 2022. My name is Pål Warolin, I'm the CEO of Fasadgruppen, and together with our CFO, Casper Tamm, we'll guide you through this presentation. Next slide, please. Let's start as usual with Fasadgruppen in brief. We are the market leader in Scandinavia within façade work. Façade work is a highly specialized and local market with a high level of craftsmanship. By façade work, we mean almost everything related to the shell of the building. The service offering consists, for example, of masonry, plastering, installation and renovation of balconies, installation and renovation of windows, roofs, glazing, almost everything you need a scaffolding to do. Fasadgruppen is focused on mid-sized projects in the range of SEK 1 million-SEK 100 million, with an average project size of SEK 3 million-SEK 4 million.
At least 75% of projects relate to renovation. We have a very active M&A agenda with the aim to consolidate the highly fragmented Nordic façade industry. The group currently comprises 61 businesses across Sweden, Denmark, Norway, and Finland, in a very decentralized structure, and has about 1,900 employees. Next slide, please. Take a look at the key financials, last twelve months. First of all, the net sales is more than SEK 3.5 billion. And the adjusted EBITDA, SEK 366 million, which gives us an adjusted EBITDA margin above our financial target, close to 10.5%. I'm also very satisfied with the order backlog. It's more than SEK 3.1 billion. Next slide, please. The second quarter in brief.
The second quarter was a very strong second quarter, both in terms of net sales and profitability. A very high activity, a lot of projects ongoing. We also won a lot of new orders in the quarter on all our markets. Of course, we have had some challenge with the price increases on material, but overall, we've been very successful in maintaining project margins. We've been good at negotiate with both suppliers and our customers, and we've also bought a little more than usual earlier for stock to keep the old price. The net sales is up 79.3% compared to same period last year, which 4.3 was organic. The adjusted EBITDA margin 10.2%.
The order backlog, we have very strong growth in the order backlog. The order backlog is up 85.6%, of which 26.6% is organic. Continued favorable M&A conditions. Seven new acquisitions in the second quarter and 18 so far this year. Next slide, please. We take a look at our acquisition overview. Our highly fragmented market continues to favor M&A activity. As I just mentioned, 18 businesses acquired in 2022. We did an estimated annual sales of almost SEK 1.2 billion, and it's pretty much the same as the full year last year. Actually, it's a little bit more businesses this year than last year. Our pipeline is still looking good going forward. We have.
After the end of the second quarter, we have added Finland as a new market with an untapped potential. Very interesting opportunity. We have grown a lot in recent years, but we are still a very small market leader. It is still plenty to do. We want to continue the way we started. We want to be selective approach with focus on quality companies, as always. Next slide, please. We take a closer look at some of the acquisitions in the second quarter. All of these acquisitions are good examples of how we acquire companies. They are all internal tips from our subsidiaries. We are really proud that we managed to acquire those companies with really great people behind. First of all, the Danish company, Kjær Knudsen.
They have a really long history, founded in 1931, strong position within facades, roofs, and windows in the Copenhagen area. Customers serving tenant owners, association, construction companies, and municipalities. It really strengthened our Fasadgruppen position in Denmark and Copenhagen area. Next one, a Swedish company, GAJ Stålkonstruktioner AB. They also have a very long history, founded in 1935, third generation family business. They offer steel construction and forging, and in one way, a new area for Fasadgruppen. I mean, Fasadgruppen has had it in its offer before, then we have used subcontractors. Now we have an own subsidiary. We are very happy and proud with this acquisition. The third one here is Stenklint , also a Danish company.
Quite young company compared to the other ones, but a very innovative company, founded in 2009, specializing in facade renovation and windows. They really have some specific solutions, so we can learn from each other there, especially the Danish company there, very interesting. It's also strengthened the Fasadgruppen position in the Copenhagen area. The last one here is a Norwegian, Chem-Con AS, founded in 1982, and they are active in Stavanger and surrounding areas. They are focused on masonry and plastering, including building integrated solar panels. They are also strengthening Fasadgruppen position in the western Norway. Actually, they have already moved to the same office as one of our subsidiaries, RSM Fasade AS. They have a great start there together.
Next slide, please. We have a quick case study from the second quarter. A very common project in Fasadgruppen, renovation of Million Programme housing. In this specific case, the subsidiary, Johns Bygg & Fasad, is carrying out an extensive renovation of 50 multifamily residential properties of Balder. The work includes new facade panels, replastering of gables, window replacement, renovation of balconies. In addition, one thing that is very interesting is that, the balconies will be glazed by, Alnova Balkongsystem, another subsidiary of Fasadgruppen. It's once again, a nice, and great cooperation between two of our subsidiaries. We can still see a great demand for renovation, of the Million Programme. Next slide, please. We are ready for some financials. I will leave it over to Casper.
Thank you, Pål. I will take you through some highlights in the quarter two financials. Next slide, please. We saw strong order intake and profitable growth in line with financial goals, which characterized the second quarter. Revenues with a strong development reached SEK 1.2 billion with an organic growth of 4.3%. Here we still had 28 companies that were comparable for the period out of a total of approximately 55. Adjusted EBITDA reached SEK 123 million with a margin of 10.2%. A margin well in line with our financial goal. As Pål already mentioned, a very strong development for the order backlog, which is at SEK 1.2 billion since year-end, now reaching SEK 3.1 billion at the end of the quarter.
Profit for the period was nearly SEK 77 million, and per share it was SEK 1.58. The operating cash flow was slightly negative due to weak net working capital development for the quarter. I will return to this later on in the presentation. Next slide, please. Looking on net sales and order backlog for second quarter. As already mentioned, a strong development for the net sales, up 80% on a year-on-year basis, with a split on organic 4.3% and acquired growth of nearly 76%. As already mentioned from Pål here, we have approximately 50 new acquisitions in the first half of 2022. We saw some price surges on material. The group has on an overall basis been successful in maintaining project margins.
Looking on the organic growth here, we had the exchange rates effect, had a positive impact of 1 percentage point, and the organic growth besides the exchange rate effect is partly made up of the effects from cost inflation on materials. Looking on the order backlog, as already said, a very strong development. The organic growth was nearly 27% with a very strong order intake for the second quarter. Of new acquisition amounted to approximately SEK 0.6 billion out of the total increase of SEK 1.2 billion since year-end. Very strong development. Next slide, please. Adjusted EBITDA in the second quarter, we saw an impact of higher raw material prices in the economy that had a certain negative effect on the profitability during second quarter.
The war in Ukraine had a limited impact on the group's material deliveries and also personnel situation. This is due to the fact that we operate in only Sweden, Norway, and Denmark with a very limited amount of personnel and material that come from the warring countries. Non-recurring items in the period reached SEK 7 million that was mainly made up of mergers and acquisition costs. We can go to the next slide, please. Some comments on the P&Ls, not the P&Ls, the P&L. Looking on the other revenues, you will find effects from positive revaluations of earnouts. Further below in the P&L, you have depreciation and amortization. This is made up partly of the depreciation on acquired intangible assets, which is approximately SEK 6 million-SEK 7 million per quarter.
For other operating expenses, a little further below at the P&L, here we find non-recurring items as mentioned mergers and acquisition costs, and also negative effects from revaluation of earnouts. Looking on the financial net, because we have the cost on external debt, which was SEK 4.7 million in second quarter and SEK 6.5 million in first half 2022. This is approximately 50% of the financial net then, which is interest cost. Next slide, please. Balance sheet reached a total of SEK 4.4 billion. And on the asset side, we can see increases mainly in brand and goodwill, and this is of course due to the acquisition agenda. And we have no depreciation on this part of the balance sheet.
On the equity side, the increase between the periods is mainly due to the targeted new share issue in March, which added SEK 410 million. On top of this, we also had offset share issues in acquisitions, which added a further SEK 42 million. We have paid dividend with SEK 58 million during the quarter. Looking on the leverage, on the right-hand side here, you can see that we have a total interest-bearing net debt of approximately SEK 1 billion. And if you break it down, interest-bearing debt from financial institutions make up SEK 1.3 billion. The net debt to adjusted EBITDA was 2.3x for the quarter.
Here we could also mention that looking on this key indicator on a pro forma basis, it was 2.0x. Next slide, please. As already mentioned earlier in the presentation, the net working capital development for the quarter was weak, especially in contrast to first quarter when we had the opposite situation with a very strong cash flow for 2022. The main reason for the negative operating cash flow and cash conversion of course down in the second quarter here, while we had the operating cash flow of -SEK 8.2 million and it follows of course a negative cash conversion. Just some facts on the net working capital, which is the main cause for the development here.
The weak working capital development is mainly due to the fact that we have actively worked to ensure prices for the projects through earlier purchases of material. And this has created a delay in relation to when invoicing to the customer can take place. There are some other factors as well, and this is the project startup phase that normally occurs primarily in the second and partly first quarter of the year. And as well as, of course, a more extensive project activity due to the strong order intake for the first half of 2022, and also companies added between the periods years. All this makes up for the slightly weaker working capital development.
It should also be mentioned that many of the projects are then completed primarily during the fourth quarter in the seasonal cycle, which usually has a positive effect on the working capital for Fasadgruppen Group then. Next slide, please, and then I hand it over to Pål Warolin here to make a short summary.
Thank you very much, Casper. We go to the next slide, concluding remarks. Really had a great order intake this quarter, so we have a really strong order backlog. We're gonna continue focus on project margins. I believe that we've been pretty successful so far, but and I also think that we have the worst behind us. We also have a solid M&A pipeline in all our markets, and Finland is added after the second quarter, another market with untapped potential. It's a very stable underlying renovation demand. The market drivers are still very good. We are very optimistic when we look ahead. Thank you very much. That was all from our presentation. We are ready for some Q&A, please.
We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question is from Carl Ragnerstam from Nordea. Please go ahead.
Good morning, it's Carl Ragnerstam from Nordea. Firstly, a question. If you could shed some light on the raw material impact on the EBITA margin in the quarter. I'm not sure if it's possible to do that, but if you could shed some light on it. Secondly, if you expect sort of the raw material effect on earnings to be tougher when we're entering Q3, given that you mentioned that the inflation is sort of picking up for a few of your materials.
Hello, Carl. I mean, the effect on the margin, first of all, our business is a lot of projects, so it can, of course, change from year to year. I mean, we have a financial target over 10%. Of course, it had some effect so far on the margin, I would believe. It also, I mean, it's also, as I mentioned here in the presentation, I believe that the worst part is behind us because in this second quarter, we had some projects that we were able to move the cost 100% to the customer.
In the third quarter and in the fourth quarter, we have a lot of projects which start, and then we have let's say the new prices in our calculation. I believe that we're gonna improve the margin a little bit over the year, even though it's gonna be hard to reach, perhaps to reach, the margin that we had for the full year last year. I believe we're gonna get closer.
Okay. That's very good. Also in terms of your order backlog growth, organic close to 27%. Could you comment if it's driven by any specific market or geography? I guess a problem in the construction industry historically has been that organic growth or gained market shares tend to come with lower margins. My question is also how certain you are that you've taken the project to sort of the right margin and also taken the inflation into account.
Yeah. In a general way of speaking, first of all, I'm very, very comfortable with the order backlog. The fact that it increased almost 27% organic. It's both that it's, I mean, it's a lot of activity at our markets. We have a lot of inquiries incoming all the time. Of course, it's also an effect of the inflation, as mentioned here, in the earlier question here. A lot of projects which start up here in the third quarter and in fourth quarter, we have won those projects with the new prices.
I'm very comfortable with the project we have in our order backlog. It actually in some of the projects, I really believe that we have also won the project with new prices, high prices. Then we have some materials which the price is going down. Perhaps we can have a little bit of a positive effect there in the end of this year.
Okay, very good. Also, I mean, could you comment if you have seen any fluctuations or variations in the order trend during the quarter and also during July and so far in August? I mean, have you seen any market starting to become more muted, I guess, partly in the sense of your small new construction exposure or anything if you have seen?
No, I mean, as we'll also mention here, but we are very positive. Of course, we are. I mean, we have to listen carefully and follow it up carefully. Right now, we cannot see any kind of bad signs of things happening in the market. Of course, I also can hear the news, and I can also see what they say about the construction companies. I mean, we have today so much for the renovation instead of the construction companies. Our subsidiaries that are a little bit more focused on new construction.
They have a really good order backlog in a long way into next year. Therefore, once again, it's very hard to see any bad sign right now. Of course, we have to follow it up closely. Inquiries are still incoming after the vacation. I mean, we have also won a lot of interesting orders, actually in July. I'm very positive and optimistic from what I can see right now.
Okay. That's very, very good. Could you also finally just give us a split between volume and price on the organic backlog growth?
The volume and price on the order backlog?
Yes. Of the 27%, how much is price-driven or volume-driven?
Oh.
Rough is fine.
It is very hard, Carl. It's very hard for me to give a number there. I mean, it has an effect, of course, but I wouldn't say that it's major, but it's an effect.
Okay, very good. That's all for me. Thank you.
Thank you, Carl.
Any further questions? Please press star then one. There are no more questions at this time.
We have received three questions from Elvin Rolder at Carnegie on email. First one. You had a very strong order intake in the quarter. Could you comment if you have signed several larger contracts, or is there something else that explains the strong order intake?
I wouldn't say that the mix is pretty much the same as normal. It's both small and big orders, but the mix is very ordinary.
Second one, when looking at the most recent trends in the market, have you seen a slowdown in the overall activity recently?
Yeah, it's pretty much the same answer as.
Yeah.
Carl question.
Yeah, last one then. Cash flow was weaker in the quarter. Should we expect a more or less normal cash conversion for the full year, 2022?
We should absolutely expect a normal cash conversion for the full year.
Great. That was the questions, that we have received. Do you want to say something in conclusion?
If we are ready. I want to thank all, first of all, our employees for a fantastic job during this challenging time, and also a thanks to all our customers for their understanding. Also thanks to our shareholders for giving us support and understanding. I hope to see you all again in November for the third quarter report. Thank you very much.