Hello, and welcome to the Lifco audiocast with teleconference for Q4 2021. Throughout the call, all participants will be in listening only mode, and afterwards there will be a question and answer session. Just to remind you, this Conference Call is being recorded. Today, I am pleased to present CEO Per Waldemarson and CFO Therése Hoffman. Please go ahead with your meeting.
Thank you very much and a warm welcome to everyone. Good morning. We would like to present the Lifco Q4 2021 numbers. We can start already by going into page 2 in our investor presentation, where we have the summary of the key figures for the quarter and for the full- year. As you can see from this page, we can conclude that 2021 was another very strong year for Lifco. We also saw the same trend in the last quarter with very strong development driven by strong underlying markets in Demolition & Tools and Systems Solutions area. Overall, in the quarter, we had a sales growth of 32%, of which 20% was organic growth and acquisitions contributed with about 15%.
For the full- year figures, Lifco grew the sales with 27%, and there we had organic growth contributing with 15% and acquisitions 13%. If you go down to the EBITA level, we had also very nice growth. In the quarter, we had 30% growth, but however, a slightly lower- margin compared to the same quarter in 2020. I'd like to remind everyone that in Q2 of 2020, we had extraordinary good margin development due to lower- cost levels following the early phase of the pandemic. For the full- year, the EBITA grew by 37% due to a combination of strong organic development and acquisitions helping our EBITA development.
Further down in the graph, you can all see that the cash flow has been solid and growing compared to previous years, thanks to increased profits, but partly offset by slightly increasing inventory and receivable levels due to the very strong market conditions which have led to this development. All in all, if we go all the way down to return on capital employed, we have ended the year and the quarter on a very high level, 23% return on capital employed. If you take the return on capital employed excluding goodwill, we are now at 162%, which is a very strong level for Lifco. We can go into page number three and go a little bit more into the different business areas.
If we start with Dental on the top, here I'd like to remind everyone, we had a very strong end of 2020. Last quarter and also the Q3 in 2020 was a little bit of a comeback situation from the early phase of the pandemic, where we suffered severely in Q2 2020. In the second half of 2020, we had the lower cost levels due to the sort of freeze coming out of the early phase of the pandemic, which led to extraordinary high- margin development in 2020. If you look in Q4 2021, we are back into more normal levels, more in line with how things were in end of 2019.
We are now seeing in the Dental that, you know, activity levels have now been back in sales and marketing activities, et cetera, more back to normal levels since basically mid-2021. The companies are more in a forward-looking mindset. If we go further down then to Demolition & Tools, we have had now for quite some time very strong market conditions, and that has continued in the Q4 . We are growing sales with 55%, thanks to very strong organic development and also quite substantial acquisition help. We have done some larger acquisitions during the year in this field.
The higher- margin that we have now generated in the last quarter in Demolition & Tools is mainly explained by strong operational leverage due to this strong sales growth in this business area. If we go down to Systems Solutions, we are growing sales strongly, both thanks to the underlying market demand and from acquisitions. The margins in the last quarter of 2021 are slightly lower than previous years or previous year, I should say. That's also the same reason that we had also extraordinary low cost levels in the later part of 2020. Now we're back into more normal levels.
Here I'd also like to mention that in this area, we have few entities that have longer order books, which have had more difficulties getting a quick compensation of the increase in raw material pricing or the material prices overall in the value chains. This has been a challenge for many companies that we have overall managed very well, I have to mention here. On the whole Lifco level, we've been doing a very good job in quickly adapting our price levels. The ones that are suffering more are of course the ones with longer order books, where it takes longer time to transfer this over. With that, I'd like to move over to page number four, and that's a little bit more of a historical review, a long-term perspective on Lifco.
This is once again another reminder on how Lifco have been growing our business for now the last seven years since we came into the stock exchange. I know there's a lot of data on this page, but if we go to the third row, we can see the growth from acquisitions that have been last year in 2021 was a record year in modern time. We grow Lifco's EBITA from acquisitions with 18%. You can also see it's been a strong growth driver for us for many years historically as well, ranging from 9%-14%, and then last year jumping up to 18%. If you go further down in the table, you can see that organic EBITDA growth has been 1.5%.
That is a very important area for us. We have stronger focus on buying high-quality companies and then developing companies ourselves organically. Last year, 2021 versus 2020, we had over 1% organic growth. We're happy thanks to very strong market conditions, but also through a significant job on the training, which is a very critical area for us.
These two things together, basically buying very good companies and then of course, having a strong focus on making sure the company is developed in the right direction, in combination with the discipline in the valuation, basically buying smaller sized companies has led to a situation on the very bottom of this graph where you can see that we can do all this, through self-financing and still keeping our net debt EBITDA ratio fairly constant while paying a small dividend or a dividend every year to our shareholders. With that, we can move over to page number 5. Just a little bit more details around the net debt development.
Obviously, we are growing our net debt in absolute terms as we are growing Lifco, but in relation to our profit development, it's been a very stable level ranging just below the 2 times net debt to EBITDA if you include all debt positions. We ended the year with a net debt to EBITDA of 1.7 times compared to 1.6 times one year ago. We have done quite a number of acquisitions in 2021, I have to mention here as well. The interest bearing net debt to EBITDA is at 1.1 times, which is the same level as one year ago.
We are basically ending a year with a very strong financial position and giving us room for financial room for more acquisitions going forward. With that, we can move over to page 7 in our presentation. We already mentioned the numbers here. We have strong developments in return on capital employed, both if you include the goodwill and also on the right-hand side, we have been looking at the company portfolio. Without the goodwill, we have very strong position now at 162%.
This has been and is a very fundamental part of Lifco because it basically means with this type of key ratios, we can grow organically like we done in 2021 and still generate a very strong cash flow, which means that we have the possibility to continue our acquisitions through self-funding in our own balance sheet. We have a lot of emphasis on this one, acquire new companies and of course a lot of emphasis in the existing portfolio to make sure we are developing in the right direction when it comes to this type of measurement.
I'd like to go all the way down to page number 13, which is a slide that I normally don't present, but we update this data every second year, so now we have a new data set. It's a slide that we actually presented the first time we went public in 2014, trying to summarize how Lifco had, you know, grown some of the portfolio organically. We have now measured the original Dental portfolio on the left-hand side. This is now pure organic development of the original Dental companies that we followed all the way back to 97.
As you can see, we had very strong development through the first 15 years up until 2013, basically doing a lot of operational improvements in this subset of the portfolio. Since then, we have been more on a plateau, but still developing overall nicely. In the last 2 years here between 2019 and 2021, we have 6% CAGR in organic EBITDA development in this subset. So I'd just like to remind these are examples. We try to follow these examples from a very long time perspective. Obviously, we have also, you know, strong organic development in companies that we've added in the later part of Lifco's development. I think these are very interesting because they follow from a very long time perspective.
On the right-hand side of this page 13, we have then followed our original demolition robots company in Brokk, which Lifco then has had in the portfolio since 2000. Here you can also see that this is one example of very long-term focus on gradually developing business from organic improvements, both improving margins and sales and leading to a situation where we now have reached another 10% CAGR between 2019 and 2021 and then a record high EBIT margin. I'd like to mention here on the Brokk data that this is now measuring only the Swedish entity, because that's the entity we had in from the start, but it's giving a relevant picture of the organic development of this type of company.
We can move all the way down to page 28, which is the list of acquisitions in 2021. As you can see, we have been very active in all our three business areas. We are slowly, you know, developing and gradually developing our acquisition capacity, which has led to this effect that we are now able to do a little bit more acquisitions than we were maybe able to do four or five years ago. This is a continuous development of organically developing our own resources in being active in finding companies, but also being able to take care of new acquisitions. That is equally important that we can make sure we set the foundation for continued organic development of the acquired entities.
We take a big emphasis on having the right people involved in steering that development from Lifco perspective. This is a journey that hopefully will continue. It's always difficult to buy. You know, great companies in small niches, but we do very hard work here and hopefully continue to find new exciting companies in the future in this area. I think this was all for me right now. Then I'd like to see if there are any questions.
Our first question comes from Carl Ragnerstam with Nordea. Please go ahead.
Hi, it's Carl here from Nordea. Firstly, a question regarding cost ramp up. You said that sales and marketing expenses came back from beginning of Q3. So I guess could you give some flavor on if you're back to the 2019 level currently or in Q4 at least, or if it's sort of more to come if we're entering a more or a period with less restrictions in 2020?
Yes. I think first of all, to make it a bit clear, it's mainly sales and marketing- related, but I think there was a general freeze. You know, Lifco is consisting of many small entrepreneurial driven companies. When the pandemic came in the early phase, there was a general freeze in many areas, including sales and marketing obviously, but also in product development there were not as many new initiatives taken during the early phase of the pandemic, et cetera. That I think started to come back already one year ago. We saw the effect in our numbers maybe more coming from Q3 2021. I think the mindset is very much back to a normal level right now.
You know, of course, we cannot in every area carry out every sales and marketing activity exactly like we done it in the past. Our companies are finding new ways to be close to our customers and to make sure we keep our positions in place. I think we are now back to a more normal level. Of course, on top of that, we have in some areas very strong organic development now, which leads to, you know, maybe needs to to ramp up costs. That's more a normal, you know, growth- related area. If you take, you know, the more normal situation, I think we are fairly back to normal levels right now in our attitude and our way of working in the companies.
Perfect. In demolition tools, you have obviously quite good margins in the quarter. Would you say that you had a tailwind from special orders from Brokk in the quarter? Or is it sort of strong widespread underlying growth? Because when I look at it looks like machinery and tools had a bit higher growth in the quarter compared to construction materials. I don't know if it's a leading indicator.
No. I think the reason for the development is mainly the very strong underlying market conditions which leads to improving sales and operational leverage. If you go into the very many details here, of course we have some areas here that you know on the margin have a little bit difficulties on raw material pricing, et cetera. There's no one project order that makes an impact. This is a general very strong underlying market condition and operational leverage that creates this development across the board, I would say.
Okay. No special orders in the quarter then higher than last year?
I mean, no special orders make this stand out in this quarter. I think the key theme for this quarter is the strong market development and strong underlying demand.
Okay. Perfect. In terms of acquired growth, I mean, in looking back in 2019, you had what, SEK 1.3 billion worth of acquired sales. Roughly you had SEK 717 million in 2020, and now we ended up in SEK 2 billion in 2021, which is obviously quite impressive. Would you say that 2021 is part an inflated number due to catch up effect from 2020, which we obviously could see by the 2020 number, meaning that 2022 might be difficult to reach the 2021 level in absolute number or is it an effect of a different way of working? Or yeah, could you help me on that?
Well, when it comes to acquisitions, you know, we are very picky in what companies we think can qualify to be part of our organic development journey going forward. We are always, you know, looking at many different companies and sometimes we get, you know, more closings and sometimes we get a little bit less. The only thing I can mention, which I have mentioned here in the past, is that, you know, we are in a position now compared to at least two, three years back. We have a better organizational structure to take care of new acquisitions and we can then ramp up the activity to get even more leads into Lifco and work on even more projects.
Whether that will lead to an outcome in 2022 or 2023, that is in the same, you know, level as 2021, it's impossible to say because it's not only related to our work, it's also related to the quality of the companies we get access to and where we strike basically the sweet spot in terms of negotiating the deal with the entrepreneurs. I can only mention that we are working harder than ever in 2021. It has yielded better results than ever in the acquisition work. We are not, you know, giving any guidance on where we'll end up. I think it would be very dangerous to do that also, because quality is always more important.
This is not a sprint, it's a marathon to develop a company like Lifco. Our ambitions are very high. We strive for always try to do a bit better than last year, both in acquisitions and organic work. We are also very patient and quality-oriented. For us, it's more important that we get the right companies in and continue to develop Lifco for the many years to come rather than stressing acquisitions for Lifco. I hope that answers your question, but hopefully we can continue this because we have no guidance on this.
Yeah, of course. Of course. Okay. All from me. Thank you.
A reminder, if you do wish to ask a question, please press zero one on your telephone keypad. Our next question comes from Karl Bokvist with ABG Sundal Collier. Please go ahead.
Yes. Thank you, and good morning. I was just a bit interested in the comments you made about the end market demand, particularly in Systems Solutions. I think the improvements that you see now in forestry, for example, is this, you know, the start of a new stable level, or is it a catch-up from a, you know, weaker comparison period or an easy comparison period?
Well, I think the forest area is a bit special for Lifco because it mainly consists of the project- related thermal equipment business, where obviously the markets are important, but maybe more important is basically the projects that we take in and how we perform on these projects. I would not really, you know, translate the market conditions comment into that specific area. I think there are other factors that are maybe even more important than market conditions for forestry. That's the situation regarding a product business. You need the market to be there, but even more importantly, you need to deliver on the right projects and get the right pricing out there and so forth. I think the comment there is more a general comment throughout all the areas of Systems Solutions, so to say.
Understood. And then just the comment you made on Systems Solutions also when it comes to just the kind of natural impact from companies having longer lead times and the impact that it has on pricing mechanics. You know, the first question overall, do you have any kind of insight into your belief on how the lead times have progressed for Lifco overall compared to, let's say, a quarter ago, given supply chain challenges? The second question is more on Systems Solutions, how you look at the business overall when it comes to pricing adjustments and continued cost inflation.
I guess the question is both about, you know, getting components in and then how we deal with raw material pricing. Is that the question?
Yeah. First, you know, for the group as a whole, I understand, you know, you have different lead times across all kinds of businesses, but just would be interesting to hear how your view on the entire supply chain situation and how that has developed compared to three months ago, for example. Just that was my first one. Yeah.
Yeah. I think it's been now for quite some time a very difficult situation when it comes to sourcing components for many of our companies. It's a constant battle out there. I think we have an advantage being very decentralized and very entrepreneurial and rather small, so we can, you know, scramble around. Most of our companies have been very successful in, you know, having very short predictability on what's gonna be able to deliver in the next couple of months, but doing a very good work. It's still in the same situation. It's still an unknown factor. It has been for quite some while, but we've been able to scramble very well in this area for the most part. Of course, there are examples of some companies that are, you know, cannot deliver everything they wanted every month.
They're waiting for some critical components. On the overall Lifco level, it has not been a material impact. You can also argue that, you know, with easier supply chains, we could of course maybe have grown a little bit more, quicker, so to say, because the demand has been very strong. I think that's, you know, a fact of the situation that, you know, when you have this type of strong market conditions combined with the situation coming out of the pandemic, we have this situation. When it comes to the pricing, you know, I think we are in general very good in adapting pricing quickly.
It's a core fundamental part of our culture in any given year and, especially also in this year, where we had some smaller issues, as has been in areas where we have long order books, and there's been some difficulties in quickly getting, you know, component pricing and raw material pricing into our own pricing. But for the most part, we have very little problem with this and we have been doing a good job of being quick in adapting to this. It's more a fact of life when you're sitting in very long order books. But even with the long order books, we also try to find ways how to address this.
This is a new learning for us, and many of us who's been now in Lifco for, you know, 15, 20 years. It's the first time we experienced this type of situation, so we are learning also how to look at the order book and you know what type of pricing can you give away for how long, etc. It's a new learning for all of our companies in this situation. We are also addressing that for the future to be even more flexible if this would arise again and continue.
Understood. Thank you.
Thank you.
There are no further questions. I hand back over to our speakers.
Okay. Thank you very much for listening in, and I wish everyone continued nice Wednesday. Thank you very much.