Green Landscaping Group AB (publ)

STO:GREEN

Welcome to the Green Landscaping Group Q1 Presentation 2025. [Operator Instructions]

Now, I will hand the conference over to the CEO, Johan Nordstrom; and CFO, Marcus Holmstrom. Please go ahead.

Thank you, and welcome to today's earnings call. As mentioned, my name is Johan Nordstrom, and I'm joined today by our CFO, Marcus Holmstrom, who is doing his second earnings call, I believe. And he will manage the financial section of this presentation.

But before we dive into the presentation, just let me tell you about the start of the year and to put that into the context. We have just left one of the mildest winters for the last 15 years behind us. And the lack of snowfall has, of course, impacted our Q1 numbers. And, of course, I'm not satisfied with the performance where we are today. Sales were down about 12% and the EBITA margin ended up at 3.2%.

Now, being an outdoor company, exposed to changing weather conditions, these situations occur. But as said, of course, we're not satisfied with the performance. We are doing what we can to mitigate the financial impact. And when we are comparing to similar conditions as we had back in 2020, we're actually doing better. So we are not pleased with the performance, but I can see significant signs of improvements.

Now, moving away from the weather, we can see that the market conditions, and that is particular in Sweden, Finland, Norway and Germany, which are our main markets. Our, let's say, outlook is basically that the markets are moving sideways. We are starting to see some positive signs, some discussions that is -- and to some extent, also a slightly decreased competitive situation, but we do not forecast that, that will have any material impact in any near-time future.

Then, as for the current economic and political turmoil, with tariffs hitting global trade and so forth, our belief today is that, we will not be directly impacted again in the near-time future. But if we have a recession coming in or something similar, then of course, we will be impacted. But at this point of time, we do not forecast any negative impact on what's going on.

And then, again, in terms of M&A, I confirm our ambition to invest in 8 to 10 companies during the course of the year, and those plans are progressing.

So having that said, let's dive into the Q1 presentation and move on to Slide #2. Now, Green Landscaping is a leading company for ground maintenance and landscaping services in Europe. We perform mainly 3 services. That is landscaping services, the outdoor services and the maintenance side of the business. And then, of course, the third item we have are winter services.

In terms of the market we serve, it's a very big and very stable market, and we see a steady growth in the market, as well as we do like being in the market, in particular, as we are an acquiring company, that means we have a lot of companies to choose from in that market. We have, during a very long time, developed our business model to fit into the market, in particular, as we are decentralized, meaning that we have local entities serving local entities. And that means that we are very fast, very nimble. And given the market, we're quite a profitable company.

And then the last item is really about the M&A strategy, and we have been investing in other companies for a long time. And we do know what we are looking for, and we do know how to take care of and develop the company that chooses to join the group. So that is just short of -- a short description of Green Landscaping Group.

Moving on to the next slide here. So if we look upon the financial performance for the rolling 12 months, we can see that net sales have increased by 4% to slightly shy of SEK 6.2 billion, where the organic growth, given the development in the first quarter this year are a negative 4%, while we had acquisitions contributing with 8%. EBITA decreased by 8%, and there we are right now at SEK 477 million, and we also saw that the EBITA margin had contracted approximately by 1%. So meaning we're coming from 8.7% to 7.7%. And cash flow from operating activities are right now at SEK 532 million. And that is, of course, a significant improvement during the last 2 quarters.

Moving into the first quarter, as I said, I'm not happy or satisfied with the financial performance, and it was impacted by a very unusual mild winter, and I will come back to that one later on in the presentation. And there, we saw that the net sales decreased by 12% to SEK 1.2 billion. And, of course, organic growth contracted by 18%. And I assume we're going to get some questions about this, but that is -- the vast majority of the contraction, that is actually not market related. It's just weather related that when you don't have the snowfall, then of course, you have a significant impact on the business we are doing during the first quarter.

Now, EBITA decreased by 56%. So we came in at SEK 40 million in EBITA. And basically, the margin went from 6.5% the previous Q1 quarter to 3.2%. Cash flow came in line, pretty much in line with our expectation at SEK 139 million. And, of course, the financial leverage also came in as we expected at 2.6x. And as I said, I am confirming the ambition to invest in other companies, but we have yet to do the first acquisition for this year.

So moving on into the next slide here. As can be seen, we have been growing and we've been growing for quite a long time, and that is still on plan. And in terms of the focus for the future growth, in particular, for the M&A activities, that is in Germany. And then if we look upon the financial performance, the EBITA, we can see that we have been growing up until the fourth quarter of 2023. And then we have been kind of flat for basically 5, 6 quarters at this point of time. And that is basically because of the market conditions as we saw in the beginning of 2024 with basically high interest rate and, I would say, a tough market environment. And that means that there is still a potential to grow and improve in terms of profitability, and we are working heavily on it. But again, we are investing money in growing the profitability, and I still expect us to come back on to a positive growth trend when it comes to the EBITA performance of the company. But for the last 5 quarters, it's been kind of flat.

Then talking about the winter and in particular, it's on the right-hand side, I would like to discuss. And that is the statistics we have based on where we -- how much snowfall we have had based on the cities where we are active. And typically, if it snows less than 5 centimeters, we do not have any snow activity. So for us to make, what we call, a snow round or when we're actually out taking away the snow, you should see a snowfall heavier than 5 centimeters in a day.

The average where we are active is about 4x during the season. And in the year of 2020 and in the year of 2025, the first quarter of each year, there we can see that we had 1.3x and we had 1.5x this year. So when we are comparing the year 2020 to the 2025, in terms of winter conditions, they are pretty much the same and significantly lower than historically and the average, they are quite below the average, and that does have a significant negative impact on our activities during the first quarter. So that's why we are comparing the performance in 2020 to the 2025.

And what can be clearly seen is that, in terms of Sweden, that we have improvement in that area, while Norway are the guys who is basically falling short. And we have made a significant improvement in Sweden during the last 5 years in terms of mitigating the dependency on snowfall, while in Norway, we have more work to do in order to be able to make money, even though we don't have the winter services. So that is something that needs to happen inside our company.

Now, looking upon segment Sweden again, in terms of the rolling 12 months, we can see that the net sales decreased by 10%. And again, the EBITA decreased by 35% to SEK 114 million. That gives us a 4.4% margin. Then the Q1, that's the one I'm referring to. We can see that the net sales is actually coming down by 20%. So it's a significant decrease in terms of the revenue in the first quarter, while we are still able to deliver a 6.1% margin in that particular quarter. And that is actually a strong -- I would say, it's not a good number, but it's still a strong performance given the weather conditions we have with an unusually mild winter. And also, there is a high level of activities, I would say, in Sweden and has been so for the last 2 years in terms of improving the overall financial performance, and that is well on track. And we do expect to see -- I won't say significant, but there will be signs during the course of the year that we will continue to improve the financial performance in Sweden. We have a good reason for that statement.

Now, moving on to Norway, to the next slide. There, we can see that organically for the rolling 12 months, we are still growing by 3%, even though we have the negative impact of the first quarter. We have an organic growth of 2% and then we have 1 acquisition, if I remember correctly, that is contributing with 3%. And then, of course, the EBITA, there, we can see a decrease by 21%, and that means that we are coming from a 10.4% profit margin down to an 8% profit margin for the rolling 12 months.

Now, for the first quarter, again, we can see that the winter or the mild winter effect is negatively impacting the segment in Norway. So it means we are decreasing by 18%. And then, of course, we saw a significant decrease on the EBITA performance by 116%. So basically, we went from a margin of 8.8% to a negative 1.7% in this quarter. And, of course, that is the unusual mild weather, and to some extent, the lack of readiness on how to cope with that situation in the companies we have in Norway.

And we should also bear in mind that some of the companies we have are focused on like a pure winter service companies, and they have been quite successful for the last 2 years when we have had winter in Norway. So I do prefer to look upon the performance of those companies in terms of the average for the 3 years.

I'm not excusing the numbers, I'm not saying that's the way you should look upon that business because they are quite profitable when it's snowing. And, of course, when you are not -- when you don't have the winter, they are not that profitable. So there is a volatility in their number built in. But then there are other companies in Norway that is more similar to the operations we have in Sweden. And those are the companies I actually believe we should see an improved financial performance moving into the future.

And then we are talking about Other Europe and for the rolling 12 months, we can see that we have a heavy growth in that area, and this is where we are focusing the main effort in terms of growth. So we are growing by 66% in the rolling 12 months. And that means we are now at above SEK 1 billion. So organically, they are growing by 3% and acquisitions by 64%. In terms of profitability, that one increased by 60% to SEK 222 million. And right now, for a rolling 12 months, we are at a margin of 20%. That is kind of a healthy margin, but we saw that in Norway as well that when we are building up the situation, then you are able to have that type of margin.

In terms of Q1, we can see that the net sales increased by 87% to SEK 195 million. And then we have the EBITA that increased to SEK 23 million, giving us a margin of 11.7%. And in that number, I believe, Marcus, we have included the sale of a building.

In Lithuania, yes, of SEK 19 million.

So there's a capital gain from a property of SEK 19 million in those numbers.

When I look upon the vast majority of the companies we have in Germany, the first quarter is a low activity season for them because you have fewer working days and also you have vacation and they have a situation where they actually spend more working hours during the summer time frame when they are running the projects and then they actually work less hours during the first quarter. So naturally, we will see a low activity in the first quarter in -- it's a low season basically with winter conditions and vacations in Germany.

I think that concludes my part of the presentation here. As I said, we are heavily impacted by the weather situations, and I'm not satisfied with the number per se, but there are things that has gone our way, in particular in Sweden, I'd like to focus on that one. So the things that will be done in Norway, in particular, moving into the future.

So, Marcus, over to you.

Thank you, Johan, and I will cover the main financials and starting with a few key financials. As said, quarter 1 showed net sales of SEK 1.2 billion, bringing our rolling 12 months sales to SEK 6.2 billion, resulting in a total growth of 4% rolling 12 months. EBITA in the first quarter came in at SEK 40 million, which was behind last year. And as Johan explained, the mild weather negatively impacted the demand for winter services, thus also the profitability in Sweden and Norway. Meanwhile, Other Europe delivered a higher performance than last year, attributed to higher level of activity in landscaping and construction, but also the last mentioned here, capital gain from sale of property in Lithuania of SEK 19 million.

This winter has been unusually mild, and we anticipate that mild winters will become more frequent in the future, and we address actions thereafter as we have done already in Sweden, looking at the financial outcome comparing to 2020 with similar weather conditions.

I will cover more about cash flow in the upcoming slides, but following the strong cash flow in Q4, we came in roughly in line with seasonal expectations on working capital development in Q1, resulting in a cash flow from operating activities of SEK 139 million and financial leverage increased sequentially to 2.6x.

Order backlog remained on levels from Q4, but levels lower than last year. But have in mind that size fluctuates between quarters, and it should, therefore, not be a short-term indicator where we're heading.

Moving on to cash flow. As said, following the strong cash flow in Q4, we continue to manage to reduce working capital in the first quarter, supported by a bit lower season, but also a result from the extra efforts made in cash flow focus. Operating cash flow amounted to SEK 139 million, which brings our rolling 12 months cash flow from operating activities to SEK 531 million comparing to our rolling 12 months EBITA of SEK 477 million. So we are converting at a healthy level, but working capital development and cash flow generation continues as always to be a focus area of us.

And moving on to the bridge -- cash flow bridge in the quarter. As said, again, operating cash flow amounted to SEK 139 million. Then we did not close any acquisitions in the quarter, but we paid out earn-outs totaling of SEK 39 million. Cash flow from CapEx and other lease amortization totaled to minus SEK 38 million, and then we had a net difference between new loans and debt repayment of minus SEK 38 million, totaling the cash flow for the period to SEK 24 million.

Financial leverage, as said, increased sequentially to 2.6x EBITA and was a result of our lower earnings in the quarter. But despite being slightly above our financial target of 2.5x, we have good headroom to financial covenant in our loan agreements.

And our loan maturity profile remained the same as in last quarter. It will mature at the end of 2026, and these are bank loans from 3 different banks, and we have initiated the refinancing discussions with them to start them in well in advance of the maturity date.

And then just concluding a slide of our financial targets. We have a growth target of 10%, and we are currently trading at 4% growth rolling 12 months, which is below target and as a result of the negative growth here in Q1 as a consequence of the weather. Then we are slightly below on EBITA margin, 7.7%, our financial leverage at 2.6x. And in conjunction with the Q4 report, the Board proposed to the Annual General Meeting that no dividend should be distributed for fiscal year of 2024. And we will hold our Annual General Meeting at 9th of May.

And with that said, I will hand back to you, Johan, to wrap the presentation.

Yes. So thank you very much. As I started with, we are just leaving a very mild winter behind us, and it's one of the milds we have had in 15 years. And, of course, that has had a negative impact on our performance, and that clearly means I'm not happy with the financial performance we can see. But it's also twofolded because we had a similar situation back in 2020. And we have been working, I would say, diligently on -- to minimize the impact of a mild winter, and we can clearly see that the activities in Sweden are bearing fruit from that perspective. And when they are coming in at a margin of 6%, I think that is actually given the conditions we have, not a good performance, but it's an okay performance, but it clearly shows that things can be done to mitigate the weather conditions.

So from that perspective, it's a twofolded feeling that, again, I'm not happy with the performance per se. But on the other hand, I'm quite convinced that we need -- we can and need to do something in Norway, in particular, to improve the situation moving into the future.

So that's pretty much where to sum up the situation here.

Perfect. And with that, we will open up for questions.

Thank you.

[Operator Instructions] The next question comes from Dan Johansson from SEB.

Johan and Marcus, three questions from my side. Maybe I'll start a bit with Norway. You spoke a lot about it here in the call, but just to get the dynamics right here in terms of weather impact in Norway. When I'm looking at Sweden, you had a similar drop in sales as in Norway. But in Sweden, you were better on defending your margin compared to Norway this quarter compared to last year. Does it have to do with your cost structure in Sweden versus Norway, where you might use less temporary staff in Norway, for example, so it's more difficult to adapt to less snow, for example, this year? Or does it more have to do with the mix of companies you have in Norway versus Sweden, which might be more dependent on snow removal?

Okay, Dan. First of all, thank you for the question because you're absolutely right that in Norway, we have a couple of companies that are very snow dependent. And when you have snow, they are contributing significantly to the profit. And we do not have that type of companies in Sweden. But that is basically 2 companies, I would say, in Norway. But I'm referring to mainly the companies behind the big snow removal companies we have in Norway that do perform similar services as we are doing in the southern part of Sweden. And we initiated activities 5 years ago in Sweden on how to be profitable, even though we do not have snow. And as the climate change are progressing, we will see that in southern part of Sweden, for instance, we hardly reckon with snow anymore.

So we're basically planning the activities more or less without any snowfall, at least along the coast line. And that work has clearly turned those companies into, let's say, 3 season companies, not the 4 season because we don't have the winter services. So they are planning the first quarter activities based on landscaping and maintenance and having excavations and having construction work going on. That's how they solved it. Norway haven't had that situation. The first quarter is typically a winter quarter. And those companies who are performing landscaping services are the ones who basically had too low flexibility in terms of employees, but also it's a matter of how is the contract written with the customer. So you have to start with the customer and having a more flexible contract with them with less dependency on the winter and so forth.

So it's a process that takes a couple of years, and you have to involve the customers in the process to basically realize that if winter doesn't come, the customer shouldn't pay for winter, which we -- if we don't have the winter services, that there should be a readiness, both on the customer side as well on our side, what do we do when we do not have winter conditions. I think that's a process that needs to start in Norway, and that one has already been going on for quite some time in Sweden.

So there are several activities that needs to be done, both internally that you control over and activities that you have to do together with the customers to have a greater flexibility. And when you have a situation like this winter that you do not wait for winter, you basically start with landscaping activities. I think that's the key point that needs to happen in Norway.

Understood. And maybe a follow-up to that. Is that made on more of a contractual basis? Or is it more in a dialogue with the customer each year? Or how does that work in practice in Southern Sweden, for example?

It has to be by the contracts. So because you can't have the dialogue per se, but you have to make sure because as I usually claim that the customers have a budget to a large extent. And if they spend a lot of money on winter services, then there's less money for landscaping services during the summer season. And you have a similar situation going on in Norway. So you have to rewrite the contract and rewrite the readiness. You still have to be able to perform the winter services because that is essential because when you have snow, you have to be able to take it away. But if you do not have snow, you have to have the readiness and that means you have to have a contractual agreement that cover both that we have the readiness for winter. And if we do not have winter, we need to have other activities going on. So you have to do that in collaboration with the customers, so both parties end up winning on it.

And for Norway, basically, if you didn't spend the money on the winter services, there will be some recovery going on for the coming 3 quarters of this year because they still have the budget. So there will be an upside in the coming 3 quarters.

Okay. Sounds good. And maybe more on demand level. And your order backlog is on the same level as in Q4. Could you say something how you feel about the market now compared to a year ago? Is it moving sideways or anything new and if it's a difference between the countries? And if possible, if you could say something about current trading and how you feel the start of Q2 has been when you enter the high season?

What we can see -- what I can see changes is actually in Germany and in Sweden, where we actually see that the level of competition are decreasing, meaning you have fewer companies who are submitting quotations for work. So from that perspective, well, probably from what I see, given that situation is basically, yes, the situation is improving in Sweden and Norway. I don't see any major change in Finland, unfortunately, while I actually see a slightly growing level of competition in Norway. So, that's our view at this point of time is that, yes, it's moving sideways, but I'm slightly more optimistic when it comes to Sweden and Germany, while Finland is still in the same situation.

And yes, it could be that you have a little snow in Norway, for instance, and that's why you have a higher level of landscaping competition going on. I can't say. I see that we don't see that the level of competition are not decreasing in Norway at this point of time. But the shortfall in the Q1 is based on the mild winter, not the competition because we are quoting business that we will deliver in the coming 3, 4, 5, 6 months. We're not quoting business today that we should do tomorrow.

Perfect. And is there anything you can say about the first week here in April has been a normal start to the quarter or yes, anything unusual both on the upside or downside that will...

No, it's -- I would say, it's a bit too soon what has happened when you don't have the winter that we are basically well into the summer season, meaning that we already have picked up the gravel from the streets and all that type of work. So we are basically several weeks ahead of schedule, if you like. There's a certain rhythm we have that you have the winter and then you have the winter activities. And then, of course, you have to do the cleaning stuff on the cities and then you start with the landscaping and flower and so forth. And as we didn't have any winter, that means we are already done with the typical spring activities and are moving into landscaping activities, in particular in Sweden.

The next question comes from Mads Andersen from DNB Markets.

I think, obviously, a difficult quarter by many means, but I think as you also said yourself, Johan, Sweden to me looks -- at least from a margin perspective, looks quite strong. Obviously, very difficult to compare against last year, but at least compared to my estimates, and I guess, consensus as well, the margin was actually quite healthy in Sweden. So I was wondering, I mean, as the first question, if you look at it on a like-for-like basis, say that if you envisage that you had the same winter this year in Sweden that you had last year, what would the margin have looked like? I'm just trying to understand how much -- the initiatives you've already taken, what -- the fruits of that, how much that would have yielded on a like-for-like basis?

Thank you for the questions. Sorry to say we haven't been able to make that analysis yet. It's quite interesting because we are doing those type of analysis. And my assumption was that, given the weather conditions, I -- my base case was basically that I thought that Norway should have performed a little bit better. And I thought that Sweden would have performed a little bit worse than the result was. So I'm positively surprised by the profit margin in Sweden, given the weather conditions, because we still have weather contracts and we still make money out of contract in Sweden. So I'm positively surprised how they were able to cope with the very mild situation.

So from that perspective, we have to do the analysis. But again, I'm surprised how well that one worked out for us. And it's kind of hard to test that one when you have winter. So if you haven't had winter, what type of profitability would you have had? Those type of analysis are almost impossible to make when you have 25 companies in Sweden. Vice versa, we looked upon Norway, and if we've actually made the analysis based on, okay, what -- if the Norwegian companies who are similar to Sweden, what would they have made if they had made the same type of activities just to come up with a number on what we should be expecting if everything else were equal.

So yes, we have some work to do here from the analysis perspective. But, of course, it's quite clear that, if we are able to deliver 6% profit margin or EBITA margin in Sweden given these weather conditions, and that is a good number because it is a low season. Then, of course, I'm not satisfied with a negative 1.7% or whatever we had in Norway. That one is clearly -- there are clearly room for improvement in that number. If you can bring it all the way up to 6%, not sure, I would say, at this point of time because we have companies who are quite profitable and focused on snow removal. But if I exclude those companies, then yes, that's the type of analysis we have made.

So yes, we have a number in our head on what Norway should be producing the next time we end up in a mild winter because the climate is changing, and we have to plan accordingly. And actually, I think it serves us well. So we are actually on the beneficial side when it becomes warmer. It doesn't mean I'm positive to climate change. But from a business perspective, it actually means that we have more work to do. And as the cities are investing in cool areas, they are building trees, they are building oases and stuff. And you have to take care of the water. That actually means that we are the company who are performing that work. So there is an increasing amount of work that we will be doing as the climate change continues.

Fair enough. But can we just...

Sorry, just adding on to it a bit of your initial question on the improvement measures we can [ know that ] we initiated during last year in Sweden. We are progressing to that plan. And as you said in the presentation, Johan, we will see benefits from those in the upcoming quarters...

Okay. Sorry, yes. But those are the activities that is above and beyond the [indiscernible] that we are clearly improving in Sweden, and I'm looking forward to the coming 3 quarters where we can see the changes we have done in Sweden.

Yes. So, I mean, yes, exactly. So sticking with that, I mean, are you still confident that you will see margin increase year-over-year in Sweden and that should we already expect that from Q2? Is that a fair assumption?

It's a bit too soon, I would say Q3.

Okay. Understood. And maybe just on Rest of Europe or Other Europe, sorry, obviously, a very different business than the business was just 1 year ago. There's been significant changes, almost doubling of revenues. But I was under the impression that the more recent companies that you acquired in Other Europe was a lot -- had an even weaker winter season. And, obviously, if we adjust for the SEK 19 million, I guess, nonoperational sort of impact, then you would still have made a small profit, at least at an EBITA level in that division and year-over-year that looks like a significant improvement. So what is that? Is that essentially just being able to do stuff earlier because of the milder winter in that region? Or what's the real driving force behind that?

That's basically the mix of the companies we have and how they perform. So we haven't yet today initiated any activities on those companies to improve the performance in the first quarter because we are basically now taking care of the companies. We're looking for best practices. We are getting them into thinking in the same way as we are thinking. So, I would say, this is a mix. It's the product mix, if you like, it's a mix of the different companies we have and the way they operate.

So the majority of the companies we have in Germany at this point of time. I think it's with 1 exception actually who has winter services. The rest of the companies are more or less landscaping companies without any winter services, given where they are located. So it's basically Stebule and Stange who have winter services in their portfolio. The rest of the companies in Germany does not have any winter services in their portfolio.

Fair enough. And maybe just one last for me. And, obviously, selling an asset in Lithuania, is this -- I mean, what was the rationale behind this? Is this a new sort of strategic shift or priority to become more asset-light? Or what's the rationale here, please?

Not at all. It was to -- we're still trying to be asset-light. That is our base assumption when we do something. And typically, if we choose to invest in a building brick-and-mortar, there needs to be a rationale for it. And in Lithuania, there was a rationale to do that investment. And then they have relocated to a new and bigger building because the company is growing significantly. And I think the lease ended, so we had to move. And we were basically the owner of that building. So that's why we moved the company to a new building, and we sold that property with a healthy profit. So I'm glad we showed up a profit on that property.

So typically, we don't deal with -- we don't speculate in buildings. If we choose to do it, it must be rational. We did a similar situation, I believe, in Switzerland, where that building was very crucial to the work they are doing in that city they are located. And then, of course, the building was crucial. The same was in Lithuania that we needed to have that building. But otherwise, we typically stay away from acquiring buildings as long as it's not needed, we don't buy them.

The next question comes from Alexander Siljestrom from Pareto.

So just 2 quick follow-ups from my side. The first one, just if you could talk a bit about, to what extent you were able to shift landscaping activities into Q1, and also how that will impact Q2 and Q4?

So basically, Alexander, sorry for the sound was a bit off, but was it how much -- to what extent we managed to shift our landscaping activities into Q1?

Yes. And the impact for Q2 and Q4 also then?

Well, given the activities, again, we are referring to Sweden, I assume. And that means that the companies in Sweden have -- there are a number of things they are doing, working with the customer and changes in contracts and so forth. And also that means, they're actually collecting work orders that can be performed like you should do this before the beginning of June or whatever. And they start to collect those work orders at the third and the fourth quarter of the previous year. So it means they have a pipeline of work, landscaping work that the customer have ordered, they want it to be done, and it doesn't have to be done immediately. There's no time limit. It's kind of an open-ended contract that you have to rebuild the playground before the end of April, let's say. So we are collecting on those, and those are high-value orders for the companies. And then they have other orders that have a time line to them that they have to perform by a certain date, then you have to begin by before and so forth.

And again, that means that you are collecting those orders and then you look upon the weather conditions. And depending on, do you have frost, do you have snow, then you can't do those, then you do the winter services. If you do not have that situation, then you start immediately with performing those type of services. And from the customer side, and I assume you mean by the impact is that, should we see a lower revenue because of that we already worked with the customers and so forth. That is not our expectation. It's actually that the customers in, let's say, southern part of Sweden and around the coast, they have a budget and they have already allocated a certain amount of money. And as you do not have winter services, they do the landscaping services instead. So that means, yes, we have done work. We have done landscaping work and we have been paid for that work, so to say. But the customers' budget remains the same as we didn't have any winter services going on.

Okay. That's very helpful.

[indiscernible] implications. That's what I'm saying.

Yes. Perfect. And then just if you could talk a bit about the M&A pipeline and also how comfortable you are with the leverage position here at 2.6x EBITA?

Yes. If we start with 2.6x in terms of the leverage, I'm pleased with that level given the, let's say, the bad financial performance in the first quarter. So end up being at 2.6x given the profit and the winter conditions, I think that is a healthy level. Then during the second quarter, we actually invest in -- that's a buildup period because that's where we are starting projects and that has a tendency of drawing cash from us. So there will be an increase in the financial leverage as we are ending the second quarter. That's typically the cyclicality you can see for the last few years. So it will go up by 0.1 or 0.2x. That's what I expect happening this year as well.

In terms of M&A activities, we still have that capacity. We are on track on doing that one. And that means we will do some M&A activities before the end of the second quarter. And then the majority of the activities on M&A will happen by the end of month of June.

The next question comes from Julia Sundvall from ABG Sundal Collier.

I have another question on the weather-dependent companies in Norway. So when you change the company to become less weather dependent, is there anything happening to the margin, both in the winter months when there is snow, but also on a year basis?

Yes. Julia, thank you for the question. What happens is really that when you are an independent company, not a public company as we are, then what I have seen is that, there's a tendency of speculation going on, meaning that you have a summer contract and you have a winter contract. And then, of course, you can speculate on the snow part of it. And that, to some extent, is problematic to us because we don't like the volatility. We have to be more careful in what's going on there. And meaning that we have less speculation going on, on the snow. So a newly acquired company might have a winter contract that is quite profitable because of the speculation situation. And if you are trying to even that out, that means that the contracts on the summer services should -- when they are being renewed, should show up on higher profit margins, while the winter contract will actually have lower margin versus how it was before.

So I think that's what typically is going on. So I would say that the profit margins are being even out on the seasonality and you will have a less seasonality effect as you're going forward. And I think that is actually what we are seeing in Sweden right now when we have a plus 6% in the winter time frame. So it's not easy to say that if you just stop speculating, yes, then you're going to see that the winter contracts will be less profitable, while the summer contract will have an increased profitability. That's what I have been seeing. But overall, we are talking about the same amount of money. So it doesn't change the year-end number, if that makes sense.

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Okay. Thank you very much, and thank you all for listening in there. As I did start with, it's a twofold feeling I have for this quarter. And as I said, I'm not happy with the financial performance on the overall of the company given the weather conditions. But also that I'm positively surprised about the activities that has been taking place in Sweden and the profit margin we saw in Sweden. And that gives us courage on how to deal with the weather dependency in Norway moving into the future. So from that perspective, it's not market related. It's -- the company is growing and the company is improving. So I'm looking forward to the future.

So do I. I think that's a good closing remark.

Yes. So...

Thank you all for listening in.

Thank you all.