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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, welcome to the Nederman Holding Audiocast with Teleconference Q3 2021. Today, I'm pleased to present CEO, Sven Kristensson; and CFO, Matthew Cusick. [Operator Instructions] I will now hand over to the speakers. Please begin.
Good morning, ladies and gentlemen, and welcome to this call regarding Nederman Group Q3 report. We start with a short summary of this latest quarter, and we can just conclude that we have a continued solid development in the quarter. We have had good order intake growth versus both 2020, that was easy, but also compared to 2019, which is more interesting. We have continued with our profitability development, and we have shown a strong solid profitability also in Q3. We have had a very good cash flow from operations and continue that pattern. But as always, the -- but we had continued concern on component availability, transport difficulties, material prices, everything what everybody is talking about. So far, we have been capable of managing it in a good way, a reasonable way, and we will continue to try to do so.
If I move on to Slide 3 and talk through some numbers, orders and sales first. So for the third quarter of this year, order intake was SEK 1.178 billion versus SEK 827 million last year. Like Sven said, that was the easy part dating 2020, but currency-neutral growth was 45% year-on-year, 36% growth in order intake versus quarter 3 2019. We did have growth in all 4 divisions, but the largest chunk of the growth comes from Process Technology division, which you see in the figures, in the divisional figures from the report.Sales for the quarter were SEK 1.046 billion versus SEK 826 million last year. And what we see there is the sales of SEK 1.046 billion is relatively close to what we had in order intake for our previous quarter 2. So you see the sort of delayed effect in some of our execution there. Currency-neutral sales growth, 28% up versus Q3 2020, 6% versus Q3 2019. On the year-to-date, we are now at very nearly SEK 3.3 billion versus SEK 2.56 billion at the same point last year. That's currency-neutral growth of 36% in orders year-to-date and 18% year-to-date currency-neutral growth versus 2019. Sales, SEK 2.89 billion versus SEK 2.735 million in the same 9-month period 2020. Currency-neutral, that's 12% up versus the year-to-date 2020 and actually still at 2% below what we did in sales or currency-neutral for 2019. So there is a delay in execution of the order intake.What you see on these charts at the bottom as well, the rolling 12 incoming orders is now basically at the same level as we were at the peak at the end of 2019, is not higher than that yet. And then you see on the sales, there is a little more catching up to do on sales. We will let you make your own forecast on where the sales will go based on the orders that you've seen in this quarter. Profitability and cash flow on to Slide 4. Adjusted operating profit for the quarter was SEK 120 million versus SEK 64 million last year. That's a margin of 11.4% versus 7.7% last year. Profit after tax, SEK 81 million versus SEK 32 million last year, which gives us earnings per share of SEK 2.31 versus SEK 0.9 in Q3 2020. Cash flow from operations, Sven already mentioned that, that was strong again, SEK 107 million in the quarter, SEK 66 million last year, was actually relatively strong given what was going on in the world at that time. January to September, profitability and cash flow, then we are on SEK 304 million now year-to-date our adjusted operating profit versus SEK 202 million last year. Adjusted operating profit after a margin is now 10.5% versus 7.4% after 9 months. Profit after tax, SEK 221 million gives earnings per share of SEK 6.29 versus SEK 1.58 last year, of course, we announced the restructuring programming in 2020 for SEK 75 million, which impacted heavy earnings per share there.Cash flow from operations for the year-to-date so far now is SEK 361 million, which we're very happy with, and that was SEK 141 million at this point last year. If we look at the chart, you can see that the cash flow from operations, particularly on the rolling 4 quarters, is extremely strong. We see there the benefit of the large project business picking up again with more consistent flow of down payments on projects that we then subsequently are executing. We're rather happy with the cash flow as well as the profitability, as you may well understand. Moving on to Slide 5, Extraction & Filtration Technology, Sven.
Yes. Moving on to the large division, Extraction & Filtration Technology. Just to recap, selling mainly under the brand Nederman, selling to applications in secondary wood, welding, auto repair shops and different general dust applications in different industries, small -- products and small to midsized projects mainly. During the quarter, we have had a strong performance in this division. We have seen higher demand in all regions. And we have again successfully managed the high material prices. And also have so far been able to handle the shortage in supply in different areas. They have made a good job of this and are continuing to do so. Of course, no one can tell exactly for the future. But again, we have handled transport issues, we have handled material prices, and we have handled shortages in the market.Moving into the geographies of this division. EMEA is the largest division. And we have had growth, I would say, in all the European region. We have had larger orders in Netherlands, Poland, and that has been for component for electric vehicles. We have seen medium and for this division large systems that has been on a good level, which is a different situation compared to earlier in the year and definitely the year before. We have also had a smaller -- we see attendance in that smaller businesses are starting to work, and there has been a good sales growth also for these partner distributed products, which is more of a plug-and-play solutions for smaller workshops mainly.In Americas, we have had a solid growth. We had a major good order. We had a few medium-sized orders target sectors. We are #1 in second [indiscernible] wood in the U.S. market, and we are continuing to strengthen our positions. So it's been mainly solution sales where we have been strong, and we have also developed well in the aftermarket. And as you know, the aftermarket is stronger in abrasive material handling such as wood, metal sheets and so on. So it's mainly there. We've also seen that Insight subscription, our IoT and digital solutions have grown and also they linked to aftermarket services into that.In Asia, we have had a more subdued market. Still a lot of markets are in lockdowns back and forth. We have example like Thailand, Vietnam. India is now opening. So we see some recovery there. But it's been more back and forth. But it grew as a whole, which is positive, and we have had a very strong trend in Australia this quarter. It's been mainly product distribution side, not so many solutions.If we move on to key activities, as I mentioned, we see during these lockdowns, during these periods where you can't visit the customer and the customer cannot be visited by service technicians, we've seen a growth and increasing interest in our IoT solution, our remote control system, what we call Nederman Insight and Nederman myAir. And that has given us a better position in selling this, including service agreement. We have also improved the user interface to make it easy, we have, as we say. We've been saying for a long period, trying internally, Nederman should be easy to do business with, and it should be easy to use our product. So we have significantly improved the user interface on the FlexVAC. And we have also launched a new version, which is FlexPak DX, says nothing for you, but for hardcore technology, flameless launch product. It's for indoor application, organically combustible dust, like flower, wood dust other. So it's in food and agriculture and also where you have highly explosive dust.
If I go through a little bit on the numbers for Extraction & Filtration technology. Order intake was rather strong at SEK 464 million in quarter 3 versus SEK 360 million the same quarter last year, 31% organic growth. Sales also grew by 25% and were SEK 441 million in the quarter, giving an adjusted EBITDA of SEK 81.5 million, which is 18.5% up from 13.6% last year. Year-to-date, the order intake growth is 26%, now SEK 1.37 billion 11% growth in sales, still behind the order intake. So you can see that some backlog has been built in this division during this year. Adjusted EBITDA year-to-date of 17.7% is rather strong and we see the impact -- the leverage impact of selling more there, SEK 227 million EBITDA for Extraction and Filtration Technology.If I move on to Process Technology, Sven, Slide #7, 6 sorry.
Process Technology is mainly large orders and following aftermarket, working with different solutions, like recycling of aluminum, magnesium, lead, et cetera, et cetera. It is a foundry business and it's also textile and fiber, where we have under the brand Luwa, and then we have under a number of others, under the brand MikroPul, mainly. The development during the quarter. Normally, we do not use word like excellent, but in this case, the order intake was very good for the Process Technology division. There was a strong Q1 and Q2 also compared to last year, which was not so good. But that has also resulted in higher sales while these orders now has gradually been converted into sales.We have also developed a service business and also with bringing in basically all solutions we have sold are fully equipped with the MikroPul-Assist, which is our IoT and support, same as Nederman Insight and Digi7. So we have had very strong cash flow. And on the negative side, there has been some project execution difficulties, due to lack of raw material, and there has been high material cost and fewer freight alternatives. It's been some difficulties in shipping on time the goods, the finished goods. All things that we see in the daily news everywhere, but so far, the organization has been good in handling the situation.If we look at Textile and Fiber, branded mainly Luwa, we have had a strong performance in the order intake. We have doubled the order intake since last year. Again, 2020 was a very depressive year. Especially since India now gradually have opened up, and they are also supporting neighboring countries with products. They have had a very good positive trend. And also over the last years, very difficult closedowns when we were not allowed to operate the factory for a long period, we now have 2 shifts operating. So it's a positive development. We also see a bit of an increased activity in China. And again, Service continued its strong performance with Digi7. And Digi7 is the Luwa brand of the IoT solution and the new control system where you can remotely service and help out customers. It has got a big interest and basically all new supply are fully equipped with that. And that gives an opportunity to build a stronger aftermarket, which was very slow and low when we acquired Luwa; in fact, we gradually improve that.In Foundry and Smelters, strong order intake. There's increasing demand for recycling, that's our sweet spot and special aluminum. We have got some orders here for that, and it's a core competence for us. We also received a 10-year service contract with digital monitoring of connected systems, again, a breakthrough from our discussion of clean air as a service, where we guarantee the functionality of our system for the coming 10 years as long as they have through connectivity, full service package, and we do the control the service and the activities, a mutual trust from customer and us. They are on given discussion with similar contract, and it's all based on our capability of measuring and also visualizes and control the big data in order to do a good job.In Customised Solutions, it's been very cyclical with complex projects. We have many projects booked in Q3. You see that on the order intake. The quotation pipeline is also stronger than for a long time. Key activities is again to make life easier and easier for customers to choose Nederman. We have started the MikroPul Solutions Lab and it gives a possibility for customers to address complex gas cleaning and material recycling problems, with our specialists and technicians in that. We have had good success with that, with the test lab we have built in [ Charlotte ] for LCI, a special process and where we have very good conversion rate. If they come into the test lab, we have a very good conversion rate and it turns into orders as long as the material and project will come through.We have also -- in order to simplify life for ourselves and be more cost efficient, we have launched a new preengineered MikroPul PE Solution. It's a more cost-competitive solution for, call it, more standard application. It's the same idea as we do in, especially in the Foundry and Smelter side of it.
Moving on to the financials in Process Technology, incoming orders 91% growth versus 2020. It's always a case of what you're comparing to, but nevertheless, SEK 436 million is a very good quarter for order intake. You can see on the chart on the top right, that's comparable with the best quarter we've had in the last 3 years or so in Q4 2019. So very, very good order intake. Sales, 39% up versus quarter 2 last year was SEK 361 million, still significantly below the order intake figure. So as you can understand, the backlog of orders booked, but not yet -- projects not yet executed, is increasing again. Adjusted EBITDA SEK 19.5 million is 5.4%. Year-to-date, order intake now at SEK 1.139 billion, which is 64% up versus 2020. Total sales, SEK 894 million, as you see it significantly again, below the order intake figure. So we have built up a backlog in basically all parts of the business. Adjusted EBITDA year to date SEK 828 million is 3.1%. Moving on to Slide #7, Sven, Monitoring & Control Technology.
Monitoring & Control Technology is, as you know, our IoT solution is our measuring capabilities, Auburn FilterSense in Boston, Gasmet in Helsinki and NEO Monitors in Oslo mainly. We sell to our own sister divisions as well as on the market to different solutions. For the quarter, we have had stable development. We had a slight decline in orders received. There was not a repeat of a SEK 20 million order from Q3 in last year and -- but still a good development. We had good sales growth and solid profitability in most areas. And we had a normal production, some delays in collection of finished goods that we couldn't ship it, because the customer couldn't find acceptable shipping routes for the group. So again, it will be shipped this quarter. But this is the everyday practice -- operation today that you have to juggle these things. In EMEA, we increased sales versus last year and the year before. Orders received was a bit lower, and that was due to exactly what we mentioned before on delayed order. And again, in Process Control side of it, there are increasing activity. Emissions-related business has continued to grow due to regulation, due to awareness, et cetera. In APAC, we have a very good continued development. It's been mainly Mainland China that's been driving growth in this region. We have high-end products not available from anywhere else, basically, and we do very well with these in the China market. There has been a slight decline in sales following some delayed deliveries for major orders. So again, it's not been manufacturing, it's been shipping possibilities to locations in Asia.In Americas, we have seen an increase in customer activity and the order intake has been good. From the M&CT perspective, we've seen that there has been a faster recovery in the Americas, but it also has to do with our initiative that we've started after the acquisition, somewhat delayed due to the lockdown and restrictions, et cetera. So it's not only the market, it's also our own performance where we now have more sales rep, we have new sales management and set up a new structure for the M&CT division in use, which has been a weak spot with the exception of AFS that has had Americas as a main market, but we are now piggybacking on that, and we're developing sales capabilities for both Gasmet and NEO. I hope that, that will continue to grow our business.We have already, by setting up our own service organization, a small one, but still in the key areas in Americas, signed global or American contract with American Petrochemical, one of the large chemical corporations, and we hope that there are more to follow. Key activities, market has normalized, but it's also increasingly adapting to digital channels. So there has been a focus on digital sales process. We had not only give us digital solutions, we have also created digital tools for ourselves. So that means we have a showroom that we launched in Q2, where we now do training for service technicians, for salespeople, for customers, et cetera, adapting to the situation where travel has been highly restricted. We have also continued our digital sales training to adapt to the new world.Auburn FilterSense in U.S., located outside Boston, has secured a contract for 250 particle emission monitors for a world-leading food producer. We think this is interesting. We've moved into food and food dust by this. It will measure and monitor particle emission to atmosphere from powder treatment filters and that collection systems.
If we move on to the numbers for this division. Incoming orders SEK 136 million was slightly below where we were last year, SEK 133 million last year, SEK 136 million, as we pointed out, still well above the average quarterly rate for 2020 in the last 12 months. Sales, SEK 123 million was 6% ahead of last year. So as mentioned already, that there's some delay in deliveries have happened [indiscernible] we've seen we also going backlog [indiscernible] to go out. Adjusted EBITDA SEK 26 million, which is 21.3%, which is rather strong. Year-to-date, we have received orders for SEK 395 million, which is 10% higher than 2020. This division, it must be pointed out, it was hit at least hard by COVID and actually gave us some good balance last year and that they continue to deliver well. Sales, SEK 381 million -- SEK 382 million, excuse me, is 12.5% higher than it was in the 9 months to September 2020, with almost at SEK 80 million in EBITDA year-to-date this -- for the division, which is 20.9%, up from 17.1% in the first 9 months of 2020 and also higher than the full year last year, which was 18.7%.Duct & Filter Technology, the final division that we will talk about today.
Yes. Duct & Filter Technology, we have speciality duct and also filter bags, filter media, sold internally as well as externally. The development in the quarter, again, it was excellent. It was a highest ever quarterly order intake. And it's also led here, we have a fast turnover from order to sales and delivery. So we resulted in excellent profitability. We continue to manage the high steel prices, and that has been and is continuing to be a key activity. So far, we haven't had any disturbances in supply, but the prices have been skyrocketing. But so far, we've been able to manage this activity in a good way. Still, U.S. represents a large portion of sales, but we are growing especially in EMEA. The activities in Asia and our factory in Thailand has been hampered by continuous lockdowns, as I mentioned before, both in Thailand, Vietnam and neighboring countries here.If we look at Nordfab, where we do duct and related products, we have had growth, and it's mainly been, of course, a continued recovery in many markets, especially secondary good. Again, Thailand strongly impacted negatively by the lockdowns. Again, price increases have had a distinct impact on growth, of course. We have had significant price increases to balance the rapidly growing steel prices. We have had very strong sales in the U.S. Some reduction in growth rate because the Q1 and Q2 was a bounce back from a very slow Q4 in 2020. But again, we have record order intake in Europe, and we have new and existing customers coming to us.Menardi filter bags order received in U.S. good, successful management of challenging supply of raw materials and pricing. But we are also here -- got several significant orders in traditionally strong segments in metal, energy, oil and gas, et cetera. And we have also secured orders for food industry, and that's a result of some work with dedicated sales effort to broaden our customer base. Key activities, what is -- I would claim AWFS -- is U.S. probably the world's largest wood working trade fair. The European one is named [ Ligna ]. We have launched a new tool for ourselves and our installers and customers an interacting 3D tool, QFV, very prosaic name, and we got the price as the most visionary new software product in the industry. It enhances efficiency when you design, you save a lot of time and risk of the faulty supply. So you have a reduction in lead times. We will, by year-end or early January, also launch this tool in Europe and in Asia. It's made in Imperial. As you know, US signed the treaty in 1952 that they should go metric, but it goes fairly slowly since they've chosen to do it inch by inch. When it comes to availability of raw materials and high logistic costs, it's a major source of concern, and it's been assigned highest priority. But as you see, so far, so good. But again, it's on top of the agenda to manage this. What is interesting in this coming quarter, we will also introduce a new investment with a fully automated Duct production in Europe. So we continue to develop our European market further to challenge our large U.S. operations.
Briefly on the financials for the division, order -- external order intake was SEK 142 million, which is almost very nearly 60% up from quarter 3 last year. Sales now SEK 143 million, giving us an EBITDA of SEK 29 million, which is actually only the 20% mark for the first time, I believe, in this division at 20.2%. Year-to-date, we've done SEK 366 million in order intake here, which is 34% up versus the first 9 months of last year. Sales on to SEK 403 million. Remember this division also produces some ducting for the sister divisions within the Nederman Group. EBITDA SEK 79.6 million is 19.8% year-to-date, which is one up versus 12.6% (sic) [ 12.2% ] last year.Quick summary, Sven, on Slide 9.
Yes. Not much more to say. It's a continued solid development in all divisions, where we have high order intake growth both versus last year, but what is more important also compared to 2019. We have developed a stronger profitability and we had had a good cash flow, I would say, excellent cash flow due to the order intake, especially in the Process Technology. But again, for the future and now, it is a major concern about component availability, transport difficulties, material prices, but we have so far been able to handle that in a reasonable way. We do utmost to do so also for the future. But it's, again, difficult to foresee how the situation will develop in the coming quarters.If we look at the outlook, we are cautiously optimistic ahead of the upcoming quarters. Base business has strengthened, and there is high demand for major projects. We have developed and continue to develop a strong digital offering, and we have uncertainty in supply chain, high material prices, expensive and unpredictable logistics. All of the above factors do impact customers' investment decision and potentially our own production and ability to deliver. Long-term potential in our industry has strengthened. The new report released during Q3 by WHO highlighted the negative health effects from poor air the world over. It is the utmost important Nederman continues to innovate and grow in order that industry can contribute positively. Political will and use of regulation and incentives can reduce the risk that millions of people by prematurely each year from breathing dirty air. So we believe that has a future. We are in a good position that every time we sell something, we make the world slightly better.
The final slide, the financial calendar. We've now released the dates for our upcoming quarterly reports, the year-end reports for 2021 will be released on 15th of February 2022. I won't call out the other dates, they are available in the actual quarterly report. So I think we can open up now for questions.
[Operator Instructions] And the first question is from Anna Lindholm, Handelsbanken.
It's Anna here from Handelsbanken. Thank you for your presentation, Sven and Matthew. I have 2 questions, and one if you could just describe how the competitive landscape is looking in the different markets? And if there are any sort of trends or shifts that you are seeing?
Thank you, Anna. Nice to speak to you. It's Sven. I'll let you -- try and explain what we're seeing there. Do you mean short-term or long-term perspective in different, what we -- I'll start, what we can see is that there is a growing interest in our digital tools. What we started 5 years ago in developing both digital offering, meaning what we sell to our customers, the Digi7, Nederman Insight and myAir prescriptions and all of that has seen a significant increase in awareness with our customers where they have seen positive effect. We've had aluminum manufacturer, we called him and said that you have a problem in Norwegian factory. No, we do not have a problem. Yes, you have a problem in your Norwegian factory. And then they couldn't get the service technician. And then they realized that it wasn't too bad to follow up, because the test installation, so that's why we control it. We got the e-mail a month later, we wanted to work. So that is, of course, a positive sign of it. And in a very conservative industry, we now see that we gradually get the traction we believe we should have for this. And we are now trying to fully incorporate also like Gasmet, because this high tech is very much about software. It's very -- it's only a third of it. it's about the half when it comes to service. And we estimate that 2/3 of the service can actually be made remotely when we have new solutions. So the digitalization is a trend that is here to stay. And I think we -- we're lucky to take the decision 5 years ago to go these routes fully. It's all...
I don't think we were lucky to say. I think we made the right decision 5 years ago, but that is absolutely the biggest shift that we see in accept -- starting to see an acceptance of digitalization. And it's also when we come to tools, which is more internal and helping people. It's like the award-winning QFV, where we simplified, you can save hours of work by the 3D tool when it comes to designing your duct work. So we're very pleased to get the -- be the winner of this award in AWFS. So I think that is the key things that we see. Was that the answer for your question or...
Yes, that's perfect. And just if you could tell us a bit, have you been able to sort of expand in different markets during the aftermath of the pandemic? Or how is the sort of geographical expansion going?
I don't think we have been doing too much on geographical expansion. We have been more focused in capturing the markets. We are talking about the hidden potential, because if -- in our different sales organization, we have different strengths. It takes a long time to describe, but our competitors are mainly local regional players, and they have different strengths and so on. So what we are working with is to use the full potential. If we take an example, we can take Belgium. We are definitely #1 the vehicle repair shops in welding, but we are not so successful in wood frames. So we're trying to take the full potential in the areas where we are. Then of course, we are looking for other areas as well. But again, it's not been so much geographical expansion, more growth where we geographically already are, but using our knowledge to the best deal that you offer...
One thing I could add on that the division, which you may have seen -- or we have seen a sort of a little bit of a shift towards this. If you take Monitoring and Control Technology and the instruments that we have sold, we've definitely seen the most demand increase in Asia and particularly in China there. Whereas Europe and America, they have got well, but there is slightly also the appetite for these high-tech measurement equipment in Asia is definitely there. Whereas the other divisions, it is like Sven says, it's more market-driven, but more digital...
We will try to do more in high -- developed countries, like South Korea and Japan. That has -- we have that -- it's been hampered by the heavy restrictions we've had for more than 1.5 years. Now we have not been able to fulfill all our clients in this sort of geographic expansion for some of our high-tech products.
And there are currently no further questions. [Operator Instructions] And we haven't received any further questions at this point. I hand back to the speakers.
Then we thank you for taking the 45 minutes, 46 minutes actually listening to us. And hope that you will come back on the 15th of February. Thank you very much.