Welcome to the Fasadgruppen Group Audiocast with Teleconference Q3 2022. Throughout the call, all participants will be in listen-only mode, and afterwards, there'll be a question and answer session. Just to remind you, this conference is being recorded. Today, I am pleased to present CEO Pål Warolin and CFO Casper Tamm. Please begin your meeting.
Welcome, everyone, to this presentation, Fasadgruppen Group third quarter 2022. My name is Pål Warolin, and I'm the CEO of Fasadgruppen Group. Together with our CFO, Casper Tamm, we will guide you through this presentation. Next slide, please. Let's start as usual with Fasadgruppen Group in brief. Fasadgruppen Group, 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 of, for example, masonry, plastering, installation or renovation of balconies, installation or renovation of windows, roof, glazing, almost everything you need a scaffolding to do.
Fasadgruppen Group, we are focused on midsize project in the range of SEK 1 million-100 million, with an average project size of about SEK 3 million-4 million, And at least 75% of our 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 about 50 businesses across Sweden, Denmark, Norway, and Finland in a decentralized structure. We have almost 2,000 employees. Next slide, please. Take a look at some key financial last twelve months. First of all, the net sales is, for the first time, more than SEK 4 billion. As a positive note, also, the cash flow was better. It is improving. It is improving slowly, so the cash conversion is a little bit better.
I'm also confident with a healthy order backlog, almost SEK 3.2 billion. Next slide, please. The third quarter in brief. Take a closer look at the third quarter. We have a strong organic growth driven by inflation and also energy renovation demand. We have a lot of activities and a lot of products more than normal. It's not only the inflation. We have some impact on margins from price increases on material in the second quarter, but overall, we've been successful in protecting profitability. We haven't been 100% successful with moving extra material cost to the customer, but very close to it. The net sales is up 69.3% compared to last year, which almost 15% was organic. The adjusted EBITDA margin 11.5%.
We have a very strong growth in order backlog, driven, of course, also of inflation, but also from a really strong demand. We have made 3 new acquisition in the third quarter, and we're the first entry to Finland. Next slide, please. We take a closer look at our 3 acquisition in the third quarter. First of all, Rovakate in Finland is the first entry to Finland, as Casper mentioned, with a market size of about SEK 25 billion. Rovakate is founded in 1973, specializing in façade and roofing works for industry buildings, such as power plants. The company is run by two entrepreneurs and they're serving customers across the Nordic region and the Northern Europe. Very proud of this first acquisition in Finland. The second one, Altana, a Danish company.
It's actually a pretty young company compared to our other subsidiaries in Fasadgruppen Group, but they have a very impressive journey so far. They founded in 2013. They are full service provider of balconies. They have a really strong position in Copenhagen, and it provides great cross-selling opportunities in Denmark. We know them for a while because they have been working with some of our subsidiaries in Denmark. I'm also very proud to announce this fantastic acquisition. The last one, the third one, Jan Tryk Facadepuds, and it's a little bit smaller acquisition compared to the other two, but it's a very typical Fasadgruppen Group company. It's a perfect asset acquisition by our subsidiary, P. Andersen & Søn. They offer us masonry and plastering with large share of renovation projects, and it's established Fasadgruppen Group in the Jutland region.
I'm also very happy to present Jan Tryk Facadepuds. Next slide, please. Case study from the third quarter, sustainable renovation across our market. This time it's not a single project. This time we really want to show that we are well-positioned towards a market that demands energy efficient solutions for buildings, and that we use material that are produced very energy friendly. We have about 1,000 projects ongoing right now. The project on this slide is very typical Fasadgruppen project. We can go to the next slide and take a closer look to three of those specific projects. The first one in Norway, our subsidiary DVS Entreprenør. It's located in Raufoss power plant. It's a very old building and a very elegant building where we have changed to more energy efficient windows.
The second case here is in Denmark. Our subsidiary Byens Tag & Facade, located in Copenhagen, and the project is called Vanløsegaard . It's a typical apartment building, almost 100 years. It's actually a building designed by the famous architect, Arthur Carl Johan Wittmaack. We have done roof replacement with solar panels and optimization of ventilation. The third project is in Sweden. Our subsidiary is Malmö Mur & Puts, located in Lund, Campus Vipan. It is a building for the university in Lund. We have done classic bricklaying, and the brick that was prescribed in this specific project was produced with natural gas.
We changed it to bricks produced with biogas instead, which gives a 60% reduction of CO2. Next slide, please. We will move on to some financials. I will hand over to Casper.
Thank you, Pål. I will take you through some highlights in the Q3 financials. Next slide, please. We saw a strong organic and profitable growth for third quarter. Revenues were up SEK 1.2 billion, and we had a strong organic growth in nearly 15%. Here, 42 companies were comparable out of a total of approximately 50. Adjusted EBITDA reached SEK 139 million, with a healthy margin of 11.5%. We had some negative impact here from cost inflation on materials. Coming to the order backlog, it reached SEK 3.2 billion, and we have seen an increase in the order backlogs since start of the year with SEK 1.2 billion. Profit for the period was SEK 105 million, and basic earnings per share was SEK 2.15.
In the period year, number of shares is up approximately 9%. Operating cash flow was strong and was SEK 125 million. This was mainly due to improved net working capital development in the quarter. We will return to above figures later in the presentation. Next slide, please. Coming to net sales. Acquired growth in the quarter was nearly 55% out of the total 69% on year-on-year basis. Since start of the year, 17 new acquisitions have been made until the end of the third quarter. As already said, we saw a strong organic growth with nearly 15%, up from approximately 4% in first quarter and more or less on the same level in the second quarter. Here we have a smaller impact from exchange rate changes with 0.9 percentage points.
The organic growth besides the exchange rate changes includes essential effects from cost inflation on materials, which we estimate to approximately 5%-10% for the quarter. Coming to the order backlog, also here, we saw a strong increase in the organic growth, up 36%. We're above second quarter here. Also here, we have some essential effects from cost inflation on materials, and we estimate the effect to approximately 10%-15% for the order backlog organic growth. New acquisitions amounted to approximately SEK 0.8 billion out of the total increase of SEK 1.2 billion since start of the year. Now next slide, please. The quarter saw an adjusted EBITDA increase of 48% on year-on-year basis with a healthy margin of 11.5%.
Also here some negative effects from cost inflation, which has impacted profitability, but still on a healthy level. Non-recurring items in the quarter amounted to SEK 9.4 million and includes M&A costs of SEK 2.8 million and positive effects on earnout revaluations with SEK 13.5 million, and also some other costs with SEK 1.2 million. Going to the next slide, please. Just some comments on the P&L. Looking on other revenues, here you will find the effects from positive non-recurring items like revaluation of earnouts, which amounted to SEK 66 million in the quarter. For depreciation and amortization, here we have our acquired intangible assets, with the depreciation, ongoing depreciation of approximately SEK 8 million-SEK 9 million for the quarter. In other operating expenses, we find negative non-recurring items like the M&A cost and also negative earnouts here.
The effects from revaluation earnouts in other operating expenses was SEK 53 million for the quarter. Going down to net financial costs, here the interest cost on external debt was SEK 8 million for the quarter and SEK 14 million on the accumulated period until September. Going to the next slide, please. Some comments on the balance sheet. We have a total balance sheet now of SEK 4.9 billion. Looking on the asset side, we see major changes for brand and especially goodwill due to the active acquisition agenda. Here we have no depreciation included. On the equity side, we have seen during the year new target for new shares in March, SEK 410 million. We also in acquisitions has added SEK 125 million as offset shares.
We had a dividend in second quarter of SEK 58 million, which also impacted the equity side. On the debt side, we had interest bearing debt from our finance institutions of SEK 1.6 billion compared to SEK 0.8 billion in the comparable period. The net interest bearing debt was SEK 1.4 billion here, giving us a net debt to adjusted EBITDA of 2.8 on the same level as the comparable period. Yes, we go to the next slide, please. Saying something about cash flow and cash conversion, as already mentioned by Pål here, we saw a strong operating cash flow in the quarter, which improved our cash conversion also, which was increasingly stronger than in the comparable period. The change in net working capital was negative for the rolling twelve months.
Here the negative development in the working capital is considered mainly to be the active work we have done during mainly second and partly third quarter to ensure prices for the extra earlier purchase of materials. This has created a delay in relation to when invoicing to the customer can take place. The, we see a larger number of projects will be completed during the fourth quarter in the seasonal cycle, which usually has a positive effect on the net working capital development for Fasadgruppen. We feel confident also here. Next slide, please, and then I leave it over to Pål here to do some remarks, closing remarks.
Thank you, Casper. Some concluding remarks. First of all, we have a record strong order backlog. We are well prepared for next year, and it gives us good confidence going forward. Number two, we have a focus on margins and cash flow. We will continue with the hard work to keep our margins, and also focus on our cash flow. We believe that we have a great possibility to improve that, even if it will take some time. Number three, M&A opportunities remain solid. We have closed one acquisition after the third quarter closed. Really good acquisition, great margins and focus on renovation. And our pipeline is still very strong, and we will continue to consolidate our industry.
All in all, we have a positive view on 2023, and we are positive going forward given what we see right now. Of course, it is important that we are humble about it. Thank you very much. We are ready for some Q&A.
Thank you. If you wish to ask the question, please dial zero-one on your telephone keypads now to enter the queue. Once your name is announced, you can ask your question. If you find your question is answered before it's your turn to speak, you can dial zero-two to cancel. Once again, that's zero-one to ask a question or zero-two if you need to cancel. Our first question comes from the line of Carl Ragnerstam of Nordea. Please go ahead, your line is open.
Good morning, it's Carl here from Nordea. A few questions. Firstly, maybe just one clarification regarding Casper's comment on the organic backlog growth. Maybe I misheard, but was the 10%-15% the pricing effect on the organic growth, or was it the underlying volume growth?
No, it was 10%-15% pricing effect.
Okay. Very good.
Coming from cost inflation then.
Okay.
That was, yes.
That's. Super. Very clear. Also, I mean, obviously then you had quite good underlying volume growth as well, right? I mean, did you see the same quite strong picture everywhere in all end markets and all geographies? Do you see a better development in some end market or?
No, it's actually pretty much the same in all our markets. The only thing perhaps is, of course, on the new production, but it's, as you know, it's a very small part of our total revenues. Then we can see going forward, it's the market is probably getting down.
Also, I mean, if you look at the housing cooperative market, I guess it's 30% of your sales. Have you seen any weakness there from higher interest rates, but also from, of course, the higher energy costs that they might postpone projects or pause the process?
Actually, it's a really good question, Carl, but so far it's been very stable, even to that market, housing cooperatives. As you mentioned, of course, when the interest is going up, everything will be more expensive, but it's also from very low levels. We can also see an increasing demand for energy savings. The total picture for housing cooperatives is still. I'm still very optimistic there. Even if, of course, as I just mentioned, we have to follow it closely. What I can see right now, it's still very stable there.
Okay, very good. And also we have heard that some of the installation players, window manufacturers might announce or have announced new price increases. Is it fair to assume that you might see a tougher raw material situation in the coming few quarters? Or would you say that it will be compensated by sort of lower prices on steel or other wooden products, or?
I mean, what we have experienced this year so far, and have you been close to that before? It's been extremely difficult, and I believe that we have handled that pretty good. I mean, it's of course it's much easier for us if the prices are back to normal. I mean, it's stable as normal. I'm also pretty confident that we have been handling it pretty good so far. I'm sleeping pretty good going forward regarding that situation.
Okay, very good. Also you had a positive revaluation of earnouts in the quarter. Is it a specific company that is not performing that well, or is it simply that the earnout structure was set quite optimistically?
Quite optimistically. In a general way of speaking, I mean, if we have, you know, when we have this negotiation with the sellers, perhaps they would have some more money for it. Then we tell them, "Of course, you can have more money if you earn more money going forward." Sometimes it happens like that, and it's what's happened in this specific case as well.
Okay. It's no big deal for any of your newly acquired companies.
No, no. They have delivered as expected, you can say. Carl, it comprises of 10-15 companies where we do these changes. It's not just one, it's several earnout companies.
Okay, very good. That's all for me. Thank you.
Thank you, Carl.
Thank you. Once again, if there are any further questions, please dial zero-one on your telephone keypads now. Okay, there seems to be currently no further questions from the phone, so I'll hand the floor back to our speakers.
Okay. I just want to say thank you everyone for listening. I hope to see or hear you in the fourth quarter. Thank you very much for today.