© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Welcome to the Nederman Holding Q4 Presentation for 2022. For the first part of the conference call, -- during the questions-and-answer session, participants are able to ask questions by dialing Star on their telephone keypad. Now I will hand the conference over to CEO, Sven Kristensson; and CFO, Matthew Cusick. Please go ahead.
Good morning, everybody, and welcome to this presentation and later on the Q&A session for Nederman Group in Q4 2022. 2022 has been an eventful year, interesting year, but what we can conclude is that we had a very stable end to the year. And we can happily report that we had a record year when it comes to sales and profit for Nederman Group and also in 4 -- 3 out of our 4 divisions also in Q4 reported a strong order intake and growing order take.We continue to deliver on a record high order backlog. And -- we also saw that last quarter, we had record high quarterly sales levels. Q4 2022 was the second highest quarterly EBITDA level ever. So it's reasonably good. The margin was lower than Q3, and that has to do with inflation pressure and some culture operational challenges. It was more to do with some bad debt that we -- from the Chinese. It has to do with especially MCT having grown problems getting the right component.We are running out of stock, but we have managed to supply to our customers. But at the cost of higher cost of both components and more labor. We acquired the small NBAD and it's a distributor to the MCT division, and they are based in Switzerland, so that will further strengthen our position on the Swiss market.There are, as it's been all year, continued uncertainty. The order intake growth has slowed down a little bit, especially we've seen in Q4, but that also has to do with the comparison with process technology in the textile and fiber side of it, that has been slightly slower where Q4 2021 was extremely high.Basically, a clear cost inflation, which we have to handle and the geopolitical concerns continue. And again, specifically the Chinese situations caused challenges, even though they are now claiming that they are opening up the economy and some of the restrictions.When it comes to dividend, the Board of Directors have proposed a dividend of EUR 3.75 million per share compared to the EUR 3.50 million that was for last year. Over to key financials and to Matthew.
If we start with orders received, Sven already mentioned, we have organic -- we've got order intake growth in 3 of the 4 divisions, the fourth division where it didn't grow being processed technology like you mentioned, where there was extremely tough comparative figures from the year before that were not realistic going to be exceeded this time around due to the bounce back in the textile business that we were seeing in the back end of 2021.Incoming orders were SEK 1.396 billion in the fourth quarter, slightly ahead of last year, but currency neutral, 7% down versus the Q4 2021, like I say, positive in 3 of 4 divisions. For the full year, we reached SEK 5.45 billion, up from SEK 4.63 billion in 2021.Currency neutral, that's a 9% growth there. What you can see there on the chart on Slide 4 in the presentation is if we start on the one in the middle, maybe the rate of growth has slowed down somewhat this rolling 4 quarters order intake growth is a little bit slower than it was at the start of the year.It's still growing, however. -- what to say on the bridge for the quarter, we had a lower organic -- we have lower organic growth, all from the Process Technology division. So not -- we're not overly concerned with that. One, we're going into the year with a rather good backlog into the 2023 with a rather good backlog.If we look at the full year, you can see the organic growth for the full year was 5% currency account for 8% and then acquisition that largely RoboVent also Ezi-Duct, they gave us 4% as well.Moving on to the sales record order for sales on has already mentioned that organic growth in sales in 3 or 4 divisions as well, SEK 1.15 billion in sales in the quarter versus SEK 1.152 billion in Q4 2021. Currency neutral, 20% up versus Q4 of 2021, which we're very happy with.If we take the full year, again, a record year, SEK 5.79 billion versus SEK 4.042 billion, is 19% for the full year. What we can see is that we've been delivering on this backlog that we've been mentioning for some time, so we see organic growth and acquisition growth in the quarter and a strong organic growth for the full year of 14% and the acquisitions have given us another 5 million there.Moving on to profitability. EBITDA SEK 161 million versus GBP 144 million in 2021 for the quarter 4. The margin ends mentioned, there are some challenges there, 10.6% versus 12.5% for quarter 4 last year, gave us a profit after tax of SEK 91 million versus SEK 84 million.So earnings per share in the quarter, SEK 259 earner versus 241 last year. Adjusted EBITDA full year, the record profit year for Nederman quite a significant increase, SEK 567 million versus SEK 495 million in the prior year. The margin for the full year, 10.9%, 12.2% last year was a record year in margin terms. There's been obviously some significant mix change in our -- when it comes to our margin, it must be pointed out with process technology having a much larger share of the overall revenue for Nederman Group in 2022 than they have in 2021.Profit after tax, SEK 329 million versus SEK 279 million in the -- for the full year last year. That comparative figure excludes this Norwegian pension scheme where we -- for accounting purposes, got a credit of SEK 29 million on to the income statement just through canceling a pension scheme, which we don't think is fair to take the credit for. Earnings per share is 937 for the full year 2022. SEK 795 million in 2021, excluding the Norwegian pension, including the Norwegian pension adjustment, we were at 8.7% last year, there still a significant increase there.And we can see on the chart at the bottom of Slide 6 that our adjusted EBITDA is still heading upwards. The trend is quite clear still. Cash flow, net set. Cash flow was -- continued to be positive, less so than quarter 4 of 2021, we had cash flow from operations in quarter 4 2022 of SEK 88 million. It was SEK 159 million in 2021, January to December, SEK 346 million in 2022 versus SEK 520 million in 2021.And -- it must be remember that 2021 was this bounce back year for process technology, where significant orders we received and down payments on those orders were booked. We were basically coming from a very low backlog position rattrative for that division, that has then boosted 2021 figures from the figures, the operation on the cash flow for the full year, we're quite comfortable and this is where somewhere near where we ought to be.Net debt has increased in 2022. The biggest single factor for that being the acquisition of RoboVent in late July for SEK 430 million. At the end of the year, net debt was SEK 1.477 billion including the IFRS 16 leasing adjustment and post-employment benefits them.If we move back into the divisions and I hand back over to you, Sven, we'll start with Extraction & Filtration Technology.
Yes. Extraction & Filtration Technology. Just to repeat a little bit, they are trading and of the brand name German mostly. Key areas is welding, composite manufacturing, wood manufacturing and also some general dust, et cetera, very wide range.Development during the quarter, we had at least 3 major orders, and we have a very, very strong backlog. And the major orders was for food, both in U.S. and Brazil and then for the newly acquired RoboVent to electric vehicle industry. We have also actively tried to go after new industries or industries that we anticipate long-term growth.And the factor here is very much recycling. You see paper, battery, plastic, et cetera, and also electric vehicles and defense. So we continue to grow into these industries as some times is tougher for the traditional ones. The sales increase in all regions and in all sales channels.The strongest regional trend was in Americas. And of course, also, we added RoboVent which made us the absolutely #1 in welding also on the American continent where we had already a position in Europe as #1.In EMEA, most markets increased. APAC had good growth in some regions, but again, some negative impact by the COVID-19 situation in China, where we still have had restriction. You have not been able to travel even domestically, et cetera. So the situation in China has been a bit problem some whereas we have had good growth in Australia, et cetera, et cetera.The key activities has been, of course, launched the Nederman sales solution that software package and service that enable their energy savings. So that in line with what a lot of people are discussing and seeing issues with, and that is energy to consumption. And here, we have a solution that will help customers with a simple system, not the system as such, but simple to apply, and it will give a significant possibility to give significant energy cost savings.We have also introduced the division's online store to a number of APAC partners. And then they get continuous work with integration of RoboVent. Nederman is doing well together with the new people from RoboVent and we see good progress in that. And again, we have an absolute leading position in both U.S. and in Europe.
If I talk numbers for the Extraction & Filtration Technology division. Order intake for quarter 4 hit SEK 591 million, up from SEK 411 million in 2021. Q4, that's currency-neutral growth of 3%, organic growth of 11% as well. Sales of SEK 637 million versus SEK 482 million, 24% currency neutral and a 5% growth in sales.Organically, adjusted EBITDA 14.5% margin versus 17% in quarter 4 in 2021. Looking at the full year, the division hit SEK 2.238 million versus SEK 1.78 billion in 2021. Organic growth, 10.4% on orders there and currency neutral in almost '19.Sales, SEK 2.165 billion versus SEK 1.763 billion in 2021. Not quite as much growth. We've built a little bit of backlog there. This is an indicator of the outlook for the coming period may be adjusted EBITDA, 16.5% for the full year versus 17.5% for 2021. Moving on to Process Technologies.
Yes, process technology, large projects, mainly focusing on textile fiber, non-woven and of the brand like [indiscernible], where we are definitely #1 globally. We have also strong positions in recycling when it comes to metal, steel, aluminum and other areas. And we're also into the energy sector, et cetera from.For the quarter, good sales following a very strong order, and we have now delivered most of what we got in 2021 in Q4, which was an absolute record year. But we also have continued to book orders. So we have a record backlog going into 2023.The service business continued to grow significantly, and that has been a task for us over a long period. So we are pleased with that. There are still some concern about this uncertainty and what is happening, et cetera. And we -- I will bore you here by saying China and we have had difficulties to get in and out in our Chinese supply chains.So going back to Textile Fibers. Sales were strong, a bit of a slowdown in orders. China continues to post the greatest challenge here. Customers have been increasing investments in other markets, and that includes India, which goes very well for us. It's very well performing in this area with our large factory in Bangalore. The raw material prices have gone up and there has been a weaker macroeconomic trend, and that could lead to reduced textile investment in the short term. We will see.In Foundry and smelters, we have seen increased demand and positive trend in especially aluminum. Aluminum is material. And here, we see continuous opportunities, a very large portion of aluminum used in Europe is recycled well as 30%, 40% in Americas and 8 to 10 in China. So there is room for improvement, and we have very good systems if that comes into play. There have been several major projects registers in this segment. And spending in the defense industry could further increase the need for foundry investments. Customized Solutions, 2 major orders of metal cycling and in the energy sector was booked and co-taken pipeline is very strong still.The key activities, of course, is the working capital position remains strong, healthy orders received will be resulting in new down payments. We have adjusted the price to defend margins and gets rising material and energy prices and also general inflation, where we see also here inflationary pressure.
I talk financials for Process Technology for a few minutes. On the slide, the chart at the top right of Slide 10 shows the all the sales and backlog for the division over a number of quarters. We can still see that with the backlog is the highest ever year-end backlog we've had going into a new year, it's slightly below the peak in the middle of 2022.If we look at orders received, SEK 437 million in quarter 4 versus NOK 646 million in quarter 4 2021 is a 40% drop of currency-neutral ore organically. What I must point out is SEK 437 million is 24% of full year -- the full year 2022 order intake of SEK 1.825 billion. So it's below quarter 4 in 2021, but in line with the rest of 2022. So we're not -- it's not a drastic reduction we're seeing in this division right now, at least. Sales clearly up SEK 515 million, excuse me, versus SEK 398 million in 2021 is 19% currency-neutral increase. And perhaps most pleasing of all EBITDA, SEK 39 million versus SEK 23 million in quarter 4 2021, is a 7.5% margin versus 5.8% last in 2021.But despite these challenges and a part of -- a large chunk of the bad debt write-off in China came in this division. For the full year, sales SEK 1.72 billion versus SEK 1.29 billion, so a clear increase there, 23% up versus currency neutral versus 2021.And they didn't quite make it to SEK 100 million in EBITDA, GBP99.9 million versus $5.9 million last year is obviously a significant increase, and they ended with 5.8% adjusted EBITDA margin for the full year versus SEK 3.9 million in 2021. Moving on to Monitoring & Control Technology on Slide 11.
Yes. Monitoring & Control Technology, that's why we sell control and monitoring systems for the industry. And we have well-known leading brands like Gasmet, NEO Monitors, AFS in Boston and also selling our digital solutions and name Nederman Insight Micropulse et cetera. The development in the quarter, orders received increased and especially to the process industry relative to industrial activity.The backlog heading into 2023 is at a record level, and that is a clear base of continued sales growth during the coming quarters.Shine is a concern. -- Demand to allow only domestically produced product when it comes to state-owned companies and state institution. That has caused a problem, especially for the gasman side of it. Whereas NEO Monitors and AFS has continued to have a better development in their focus in industrial activities post industry in that. They reduced turnover, not yet fully compensated for elsewhere because it was large. We have had very good business in that region. We haven't been able to fully compensate them even if we have seen growing in other areas.So again, challenging remaining component supply, and that has had a significant negative impact on production capacity and profitability. We have had to spend a lot of extra time, pay a lot of extra to get the specific components needed, et cetera. We believe that it will ease the coming quarters, but it's still a challenge.In EMEA, we had growth both in orders received and in sales, and it was primarily driven by NEO Monitors laser measurement technology that comes from our factories and our base in Oslo. Gasmet saw some delayed emission monitoring products and an overall slowdown, although part of it, like U.K. performed very well. We have other areas and again, good growth. APAC orders and safe declined in total, and that was Gasmet, very negatively impacted by the situation in China.NEO Monitors had a much more positive trend driven by petrochemical industry, where we've seen that we're going direct to the end user, get a better position and success. In America, sales and orders grew significantly versus Q4 year 2021. NEO Monitors had strong growth driven by the investment to improve efficiency and to reduce dependence on imported energy -- sales, in particular monitoring particle monitoring increased very well.So we've seen areas besides our significant problems in China, there are very positive signs in many areas. The acquisition of MBE-AG will give us a position on the Swiss market and will be the base for further growth on Industries market.
If I take financials for Monitoring & Control Technology division. Order intake in the quarter was a very strong SEK 203 million versus SEK 166 million in 2021. That's currency-neutral growth of 10.4%, organic 6.1% despite the Chinese challenges.Total sales, SEK 177 million versus SEK 156 million in quarter 4 last year. The increase, not as much like [indiscernible] we would have preferred a lower backlog and some more sales in the fourth quarter, but we're working on that.Organic growth, 1.2% on sales. Adjusted EBITDA SEK 34 million versus SEK 41 million in 2021 in quarter 4. That's a margin of 19% versus the extremely high 26.5% that we saw in quarter 4 2021. 19%, it must be pointed out, still clearly above the average for the first 3 quarters of 2022.Full year now for the division, SEK 657 million in order intake versus SEK 562 million last in 2021. currency neutral growth, 7.2% and organic 4.7 currency-neutral growth in sales, 2.3% organically. And the adjusted EBITDA full year, 15.9% was SEK 97 million versus SEK 121 million or 22.5% in 2021. On Product & Filter Technology.
Yes, on Product & Filter Technology for Q4, we have, in the quarter, growth in sales and orders compared to 2021. The increase primarily from strong performance in Europe, and we have a positive effect by higher sales volumes. The negative impact came from some of the deducting production issues in the United States in the quarter. We have, in North hub, that's ducting and suppression system continued very healthy order growth.We have clear variation between regions. U.S. orders received decreased a little bit versus Q3 2022, but strong growth for the whole year. We have significant orders from battery production factories that are being built around the U.S. at the moment. We have good growth in Europe and our new [indiscernible] product in performing well, including major orders to U.K., where we have further strengthened our position. We also have seen good growth in Australia, especially, and in Thailand, it declined a little bit during the last quarter. Menardi, which is filter element, we have seen a bit of a slowdown in orders received. And the backlog is still good, and we have a continued healthy sale. The quotation pipeline remains very strong. The key activities, of course, we are building a new expanded North factory and warehouse and that is scheduled to open April around Easter time. There will be 9,000 square meters of solar panels to generate at least 50% of the energy needs for that factory. It's one of the largest industrial park solar panel installations in Carolinas. So it's interesting for us in our continuous work.We have also continued to work and renew and upgrade older manufacturing equipment, both in Europe and U.S., and that is also to take away some bottlenecks and further increase our efficiency in the different factories.
Financial Production & Filter Technology, orders in quarter 4 were SEK 165 million versus SEK 128 million in quarter 4 2021. Currency neutral, 8.3% up organically, only 1.6%. But sales, however, were very strong SEK 212 million versus SEK 138 million in 2021 quarter 4.We had an EBITDA that was SEK 10 million higher -- dish higher at SEK 34 million versus SEK 24 million in 2021 quarter for margins slightly down 16.1% versus 17.7% the margin exactly in line with the average for the full year 2022. It must be pointed out.Order intake for the full year, over SEK 700 million for the full year for the first time in this division's history, SEK 704 million versus SEK 495 million last year. So good currency-neutral growth almost 25% and organic growth of almost 17%. Sales up 28%, currency neutral, 22% organically and EBITDA, a clear increase of over SEK 23 million per owner, SEK 127 million for the full year is 16.1%, like I mentioned, versus 10%, SEK 104 million in the full year 2021.So on to the outlook, Sven.
Yes. Again, it's an interesting period in the world. So the outlook here is of course, very difficult. But as on the short term, we have seen the demand and the orders received in Q4 were generally good. We have seen that the decline mainly came from PT, but that was mainly due to an extreme situation 2021.The rate of growth has slowed a bit from the first half of 2022, probably because of wariness of inflationary pressure, hiking interest rates, still the macroeconomics are so and ore. So we've seen a little bit of a slow in the growth.The backlog heading into 2023 is solid. It's actually a record high. So that bodes well for the short term. There are challenges, including what I mentioned before, inflationary pressure, economic geopolitical uncertainty, and that might impact customers' investment decision. Time will tell.Still with addressing solutions for new growing industries like battery factories, recycling, whether it's paper, plastic or metals and so, we are very well positioned for the future. So we remain cautiously optimistic towards more to the coming quarters.Long term, we see the potential continues to strengthen. We see in a world which insight into the damage that poor ad has to people is increasing. Nederman with leading industrial application offering has a key role to play. Technical advances centering around on digitalization have led to a completely new possibility to streamline and optimize the air filtration process or together with political insight and will need to set rate limits and legislated. There is a basis for viable future manufacturing in that contribute to sustainable air quality around the world.So again, also the move into sort of the reshoring to U.S., Europe, also leads to new factories, and they will be modernized and they will use latest technology.So again, cautiously optimistic going forward.
The final slide shows the financial calendar. The annual report for 2022 is should note will be released on the 17th of March and the presentation for the quarter 1 report will be on the 24th of April 2023.With that, I think we can open up for any questions that listeners have.
[Operator Instructions] -- the next question comes from Anna Wistrom from Handelsbanken.
Hope you both are well. So a few questions from my side. Firstly, we go into some details on the cash flow. I mean, of course, you have a very sort of high comparison numbers from Q4 2021. But usually, we do see a better development on working capital in the quarter. I mean usually so we see a capital -- working capital release. Could you maybe give us some details on this quarter and how we should see it?
Yes. What we've seen is -- what the tradition -- you're right about the tradition of this quarter for has traditionally been this huge quarter for large projects where companies are spending their budgets -- and with large project orders being booked becomes large -- very large down payments.So like I said, last year or 2021 was extreme in that respect. We've seen a much steadier flow of orders in Process Technology division. This is where the main one, the main vision is impacted by this much steadier flow through 2022. So that is the thing that we've seen there or the reason for the lack of the major upturn in quarter 4.The other thing you can say about cash flow, and this is effective throughout the year is we have been impacted. We're not stocking up more inventory in terms of volume of inventory, but with inflationary pressure, the cost the event has gone up, and that impacts negatively.So those are the 2 main factors impacting cash flow. We've not -- overall, we've not seen a large impact on from receivables from overdue receivables and on a cash flow with the exception of these one-offs that we've seen in China related to bad debts.We've not seen a general trend change. We're having to work a little bit harder maybe to collect some money, but we've not got a major problem yet in terms of that accounts receivable days increasing.
Okay. That's very clear. And if we maybe go into the process technology base, I mean, you did touch upon it a bit then. But should we kind of view the current happening as a pause in investments and we should expect this to pick up in a year or 2? Or should we view it as a onetime boom from these textile companies?
It was a bit that everything came. It's like the catch-up effect when you've been working, working and everybody has been waiting. And then you saw 2021 was not that great until we hit Q4, where everything, then they should do everything it should be signed before year-end.So that was exception. We had a very good -- if you look at the order intake in Q4 despite the fact it was 40% down compared to 2021, it was a very good year, and we have a record backlog.When it comes to textile, it has and fiber, it has a tendency to be a bit volatile. And then there has been these transport issues, inflationary issues. And then there's been a slightly slowdown in the investment trend in textile at the moment.We do not see it as dramatic. There is a lot of new activities in the recycle. We come back to, again, recycling. We are focusing a lot in recycling industry. And also here, we are involved in a number of projects for recycling, textiles, et cetera.And I think that part of the effect we've seen is that the -- that's a wait and see. Should we continue on traditional only? Should we find other technologies, there's still a good demand in that industry. And we definitely have the leading position.So I'm not worried that there is a certain volatility. What has been positive is that we've been able to go into , which has been part of our product when we acquired Little to grow the nonwoven side, which is everything from feminine care to technical fibers to baby diapers or adult diapers, et cetera.Here, we have had a significant change and success and grow that. So that has balanced quite a lot, and we see using our footprint when it comes to sales and service, we can further grow that, especially in these areas in Asia, India, et cetera.So I don't -- I'm not overly negative, but there are sort of a bit wait-and-see mode at the moment. We'll see in you when the sort of the big textile exhibition in Milan, it comes every fourth year. So we'll see then what moves they are in the potential customers and buyers.
Okay. Perfect. And then you'll be going to a bit on price and volume. Do you have any sort of aggregates on group level? Is it more -- is it better to look on each division maybe to see sort of what price increases you've done in the last 12 months, just to give us some sense on price level versus volumes?
For the group as a whole, is extremely difficult... And I think with the amount of process technology, I don't think it's dangerous to even talk volume because they're projects rather than the number of filters. What can we say the largest price increases if we take -- the division has impacted most by prices locked and filter technology where there's still a clear connection to steel price.And the largest part of their price increases happened towards the end of 2021 and into 2020 -- in the early part of 2022. We have increased prices throughout 2022, but it's not quite the rate that we saw earlier on.Of the growth, it's a little bit difficult to say, but it's 25%. I think they had growth or 24% growth. I think you would probably, I think, roughly half... below half, 9% was price and the rest was 9% to 10% price in the rest of the volume in Process Technology Sorry, induction filter technology.Extraction and filtration technology. That one I don't have an accurate figure for you. So I don't want to guess on that...
Okay. That's fine. That's very helpful. And maybe my last question, going into the situation in China. I mean, would you really about some opening up and everything, but you haven't started to see any improvements yet seen in your operations?
I think it's far too early because the opening up is -- still they are trying to book meetings. They are trying to do -- it's still very early and it's still difficult. And it has taken its toll on the economy, this lockdown.Now we also have a Chinese New Year, and this is the first time since 2019 that they are allowed to travel to meet their relatives -- so you can imagine that the whole country is -- the industry stands still. And what is normally one week, we see that people want to be away for 3 weeks, et cetera.So let's come back to what's really happening when we come into March and see if we have a positive effect. I think we will have that. But again, from our horizon, China is still a troublesome market when it comes to the financial situation, it's taken its toll in the industry over these severe lockdowns and activities they've had for the last 2 years.So almost 3 years. So it's -- we'll see. Time will tell, but it's probably going to be a bit better in Q2, at least...
Okay. Perfect. Thank you so much for asking all my questions. That's all for me.
As a reminder, [Operator Instructions] -- there are no more questions at this time. So I hand the conference back to the speakers for any closing comments.
Yes. Thank you very much for taking the time listening to us. And again, summarizing the report. We are very proud of being able in this challenging environment to deliver record profit and record sales for 2022.And it's nothing without challenges, and there are challenges also forward. But as mentioned, we remain cautiously optimistic based on good order intake and a very strong backlog for the coming few quarters.So thank you very much, and we'll be in touch again after the first quarter, and maybe we can straighten out some of your question marks -- thank you very much.
This concludes the call. You may disconnect.