Hello everyone and welcome to this presentation, Fasadgruppen first quarter 2023. My name is Pål Warolin. I'm CEO of Fasadgruppen. Together with our CFO, Casper Tamm.
Welcome to the Fasadgruppen Q1 report for 2023. For the first part of the conference call, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing star five on their telephone keypad. I will hand the conference over to the speakers, CEO Pål Warolin and CFO Casper Tamm. Please go ahead.
Welcome to this presentation, Fasadgruppen 1st quarter 2023. My name is Pål Warolin. I'm CEO of Fasadgruppen, and together with our CFO, Casper Tamm, and also our IR, Adrian Westman, and also our new CEO, starting tomorrow, Martin Jacobsson. We will guide you through this presentation, and after that, we're ready for some Q&A. Let's start as usual with Fasadgruppen in brief. Fasadgruppen is 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, renovation of balconies, installation, renovation of windows, roof renovation, glazing, almost everything you need a scaffolding to do.
Fasadgruppen, we are focused on mid-size project in the range of SEK 1 million - 100 million SEK , with an average project size of SEK 3 million- 4 million SEK. At least 75% of projects relate to renovation. Fasadgruppen, we have an active M&A agenda with the aim to consolidate the highly fragmented Nordic façade industry. The group currently comprises approx 50 businesses across Sweden, Denmark, Norway, and Finland in a very decentralized structure, and has almost 2,000 employees. Take a look at some key financials, last 12 months. First of all, net sales, really close to 5 billion SEK. The Adjusted EBITDA, a little more than SEK 462 million, which gives an Adjusted EBITDA margin, 9.3%.
We can also see the order backlog is close to 2.9 billion SEK. I really feel that demand is still very strong. First quarter in brief. This year started very well with a high activity for the quarter. Important to remember, the first quarter is always a quarter for Fasadgruppen Group with a little bit lower activity than the other quarters because of the weather. This first quarter, a really strong start with high growth, increased earning, and clear margin improvement. We still have some cost inflation on material, but it's stabilized, and we got much better conditions from our suppliers. Even if some of them still need to increase the price, we got a little bit longer lead times.
Net sales is up 55% compared to last year, of which 25.2 is organic. The Adjusted EBITDA is up almost 71% compared to last year, and the Adjusted EBITDA margin of 6.5% compared to last year's 6.9%. This is very positive. It's actually even better than 2021. We really see an increase in new project requests during the spring. I would say it's a very positive market sentiment. As I mentioned, the demand is still very strong on all our markets, and especially, of course, on renovation, but also in new construction. Acquisitions. First of all, of course, M&A is key in our growth strategy, but it's all about timing.
Sometimes we suddenly agree in many negotiations, and sometimes it takes a little bit longer time. That's how it's always been for us since the start. Right now, we have several ongoing dialogues with different potential acquisitions on all our markets. It's actually pretty much as usual. We continue to focus as usual on profitable companies that are best in class and with good cash flow to fuel continued M&A execution. Daniel Bergman will join us as new head of M&A in September. Next slide, we can see some examples of orders that we won in the first quarter. There's a small mix of different orders. As you can see, it's still a mix of both renovation and new construction. Just to give you an example here.
First one, STARK Fasadrenovering, our Swedish subsidiary in Stockholm. The customer is MZ Bygg, and what we're doing is facade and balcony renovation, a very typical Fasadgruppen project. The second one is in Norway, our subsidiary, Mjøndalen Mur & Puss in Oslo. The customer, JM Norge, and the project is brick facade on a new residential building. Also a typical Fasadgruppen project. The third one is also in Norway, at DVS, also in the Oslo region. It's a renovation project. The customer is Boligbygg Oslo, what we are doing there is window and door replacement. Also very typical Fasadgruppen project. The last one, the last example here is also in Sweden, Frillesås Mur & Puts, our subsidiaries in Varberg. They have a project in Värnamo for ByggDialog.
The customer is ByggDialog, and it's brick facade on a new school. As I mentioned before, we really see an increase in new product requests in both renovation but also new construction during the spring. The renovation market characterized by long-term stability, driven once again by aging properties and increased requirements on energy performance. I would even say that a facade renovation is a must-have. It's not nice to have. Of course, general speaking, but general property owners avoid to postpone planned measures as it may cause damage and increase maintenance costs in the future. Also in an already stable market, continued progress in the revision of the Energy Performance of Buildings Directive in the first quarter.
Buildings account for 40% of energy consumption and 36% of greenhouse gas emissions in the European Union. In March, the European Union Parliament adopted draft measures to increase the rate of renovation and reduce energy consumption in the European building stock. Of course, the final shape of the bill to be negotiated between Parliament and Council, but I would say no matter how it ends, the bill will support renovation market growth for many years to come. Fasadgruppen, we are in an excellent position with a wide range of services. This gives us an great possibility to improve even more. Just so you understand how positive such a decision can be for us and what a difference we can make for our customer regarding energy savings.
If we take a look at a typical house here, energy efficiency at the core of our services, I mean, much of what we do, when we do façade renovation really improves energy savings. Just to give you some general examples. Façade insulation can be like 20%-25% improved energy savings. Window renovation, 10%-20%. Window replacement, 20%-25%. Even if you're using the SmartFront method, the Fasadgruppen method, can be like 60%-65%. Of course, normally we may not do all those actions in every single project, but just one or two action can really make a difference for our customers, so it's really important. Then we go to a case study within the first quarter, and this time it's our subsidiaries in Oslo, DVS Entreprenør.
It's a company founded in 1998, it was acquired in 2020 as Fasadgruppen's first entry to Norway. They are one of Norway's largest façade renovation companies with a really strong position in the Oslo area. They're serving a mix of private and public customers, including tenant owner association, construction companies, and also Boligbygg Oslo. Examples of ongoing project right now for DVS, I would say the major is right now for tenant owner associations. The company is actually a very typical Fasadgruppen company with 100% renovation, and they have also successfully improved the margin since they entered the Fasadgruppen. I am very proud of this company. We are ready for some financials, so I will leave it over to Casper.
Thank you, Paul. I will take you through some highlights in the Q1 financials. Looking on the Q1 2023 figures, in summary here, we can See that we had clear margin improvements and strong organic growth, which characterized the first quarter. Revenues were up with 55% to SEK 1.14 billion, with a record organic growth of 25%. We had 41 companies which were comparable out of a total of approximately 50 for the organic growth. Adjusted EBITDA was up with 71% to SEK 74 million, with an improved margin of 6.5%. We see that cost inflation of materials is now starting to stabilize. Order backlog was up 9% to SEK 2.85 billion, and the rate of new project requests has gradually increased during the spring and is now at a high level.
Profit for the period was SEK 29 million. Basic earnings per share were at SEK 0.58. We had the operating cash flow, which improved to SEK 77 million. The assessment is that the working capital development during the current quarter has followed a normal seasonal pattern for the year. We will return to our bulk figures later in the presentation. Net sales and order backlog. Net sales had an acquired growth of nearly 30%. Between the periods, 11 new acquisitions has been made. As already said, we saw a very strong organic growth here, which reached 25%. This is actually the highest organic growth in the period, 2022, 2023 here, with an upgoing trend also over the quarters. Exchange rate changes had a positive impact on organic growth by 0.8 percentage points.
Otherwise, the organic growth has primarily been affected by the impacts of cost inflation of materials. We have also seen an actual volume growth that has added positively to the growth in the first quarter. The order backlog for comparable companies at the end of March 2022 dropped by 8.3%. The first quarter last year was characterized by the very strong development in the order backlog as an effect of the pandemic receding. The corresponding period this year can be described as a normal development that broadly follows the previous seasonal patterns. Coming to the Adjusted EBITDA here. The quarter saw an Adjusted EBITDA increase of 71% on a year-on-year basis with an improved margin of 6.5%.
Cost inflation of materials calmed, which meant that prices to the customer could be managed satisfactorily during the quarter, with following positive effect on the margin compared to last year. The margin actually surpassed the comparable periods of both 2022 and 2021 here. Non-recurring items amounted to SEK 2.1 million and included mainly other costs of SEK 1.7 million. Some comments on the P&L. Here we want to mention on the depreciation and amortization that depreciation of on acquired intangible assets amounted to SEK 9 million in Q1 and SEK 40 million on a rolling twelve-month basis. Going down to the net financial cost, here we can say that interest cost on our external debt was SEK 19 million in Q1 and SEK 47 million on a rolling twelve-month basis.
Looking a bit on our balance sheet and leverage. Our total balance sheet now reached SEK 4.9 million with a healthy solidity of 43%. On the asset side, we saw increases in brand and especially goodwill due to the active acquisition agenda between the period. Here we have no depreciation included. Going down to the equity side, during the period, we have seen offset share issues on acquisitions that added a further SEK 115 million in equity. We also saw a negative impact from the dividend in 2022 here with SEK 58 million, and the rest of the change is in the equity is attributable to the comprehensive income between the periods. Saying something about the debt here, interest-bearing debt from finance institutions was up to with approximately SEK 300 million to SEK 1.5 billion.
Net debt was SEK 1.3 billion for the period. Going over here to the leverage key indicator, the net debt to Adjusted EBITDA has improved compared to last quarter and was down to 2.3 times at the end of the quarter. Here we could also add that net debt to Adjusted EBITDA pro forma basis was approximately 2.2 times. Our covenant for leverage key indicator indicates a potential headroom for acquisitions.
Financed by a new debt in the range of approximately half a billion SEK. Coming into cash flow and cash conversion, as already said here, the operating cash flow increased with SEK 77 million, and we had a cash conversion that reached 81%. The quarter was positively affected by the strong EBITDA, paired with a normal weaker development for the working capital in the first quarter. The weaker development of the working capital during the current quarter can mainly be traced back to the strong working capital development during the fourth quarter of 2022. Looking on the comparison period here, in the last year, the fourth quarter of 2021 respectively, we saw the reverse scenario. The assessment is that the working capital development during the current quarter largely follows the normal seasonal pattern for the year.
I leave it over for Pål here to make some concluding remarks together with Martin.
Thank you, Casper. Concluding remarks for the first quarter. First of all, a really strong start to 2023. We already see a really strong demand, increased amount on new project requests during spring. It's more stable conditions on material prices compared to 2022, which gives us better condition to improve the margin. We have many ongoing M&A dialogues. We have to continue focus on margins and cash flow. Absolutely all in all, I have a very positive view on 2023. Okay, to the fact that this is my last report before I'm leaving, and our new CEO, Martin Jacobsson, takes over, I would like to take the opportunity to thank all employees, customers, shareholders for a fantastic journey. With that said, I want to hand over to Martin Jacobsson.
Hi, everyone. Martin here. A bit about myself. I was the first employee in Fasadgruppen. I started in 2018 as CFO, and I've had various roles along the way, and I've been the Deputy CEO and a Head of M&A since 2019. During this time, I have been around and completed roughly more than 60 acquisitions. In short, I have an engineering background. Looking ahead, what's important for me, well, first of all, it's going to be business as usual. We will continue to strengthen our leadership within the market, and we will focus on profitable growth where margins and cash flow is going to be key. We will continue to consolidate the Nordic facade market as we always had, and potentially expand outside the Nordics in the midterm.
We will also continue to improve our efficiency, which I feel is very important, and we will do that through digitalization and also through education. We will also continue to increase our services within energy efficiency and our sustainability offering. What's not to be forgotten is that Fasadgruppen's main strength is our people, and I'm very proud of the development throughout the years and the fantastic journey that Fasadgruppen has been on. It still feels that it's just the beginning. What's super important for me is that we will continue to keep the entrepreneurial spirit going forward. With that, I would also like to thank Pål Warolin during his tenure. It's been a fantastic journey, and we wish you all the best going forward.
With that, I think we'll open up for questions.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Carl Ragnerstam from Nordea. Please go ahead.
Good morning. It's Carl here from Nordea. A few questions. Firstly, obviously, quite strong margin here in Q1 with the first positive year delta in a while. You mentioned raw material headwinds as one reason. Would you say that it's the sole reason for the positive year-year delta? Should we also expect further improvements due to continuous fading raw material headwinds here in the coming quarters?
It's pretty hard to answer that question. What we can see right now is that conditions are better, so which gives us... It's easier for us to have the right price in our calculation. From that point of view, better conditions to improve the margin. It's still the situation at the market, where some suppliers definitely try and need to increase the price. What we see right now, it's more stabilized. It's looking. Right now it's looking much better than it did a year ago.
Sounds very promising. Also we heard from other companies in adjacent industries that the sort of long Nordic winter impacted both sales as well as obviously efficiency. Did you experience that as well, I mean, working outdoors or was it business as usual for you?
I mean, it's pretty much business as usual. But we have this I mean, we have seen an increased requests regarding energy savings and some of those projects, you can say that some energy savings projects, there might be a little bit easier to take care of those projects even in wintertime. Of course, it depends on exactly what it is. Absolutely, we can see a trend of that. It's hard for me to say exactly what kind of effect it had on this first quarter.
Looking at the order backlog, it contracted by high single digits in the quarter organically. I mean, on one hand, you sound at least pretty confident in the underlying market. You also said that you've seen quite good number of incoming requests or projects lately here. Should we see it as a quite good start to Q2 with orders turning positive again? Or how should we look at it? Or is it just a part of normal seasonality, what you're describing?
What I think I'm seeing here is that when we have this last year, when we had this extreme cost inflation situation, we also could see that some customers, they place their order a little bit earlier than normal. What we see signs of right now, it's that the market is more established back to what we call normal. As you know, Carl, normally we have pretty short lead times regarding orders. Sometimes we don't know in January what we should produce in spring. We got requests and then it starts pretty short after. That's what we think we see right now is that it's going slowly back to normal.
Always look at how the organic growth looks in the over the year. It's too early to tell you exactly.
You sound at least pretty confident in sort of the underlying market demand. Have you seen that with energy prices coming down a bit, customers are changing their behavior? I mean, that it's less urgent to do energy efficiency upgrades?
No, but it's, like you said, I mean, the demand is still very strong. That's perhaps, if I read a newspaper or if I ask some other experts, they will tell me that the demand is going down. The situation right now is that I cannot see that the demand is going down. Of course, we have to be humble about it, but what we see right now, the requests, it's on high levels.
The final question from my side is a bit on the strike in Norway, which led to quite significant salary increases. Could you update us a bit on how this might impact your margins in the country here? Do you feel that you have index clauses covering it all the way or maybe that you factored in the wage increase into your projects already taken over the past six months? How should we look at it?
I mean, we are better. We learned a lesson last year, you can say, and we are better performed, and better prepared for this situation right now. Of course, we're gonna have to fight in specific projects. And we also have some projects right now, if you see old projects, if you see what I mean, from some which continued from last year. The total picture is absolutely more positive than a year ago.
Okay. Sounds promising. Thank you. That's all for me.
Thank you.
With that, no questions coming in by email. I don't think we have any more in the phone queue either. Do you want to conclude?
Thank you very much for this. Once again, this was my last report. So it's a little bit sad, but I wish Martin and his team good luck, and I'm very comfortable leaving over to Martin. This is gonna be a success. Thank you very much.