Earnings Call: Q1 2019

Apr 26, 2019

Hello, and welcome to the Lifeco Q1 Report 2019 Call. Throughout the call, all participants will be in listen only mode, and afterwards there will be a question and answer session. And just to remind you, this conference call is being recorded. Today, I am pleased to present Per Waldmarsen, the CEO and Therese Hofmann, the CFO. Please go ahead with your meeting. Thank you. Hello, everyone. This is Parvadomarsong. I would like to just give a few short comments about the quarterly results, and we can turn directly into Page 2 in the presentation. And as everyone can see, it's a quarter that can be summarized of growth organically, also through exchange rates and acquisition. So all three areas is contributing to our sales and results development. It's also worthwhile mentioning that this quarter contains onetime costs, nonrecurring costs of SEK56 1,000,000 that is being adjusted for in the EBITDA numbers. And that relates to the management change we had in this quarter, so everyone is aware of that effect. I can then turn to Page 3, where we go through the different business areas very briefly. And dental is having a good quarter, partly thanks to the Easter effect. Last year, the Easter was in March, early April. This year, Easter came fully in April, which has a positive effect in this year for dental, especially in the parts of the Nordic region. And then we have also a contribution from acquisitions made during last year that contributes to our sales and results development in this quarter. In the demolition and tools area, we have an improvement from a rather weak 2018 Q1, as something you might remember. So we have some organic development there in this quarter as well as acquisitions that have been carried out in the beginning of Q1 in this business area. And this is a solution, it's a strong organic development, pretty much in all divisions and a slight we assume we expect a slight positive effect also on Easter in certain parts of the solution where working days makes a difference. And then we can turn into Page 4, which is just a short reminder, and this is a more of a historical looking back at historical numbers that I want to remind everyone that the value creation in Lifeco has been and hopefully will be coming from 2 areas, the acquisition part, which has been giving us historical growth in the range of 10% to 14%, And also from organic development, which you can see is more volatile depending on the business cycle and other things. And as you can see there, the organic growth has been good in the last 4 years and also in this quarter, thanks to the business cycle overall being positive. We then turn to Page 5. Just want to highlight in the balance sheet that we have now implemented the IFRS 16, which has an impact on the tangible assets, tangible fixed assets of about actually of SEK447 1,000,000 and the same effect also in the interest bearing liabilities of SEK447, just to highlight that. Also here, you can see that our net debt to EBITDA ratio is going up from year end due to acquisitions and also partly due to a little bit higher working capital in Q1, which is partly a normal effect and partly an effect of the business cycle being very strong, which ties up capital in inventory and receivables mainly. And then actually, I would just flip all the way over to Page 26, just skip the other pages. And just a short comment on the recent acquisitions that we made. We have already in the first in the presentation of Q4, we already had Indixator and HAMR being published. Indexator is a leading supplier of rotators for forest industry, but also the general, so to say, construction market. And then we have acquired HAMR in Italy, which is focused on the hydraulic breaker segment. Both of these acquisitions fall into generation tools. And then we have, after the closing of Q1, acquired a company in U. K, which is in the systems solutions area that is an asset light business selling to various customer group different display solutions, mainly through catalog, telephone and also not through Internet, mainly in the U. K. This was a very short introduction to the quarter, and I would like to open up for any questions. Thank And we have a question from the line of Oskar Vikstrom of ABG. Please go ahead. Your line is open. Hi. Thank you. So I have a question regarding the Molysinum tools. You mentioned in the text there that the market situation was generally good. Could you help define a bit what you mean by generally? Is that a comment on the year or just the quarter? Or how should we look at demolition and tools going forward? Well, first of all, we don't give any forecast. So it's a historical conclusion of what we saw in Q1 and also a lot in 2018. So we are speaking about the current situation in the quarter. And generally good. What could you help define that? So I think the organic, as you can see, we have organic growth in the segment, which is referring to this generally good business plan. All right. And so okay. So following up on that. So the system solutions had a very, very strong performance this quarter and especially on EBITA level. Was that supported largely by volumes or the profitability in the segment? Yes. So you have the effect of good organic growth being translated into good results. But there hasn't been so there's no pricing increases or anything like that is mainly driven by volume? The system solution area is such a diversified area. But I can only say that we're sticking into different divisions, and all our divisions are performing well in the Q1. Some of them having, I think, some positive effect from the Easter, as I mentioned initially, and some others maybe less so. In overall, it's a very strong quarter for the organic development solutions for the quarter. Okay, understood. All right. I mean, that's all I had. So thank you. Thank you. Thank you. And there are no further questions at this time. Please go ahead. So if there are no further questions, I would like to thank everyone for listening, and I'll leave it over to you with that. Thank you. This now concludes our conference call. Thank you all for attending. You may now disconnect.