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Good morning, everyone. My name is Rikard Engberg, and I'm an equity research analyst here at Erik Penser Bank. With me, I have Mr. Henrik Ekelund, CEO of BTS Group, here to present for the quarter. Henrik, welcome and congratulations for another fine quarter.
Thank you, Rikard. Yes, Rikard and dear shareholders listening in, we are happy and proud to deliver another record quarter for BTS. We now have 18 consecutive record quarters in a row. So from mid-2016 and until today, not counting 2020, which was a year when we couldn't really run our business, but since mid-2016, quarter after quarter, 18 quarters in a row, we have delivered record revenues and record results, and we are very, very happy for that. And we -- I will present some more details for you here. Well, first of all, the market. There's a very strong demand for our services. It's driven by the rapid change among the top businesses of the world. And virtual delivery is where basically everything happens now. It is fully accepted as a replacement for physical delivery. However, we see now with the pandemic slowing down and things becoming more safe that the physical deliveries are coming back quite strongly. Looking at Q4, the underlying revenue growth in the actual operations is -- so 17%. So that is adjusted for currency and for the fact that there was less cost in 2021 than 2019 for travel. There was no travel in 2021. So we are making basically all our comparisons with 2019 because beating 2020 is simply too easy. So we compare with 2021. And the EBITA of Q4 was 13% higher than in Q4 of 2019. If we counted in Swedish krona, if we look at the underlying growth in the profit, it is 26% but lower because of the change in currency rates compared to 2 years ago. Our EBITA margin got to 15%, and we now have a new goal. Let me come back to that a little bit further. And for the whole year of 2021, we had 18% better results and revenues more than 30% better, if we count away the currency impact. So we are very, very pleased with 2021 and with the fourth quarter that we have delivered. And here it gives a bit of a perspective of the record development. You can see how revenue is growing. Quarter-by-quarter, it is going in the right northeasterly direction, with an exception for 2020. And as you know, in 2020, the physical training stopped, and that was hard for us to really run our business in the normal way. If we look at the profit, you again see the northeastern trend, but then even stronger. So the profit growth has been even stronger than revenue. And now talk about EBITA margin. About 5 years ago, we were down at 10%, 11% in EBITA. I said now we're really going to work long term to get to 15% by using many different tools, becoming more efficient, pricing in a more optimal way, taking out unnecessary cost, moving to more profitable customers, more profitable projects, a range of devices we bring year after year, improving our EBITA margin to the goal of 15%. And we're pleased with that. It was 5-year journey to go from 11% to 15%, really 4 years. 2020 was an exceptional year, and we have decided to set a new EBITA margin goal at 17%. So this is now our new long-term EBITA margin goal. Looking a bit more at the numbers. You can see here the EBITA growing, revenue growing 18% currency adjusted and EBITA at 18% as well. Looking for each business unit. You can see that in 2021, we've had fantastic development in North America and also in Other markets. BTS Europe has overall done well in most of its offices, but we've had a big decline in BTS Germany due to 2 big projects, which kind of ended midyear -- just before midyear in 2021. So Germany had a difficult year with a big loss, and that impacted BTS Europe, which in our other geographies did quite well. I should also say that the overall revenue growth of 18% in 2021 compared to 2019, 12% is organic and 6% roughly is from acquisitions we have made. Moving on here to Q4. Again, you can see the numbers that I just described. And same thing on the profit side. You can see here Europe's decline, which comes fully from what has happened in Germany, and the continued work in Other markets. In North America, actually, we had to postpone some work into Q1 because of lack of resources. So North America could have grown faster, but we decided to move some projects into Q1 because of quality reasons, because of work-life balance for our people. Many of them put a lot of hard work into last year. And you may ask why are we so successful in 2021 and over the last couple of years. It's really 2 main reasons. The first reason is that the market is growing. The market is really favorable for our services because of the speed of change in the business community and also because companies want to invest more in their people. And secondly, we are taking market shares. We are -- through our innovative approach, our investments in digital, our investments in marketing, we are winning more and more business taking market share. And just an overview of what you can do. You could see the 7 main practice areas that we have here. So it's 7 different areas, and this makes it possible for us that once we come into a client, we can serve that client across many needs or for many years. And as you know, we always communicated the average length of a customer in BTS is 7 years. So our revenues are coming back year after year due to this breadth and our ability to work from top to bottom to serve our clients on all their levels. So this broad portfolio is a very good competitive advantage and a way to really create a recurring revenue. And just a few word of the pandemic. It was very dramatic for us in early 2020 because we faced a situation where basically our business stopped. What we did was physical training, and all of that was closed down and stopped in early 2020. And we decided at that point in time to see 2020 as an investment year, to not focus on profitability, to keep all our employees and to switch everything to virtual and digital and not care about the profit in 2020. And that has really paid off that long term. We moved fast, but we thought we acted with a long-term perspective, and that has really paid off. Look, compared to competition, we have grown our distance to them. In digital, in virtual, we have our resources still at the base. We've innovated a lot. We have a stronger organization, a stronger customer base and a much stronger offering. So it's very interesting how a potential crisis for a company if you think long term and act fast, how you can use that to level up the business, and we see that in 2021. And we see that as we move into 2022, the business has been leveled up. And we continue. Of course, our share price has done phenomenally over the last 5 years. So why should you own shares in BTS given this growth? And I think a lot of people, when they look at BTS, they see that BTS, our growth opportunity is really limitless. We are not confined to a Swedish or a Nordic market. We are all over the globe, and we have less than 1% market share. And we are taking market shares, so really in a growth position. We have this long track record of growing and growing and growing both revenues and profit. And obviously, our financial goals that we have now upgraded on the profit side, I think people find that also quite attractive. For the dividend, we -- the Board has proposed a dividend of SEK 4.80, which is a 33% increase compared to 2019. We didn't grow the dividend in 2019, but this dividend is really in line with how profit has grown since 2018. So we're keeping a consistent policy there. And we're keeping our strategy of being able to create both rapid growth and strong cash flow so that we can give dividends to our shareholders. And for 2022, we are expecting our results to be better than in 2021. So in 2021, our EBITA was SEK 288 million, excluding a loan that was forgiven from the U.S. government. We're not taking that into account. So we will have a result which is better than the outcome in 2021. So this is the same outlook we've given for the last 5 years. And in all of those years, we've upgraded during the year to a significantly better, except 2020. So that is looking into 2022. And this is the stock price. As you can see, it's been -- since we went to the IPO, we performed clearly better than the market. I'll stop there, Rikard, and looking forward to your questions.
Thank you, Henrik. And my first question is, can you describe the driver behind this margin expansion that you see going forward? And how long do you think it will take? It took you 5 years to reach 15%. So what is the time frame here?
It's a great question, Rikard. And first of all, I would like to say, it took us really 4 years to get because 2020 is a year, I think, we can put to the side. And it is really a combination of many things. It's looking for efficiencies everywhere. It is about optimizing our pricing, so really making sure that we charge for all the services that we provide to clients. It is also about working with the most important customer problems that are really valuable for the right customers. So a range of many things that, year after year, we can improve our margin 0.5%, 1% each year. And we don't have a time frame for the 17% EBITA margin goal. We are determined to reach it. It's a long-term goal, and let's see how sharp we are in executing towards that goal.
And my next question is looking at the mix going forward, what do you think the mix will be between physical and digital and virtual delivery? And how will that affect your sales numbers?
So I do believe that we will see a mix. Companies and the people who come to these training sessions, they've learned that they can save money. They can save time. They can save emissions by having this virtual. On the other hand, human beings were not created to be Zoombies. And when we meet, the energy, the learning, the creativity is huge. So both of these will live. We think there will be somewhere between 30-70, 70-30. And we see that as a strength that we can deliver every solution anyway the customer want it. Do they want it physical? Do they want it virtual? Do they want it digital? That flexibility that -- in consumption will be super important. And in terms of margins, of course, there will be challenges when you have different modalities, but we can handle those. Just like we handled the transition to virtual, we can handle this transition to a mixed situation without any problems.
Okay. Good. And my next question is regarding the U.S. market. You mentioned that some projects went from Q4 to Q1. And how does the recruitment seen in the U.S. looks like right now? And how do you view the, for example, rising wages in the U.S.?
Clearly, we must raise salaries to stay competitive. We've seen more people leave than -- in 2021 than in a normal year. But we are still only at half the turnover compared to the consulting market in general. The consulting market, in general, is 20% to 25% turnover, and we are about half of that. So we -- and hiring, we find, is more challenging but absolutely possible. And we had a lot of people last year. We are hiring a lot of people now. We decided to postpone some projects because we believe that some of the people simply had worked too hard, and we didn't want to push them harder in Q4.
Okay. Good. And my next question is regarding the German market. As you mentioned, there were quite a lot of projects finishing earlier -- early this year. Can you describe this market going forward?
The German market is a fantastic opportunity. It is the second biggest market in the world. It is a difficult market to get into. I would say it's the most competitive and difficult in Europe. So it's a big opportunity. We have a small operation there that should become much bigger. And in -- we've had a nice growth in the last couple of years. And then in 2021, we had this big drop because there's some big client projects leveling off. The good news when you have the big drop from -- in 2021 is that the numbers are much easier to beat in 2022. So we're solid that in 2022, we should be back to growth in Germany.
And finally, before I look at other questions, can you please describe the M&A market right now? How do you see potential objects? And how do you see valuations in those objects?
Yes. There is a good amount of potential object in the market. We are, as always, very critical and really only buy the companies where we are sure that there will be a positive synergy and that we get the right deal. And one of the reasons why our acquisitions have been so successful is because we are very picky in what we bid for. And there's a good amount of objects out there. Prices have been quite -- it's been a tough competitive situation in 2021. That's easing actually now a bit.
Okay. Thanks. Do we have any questions from the webcast?
We have one question over the phone. [Operator Instructions] First question is from Mr. Daniel Thorsson from ABG.
Henrik and Rikard, so my first question is a technical question here. Depreciations were up significantly in Q4 to SEK 25 million from SEK 15 million, SEK 16 million in the previous quarters. And you have said that you have higher intangible depreciations from the digital offering. Is this some -- is this the new level we should expect in '22 as well because I noticed that CapEx is relatively unchanged? How should we think about that?
It's -- our depreciation is mostly a function of the acquisitions we've made. So the Q4 increase is primarily because of our acquisition of Netmind. When we acquire a company, we put some of it in goodwill and some of it in intangible assets, and those, we depreciate. So it's mostly related to acquisitions. And with the acquisition of Netmind, yes, I think it's inching up a bit.
Yes, exactly. But I was thinking about the depreciation on tangible assets, rather, that was up some SEK 8 million quarter-over-quarter.
Tangible?
Yes, on tangible. That was up quite a lot.
So tangible assets, it's something where if we move to that level in Q4 -- I have to come back to you on that question, which is more technical what we can expect going forward.
No problem. No problem. I just noticed that the CapEx levels were relatively unchanged. So I just wanted to understand. Okay. But that's no problem. And then a question on the 2022 outlook here in the guidance. How should we think about the EBITA drivers? I mean you're talking about a very strong market, we should expect sales to grow and then a physical share of revenues is increasing, maybe the margin will be more flat or just a small increase in '22. Is that really how we should think about the guidance drivers for EBITA?
We don't see that physical deliveries will lead to lower margins. There is -- there are pros and cons. With the virtual delivery, yes, you don't travel. But on the other hand, it's more spread out. So it's not naturally a lower productivity. In physical deliveries, we see that just like all of the last 4 years, except 2020, there are many things we can do to optimize margins. Just like any company, making our deliveries more efficient, getting the right projects mix going, optimizing pricing, working with the right clients. There are many, many, many things to do, and we aim to continue this long-term drive to increase the margin, 0.5%, 1% going forward. But we haven't set a time line for when we get to 17%.
Okay. That's clear. And then a question on the revenue streams here really. So in 2021, the share of revenues coming from programs were at an all-time high level of 65%. Licenses remain around 10%. How should we think about that mix in '22 and onwards?
It's pretty stable. It varies a bit over the years. I think what we're trying to do, obviously, is increase that license revenue stream. We're putting -- we're investing a lot more into building digital solutions. And then our goal is to -- when we sell those to generate more license revenue. So really, we want to get that license share up. That's important for us. And we're making the investments needed to make that possible.
Okay. And then a margin question on the regions. In both North America and Other markets, we saw margin increases of 2 to 3 percentage points versus 2019 levels in Q4. And you're right in the report that, that was partly driven by lower external costs in both segments. Is that something we should expect coming back a bit in '22? Or have you reduced external costs sustainably in those regions?
The external cost is very much related to travel, which was much lower in 2021 than 2019. In 2022, that cost element will go up, not to the early levels, but will -- it will absolutely go up. So that's something that we have in our plans.
We have no other questions. [Operator Instructions]
So thank you, Henrik.
We have a question from the webcast as well from [ Jonas Liegl ]. How much is the market growing? And how much more can BTS grow? And also, what are your net recruitment plans for 2022?
Yes, yes. So the plan -- the question is really how much the market is growing, how much can we grow and what is our net recruitment plans. So it's hard to find exact statistics on our niche. The sentiment is that it's growing around 5% to 6% per year over the longer term, possibly somewhat faster in 2021. And at the same time, we are taking market shares. So our goal is to grow 20% per year. This year, we grew 18% in the underlying growth. So we have another 2% to go. Currencies, of course, impact us quite a bit. And when we compare with 2019, the krona is stronger, that could turn around in 2022. Currently, the krona is at a lower level than it was in early 2021. So we might have some currency wind in the back of our sales helping us in 2022. So really, we want to grow 20%. We did 18% last year, so 2 more percent to go. In terms of the recruitment plans, the exact numbers, I cannot share here, but obviously, we are hiring a lot of people and everywhere.
So I would say thank you to all of you listening, and thank you for Henrik for coming here at Erik Penser Bank.
Thank you, Rikard, and thank you, everyone listening. And dear shareholders, we are happy. We are grateful for your confidence in the company. And we are happy that we continue to deliver record quarters, and this is what we aim to do again in 2022. Thank you very much.