Ambea AB (publ) (AMBEA) Earnings Call Transcript & Summary

Hello, and welcome to the Ambea Interim Report Third Quarter 2024 Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand over to Mark Jensen, CEO. Please go ahead.

Thank you so much, and welcome, everyone. Today, we will review Ambea's performance for the third quarter of 2024. My name is Mark Jensen, CEO of Ambea and I'm joined by our CFO, Benno Eliasson. Together, we will walk you through our results and highlight the key developments during this period. After that, I will summarize the quarter and compare it to our financial targets before we open for questions. I would like to begin with a brief overview of Ambea. Ambea remains the leading care provider in Sweden, Norway and Denmark, offering high-quality care and support for over 14,500 care receivers across 950 units. We are delivering care across a wide spectrum of services, including elderly care, disability care and psychosocial support. Our competency-based approach ensures that every person receives high-quality personalized care. Let's have a brief look at some of the reasons to invest in Ambea. Ambea delivers value to society, and we aspire to be the most attractive investment in the care sector. From a distance, care providers can look somewhat similar, but at a closer look, there are distinct differences as you see on this slide. Today, I would like to highlight our diversified care portfolio and with that, balanced risk. With balanced risk, I'm referring to Ambea's diversified portfolio that includes elderly care, disability care and psychosocial support. Within this portfolio, there is a broad variety of services offered. And for instance, Nytida is offering more than 20 different care services within social care. As our sector is operating in a tax-financed environment, there's always an element of political and regulatory risk. However, I would like to highlight that Ambea has over 450 different municipal clients across three Scandinavian countries. Within current legislation, they are all making their own decisions on how and where to buy care services. Most of our municipal relationships are long-lasting. The trust, we own through quality delivered according to the agreed contracts. Specialized care services as a complement to the municipality's own offering have been delivered regardless of political shifts, and we focus on lowering risk to a manageable level through our consistent quality processes and adherence to rules and legislation. Quality is our license to operate. So it is constantly top of mind in everything we do. Balance also comes from the fact that we are market leaders in our three countries, Sweden, Norway and Denmark, a position we have developed and hold through keeping our promises, which includes being fast and transparent in correcting errors when they occur. Signs of a balanced risk profile can also be found in the fact that Ambea delivered stable margins regardless of political shifts and in times of pandemic and high inflation. Let's turn to care quality. Our focus has always been on ensuring a sustainable and competency-based approach to care, which is fundamental to our vision, making the world a better place one person at a time. Quality ultimately arises in the interaction between care receivers and our employees. We always want to make it easy for employees to do the right thing in any given situation so that they can spend their time on things that creates quality and value. We have a systemic approach to quality and sustainability, where we carefully follow up all our units every month. External measurements of care receiver satisfaction are highly objective means of demonstrating the quality of care we provide. This year, our overall result in the Swedish National Board of Health and Welfare's user survey for elderly care receiver satisfaction was 79.8%, an increase of 0.3 percentage points from last year. The residents of our 8 of our care facilities reported 100% satisfaction. We are incredibly proud of these results, which originates from much dedicated work by our employees. Ambea and Vardaga believes in transparency. And to my knowledge, Vardaga is the only Swedish elderly care operator that on unit level, shows the results from the National Care receiver satisfaction survey at our website. Here, we also describe how we work with constant quality improvements and how the results are handled on unit level. In our quarterly report, you can read more about the survey. Ambea's sustainability ambition remains high across the full ESG remit. Signing up to the science-based targets initiative will help us to align our climate actions with global best practices, demonstrating a strong commitment to reducing greenhouse gas emissions in line with the Paris Agreement. And more on sustainability. On this slide, we have a few examples of social sustainability successes in quarter 3, all related to our role as an employer. Being an attractive and inclusive workplace for both current and future employees is very important to us and will become increasingly so. We are, therefore, very proud that Ambea is now in the top 20 of Sweden's best employers, in 17th position in Universum's annual ranking. This is the result of a survey completed across all our Swedish operations. This is our best position ever and a reflection of our strategic focus on creating the conditions for employees to do their best work in often challenging circumstances as well as focusing on leadership. At all levels of our organization, diversity and inclusion is of paramount importance to us. Everyone should feel welcome and included. In quarter 2, we talked about supporting Pride and Stockholm. And now in quarter 3, we have once again been recognized on the Allbright Foundation screen list of listed companies for gender balance in our leadership team. Role modeling from the very top is an important element in demonstrating our commitment to diversity and inclusion. With strong competition for scarce talent in the industry, it's vital that we establish strong employer brands in each market. In Norway, Stendi has recently run a targeted recruitment campaign for Individual and family care services, which saw an increase in relevant applications from candidates. Our international footprint allows us to share such best practices across the group. Turning to organic growth. We remain focused on expanding our services to meet the growing demand for care fueled by an aging population and increasing care needs. In quarter 3, we had 1,283 beds and care places in all management pipeline, most of them in Sweden. The pipeline increased compared to the previous quarter due to a new signed contracts in Nytida and also in Stendi that added 29 beds to the pipeline. In quarter 3, we opened several new care facilities, including two assisted living facilities each in Nytida and Stendi with 12, respectively, 6 new beds. Nytida and Stendi also expanded existing units with 9 beds in total. Looking at Ambea as a whole, more units under construction, positioning us for future growth in the Scandinavian markets. Now let's have a look at acquisitions. Nytida acquired 4 companies in 2024, expanding our footprint within social care. This is a part of our strategy to strengthen our service offering in social care through qualitative bolt-on acquisitions. In quarter 3, Nytida acquired Sorbus, adding SEK 22 million in annual net sales. Nytida closed one bolt-on acquisition after the quarter ended for care providers free ups operations in foster homes, HVB homes and assisted living facilities and thereby adding SEK 180 million in annual net sales. Further bolt-on acquisitions are expected in the coming quarters as we continue to identify strategic opportunities for growth. Let's look at total revenue growth. The organic growth shown in the purple bars follows the positive trend we have seen since 2022. The total organic growth in this quarter was 7.2%. We remain positive about our overall growth potential in the coming quarters where volume, service and price mix and also acquisitions are expected to contribute. And now to the highlights of the third quarter. In conclusion, the third quarter of 2024 has been another successful quarter for Ambea, marked by strong financial performance, continued organic growth and improved occupancy as well as a bolt-on acquisition. Net sales increased by 6%, reflecting 7% organic growth across our divisions. Group EBITA rose by 25%, reaching a margin of 13.4%, a significant improvement compared to last year. This growth is a testament to our strong operational performance, particularly in Vardaga and Stendi and our continuous investments in leadership, innovation and care quality. Altiden in Denmark continues to see profitability improvements from strength in operations and overhead cost reductions and showed positive earnings in the quarter. Our strong cash flow has allowed us to conclude our second share buyback program this year and to invest in further acquisitions. Nytida acquired one company in Q3 and closed one bolt-on acquisition after the quarter ended. The acquisitions complement Nytida very well and are in line with our strategy to acquire quality companies contributing positively to our service offering and profitability targets. We are pleased that Vardaga once again achieved a strong score that is above the industry average in the National Board of Health and Welfare's annual care receiver survey. And now I will pass the presentation to Benno Eliasson, our CFO, to provide a financial overview of our performance this quarter.

Thank you, Mark. The good organic growth we have seen in the last quarters continues. In Q3, we achieved 6% growth in net sales, largely driven by increased occupancy in our care units and new contracts within contract management. Vardaga, Nytida and Stendi continue to contribute to the growth, whereas Altiden, in SEK, and Klara had a negative growth. Turning to the EBITA development. This slide shows how the different business areas have contributed to the EBITA of the group. EBITA increased by 25% and our margin improved to 13.4%, driven by strong results in Vardaga, Stendi and positive earnings this quarter in Altiden. The EBITA margin is 2 percentage points higher than the same quarter last year, and we are, of course, satisfied with a positive margin development. Vardaga's EBITA was higher than last year, up 1.9 percentage points, mainly due to higher occupancy. Stendi's EBITA increased significantly by 3.5 percentage points, reflecting the benefits of our operational improvement with focus on occupancy and service offerings optimization. As Altiden showed positive earnings this quarter, EBITA increased by 8.4 percentage points compared to the same quarter last year. Now to the cash flow. Our operating cash flow remains robust with strong cash conversion throughout the quarter, even though the third quarter is from a seasonal point of view, one of the weakest quarters in the year. The cash flow development over the last quarter reflects the strong EBITA development. This slide shows the way from the rolling 12 reported EBITA down to the free cash flow post tax of SEK 776 million excluding IFRS 16. Free cash flow is 27% higher than the full year 2023 number we reported just three quarters ago. You can here see that the last 12 months have invested SEK 67 million in fixed assets, have paid SEK 155 million in interest and SEK 112 million in taxes. We had a negative effect on working capital of SEK 57 million. Over the time, we think that the working capital contribution to the cash flow will be neutral which means that underlying free cash flow are above SEK 800 million. This allowed us to maintain financial flexibility, supporting both dividend payments and strategic investments including acquisitions and share buybacks, which I will show on the next slide. Here, we can see how we have used the generated SEK 776 million cash in free cash flow. SEK 130 million was distributed to our shareholders as dividend, SEK 90 million was spent on the 3 acquisitions earlier this year and SEK 431 million was spent on the 2 share buyback programs. And based on our strong cash flow, we continue to reduce our debt, now rolling 12 by SEK 161 million. And then to the overview of our 5 business areas, we start as usual with Nytida. Sales increased by 5%, which is driven by new operations as well as higher prices in both contract management and own management. As an offsetting effect, we had lower occupancy in some parts of the segment, Individual and family care, which can be seen as natural fluctuations in demand. To meet the long-term increasing demand for care services, we continue expanding our capacity. Nytida increased our own management pipeline with new beds during the quarter. And Nytida also signed one new assisting living facility with a total of 20 beds. EBITA was in line with last year at SEK 168 million and EBITA margin in the quarter landed at 15.9% and at 13.2%, rolling 12%. Nytida acquired Sorbus Vårdboende in the beginning of the quarter, adding SEK 22 million in annual net sales. And after the quarter ended, Nytida acquired the care provider, Friab's operations in foster homes and various residential care services adding another SEK 180 million in annual net sales. Vardaga net sales increased by 11% year-on-year, driven by higher occupancy in our own management units and new contract management units. In own management, net sales increased by 10%. Net sales in Vardaga contract management portfolio increased by 15%, which is the result of commenced operations of previously won tenders. EBITA amounted to SEK 161 million, which is significantly higher than last year, up 31% and primarily because of the higher occupancy. The EBITA increase is also driven by earlier measures related to handing back to rental contracts. Mature units showed an improved margin of 14.1% in the quarter, which is 1.6 percentage points higher than average margin for Vardaga's total portfolio. And then turning to Norway for an overview of Stendi. In Stendi, net sales increased by 4% in SEK, but by 11% in local currency and due to the stable occupancy and better service and price mix. The high demand for care services for children and youth with complex needs remains. In the quarter, Stendi opened two new assisted living facilities and expanded existing units, providing a total of 11 beds. During the same period, 8 facilities with a total of 13 beds were closed to better meet future demand. We continue focusing on occupancy and service offerings optimization. EBITA increased by SEK 33 million to SEK 121 million due to the improved service price mix and operational improvements. Earnings were also positively impacted by seasonal variations stronger than usually. The EBITA margin in the quarter increased by 3.5 percentage points to 14.4%, and the rolling 12 margin increased to 9.4%, thanks to the good earnings development over the last quarter. And now down to Denmark and Altiden. Net sales in Altiden fell by 2% in SEK which is currently driven. Net sales in local currency rose by 1%. The decrease in contract management sales was mainly due to one large elderly care contract that expired in the first quarter. Altiden demonstrated strong profitability improvement during Q3. EBITA was up SEK 27 million compared to last year, thanks to the continued structural profitability improvement measures regarding capacity, reduced overhead cost and organizational adjustments that gained effect. Altiden's increase in EBITA is also reflected by seasonal variation even stronger than usually. The third quarter is by far the strongest quarter of the year. EBITA margin in the quarter was 7.8% and rolling 12. We are still losing money, but we are getting close to breakeven at EBITA level. And now to Klara. In Klara, net sales decreased by 11%, because of continued weak demand due to the public health care organizations, limitations of the use of temporary nurses. This also affects other stopping services. EBITA decreased by SEK 4 million to SEK 10 million due to the lower net sales, which could not be fully offset by lower costs. EBITA margin was at 10.6% which is a satisfying margin given the situation and way above the competitors starting margins. Klara has a diversified portfolio consisting of different welfare services, for example, different mobile nursing teams and student health services. And this diversity of Klara services and adaptability to change market condition is our core strength, of course. And with that, back to you, Mark.

Thank you, Benno. To sum up our financial development versus our targets, we aim for an annual growth rate of 8% to 10%, driven both by organic and acquired growth. Rolling 12 shows solid organic growth, and we will now see more growth from acquisitions adding to the overall growth level. In terms of profitability, our target is to reach an adjusted EBITA margin of 9.5% in the medium term. We are currently closed to our profitability target with 9.4% rolling 12 and are on a good path to close the gap to our target. On leverage, we target the net debt-to-EBITDA ratio below 3.25x. And as quarter 3, we remain well below this target at 2.0x, thanks to the strong EBITDA development. These financial targets underscore our commitment to delivering sustainable financial performance while investing in our long-term growth. Free cash flow will be used for bolt-on acquisitions, future dividends according to our policy, for share buybacks and eventually for debt reduction. In combination, this will ensure that we continue to deliver value to our shareholders. And before we open for questions, I would like to provide an outlook post quarter 3, 2024. So looking ahead, Ambea remains focused on achieving sustained growth and profitability. As we move into the final quarter of 2024, we remain optimistic about the future. We expect continued organic growth, driven by increased demand for care services. And in quarter 4, we plan to open new care homes in Nytida and Stendi. Additionally, our ongoing discussions with target companies indicate further possible acquisitions in the coming quarters. We expect the profitability to continue to improve in Altiden, which is an important component to reach our profitability target. Ambea is well prepared to meet the growing demand for care services. And from my visits to our care homes during the third quarter, I noticed a strong commitment from our employees to continue delivering personalized, high-quality and sustainable care. We all look forward to welcome more care receivers in the coming quarters. I owe the entire team my sincere thanks for their dedicated work again this quarter. For the coming quarters, I hope we will have engaged discussions with more municipalities leading to greenfield development of all managed care homes. Society needs it to avoid a care crisis in the near future. And this concludes our presentation, and we will now open for questions. So operator, can we have the first question, please?

[Operator Instructions] The first question comes from David Johansson at Nordea Markets.

First one I had was on Stendi. I think previously, you communicated that you have somewhat limited visibility on the demand for child and also use care services there. But since you're adding a number of placements for this complex care, does it mean that you sort of anticipate higher demand also to continue for '25?

So childcare is by nature, a little harder to predict in the long term. But we have seen high demand this year, and we see that also continue into the last quarter of the year. And with the visibility we have now, we don't foresee that to change in the near future. For children, youth care is, by nature, more volatile than adult care. So midterm, long term, it's very difficult to predict. But with the visibility we have now, the demand is still strong.

Then if I could follow up with a question on Altiden, obviously, I think profitability looks quite strong here. So does it mean that we could see a profitability quarter also for Q4?

We don't guide on the next quarter. But as we said, and we have also said that earlier, we expect and plan for Altiden to deliver a positive result for the full year. And we are not far away. But in order to do that, we would need a good quarter again in quarter 4. So that's how I will put it.

Okay. And then on the political initiatives and the new legislation in Denmark that I think that you mentioned. Are you able to elaborate a bit more on what this can mean for Danish elderly care as a whole and also the operating conditions for Altiden going forward?

Yes. So I mean, Denmark faced the same challenge as Sweden does in terms of high demand for elderly care going forward. It's the generations that were born after the Second World War that get into the elderly care age. These generations are on average 30% higher than the generations before them. So it is very important that society steps up now and starts to construct more elderly care homes in order to meet the demand going forward. In Sweden, it's more than 450 new homes that is needed to 2032. Denmark will halve the population. It's more than 200 homes. And in Denmark, the politicians have realized that the public and private sector need to join forces here in order to increase construction and to fulfill the demand. So there will be a national legislation coming in next summer in Denmark, which is a broad political coalition between both the left and the right wing side of the Danish politics. And that would allow elderly a full freedom of choice across the country. You can basically decide if you're granted care where you want to live, in which municipality. If your kids live in one part of the country, you can move to that part of the country and will be allowed to get your elderly care there. And also, there will be full freedom for private operators to build new elderly care homes in any municipality with a lack of places. And also, the way you will be compensated is in line with the municipalities own cost for their elderly care, which should be a fair and transparent compensation. So in general, we believe that this is a very good, forward-looking legislation that will ensure to a higher degree that Denmark will be able to fulfill the need for elderly care going forward. And we think it's a good example also for the Swedish politicians to look after. We lack the same kind of political movement in Sweden, but we are, of course, discussing this, both on municipal and on a national level.

Okay. And then if I could do a last question. I was wondering on the acquisition in Nytida that you announced last night. And from what I can see, Friab has operated with a lower margin, I think 6% EBITDA target, I believe it was on a group level, which then includes the personal assistant units which, I guess, was left out of the deal. So are you able to comment anything on the margin development for the acquired units and if this is on par with what you already have in Nytida?

The Nytida -- the Friab margins are expected to be at an average Nytida margin over time. Of course, they are not really there yet, but there were some changes to be made in the beginning of our ownership. But over time, we think that these units will have the same margins as the average Nytida margin.

The next question comes from Jakob Lembke at SEB.

First question on Vardaga, noticing a quite solid trend here in mature units. Could you maybe comment on what is driving that, please?

So the trend in Vardaga is primarily driven through high occupancy and also continued operational improvements. But the most important factor is high occupancy.

And then it seems we have lost some outsourcing contracts in Vardaga. Can you comment on the profitability on those and in general, why you lost them?

No, we haven't lost an outsourcing. We said that the contract management portfolio increased by 15%. So that is more than the own management portfolio.

Okay. But it seems like the net wins and losses turned negative here.

Okay. You mean going forward, we are -- okay, we have lost a contract that will expire later in 2025. And average margin in the contract management is often a little bit lower than our average margin in the own management portfolio. That is the guidance I can give on that.

And then on Nytida, you mentioned here the slightly lower occupancy and varying demand. Is there sort of any idea when we can expect sort of demand to pick up in Individual and family?

So Individual and family for Adults is, in general, a more volatile segment where demand is going a bit up and down based on municipals' will to buy placements and also the type of placements that they buy. And we have had in quarter 3, a relative weak demand. It often bounces back. And we, of course, close the municipalities to understand what care services they want, and we try to adjust also offering according to that. But Individual and family is just a little bit more volatile than other segments. So we still believe that Vardaga holds a good result and is also at a solid margin level, and we expect that to continue going forward also. Nytida has been always a very solid and stable part of the Ambea Group.

Okay. And just finally, I mean, you touched upon it during the presentation that you have basically reached the EBITA margin target now on a rolling 12 months basis. Looking forward, should we expect you to update these targets? Or how should we think?

So for now, we have the targets that are decided and that we can communicate. And we have a strategy that is delivering well up against these targets, so no changes as we see it now. We are still not completely there on the growth target and also not on the profitability target, but we are, of course, getting close. And we think that the activities we have behind the strategy and the financial targets that are linked to that is a good set that is proving to work. So no plans to change that at the moment.

The next question comes from Kristofer Liljeberg at Carnegie.

Yes. A few questions. First, on the new legislation in Denmark. It seems, based on what you're saying, that you may be more confident here about the details in its pricing, for example. Is that correct? And does it also mean that you would be happy starting at new capacity? Or would you rather wait for the vote in parliament? That's my first question. Then a financial one on -- did you say you expect working capital to be flat for this year? Or was it more general trend going forward? And related to the balance sheet, what's your view here about buybacks given that you seem more focused on doing more M&As? My third question relates to Denmark. And I hear what you say about not guiding on the quarters, but do you think it's fair to assume here that Denmark should not see more quarterly losses going forward? Yes. I think I'll stop there.

So I can start with two questions on Denmark, and then Benno can take the two questions you had on net working capital and capital allocation. So in terms of the new legislation for elderly care, as it is a broad majority in parliament behind this, and we have also seen the drafts of the legislation that are in line with the agreement between the parties, we feel quite confident that this will be voted and also will be reality from next summer. Then always, it can take a bit of time before legislation meets reality, and there can be some bumps on the road, of course, but we are looking at a potential expansion of elderly care in Denmark. And we'll also be able to sign new contracts if the right opportunity will occur. So that's clear from our perspective, that that's a growth potential that we want to contribute to and also an area where we believe we can help society also in Denmark. And then in...

Sorry, did you say that when it comes to adding new capacity, you can do that in regions or municipalities where there is a lack of capacity? Or are you free to open as much as you want?

In general, you could say, yes, you will be free to do that. What you should be aware is, of course, that the compensation you will receive is -- will correspond to the municipal costs for elderly care in that particular municipality. So of course, you need to have an eye also on what is the money spent behind elderly care and municipality and whether you'll be able to deliver quality care for that same amount of money. In most municipalities, we definitely will be, but there, of course, could be some where the spending per bed or per placement will be too low for our standards. But in general, of course, there will be good opportunity here, and you will be free to -- if you can find good locations, and you get the plant permits and so on, you can establish where you want to do that. So that's very clear and a huge benefit in Denmark going forward.

How realistic do you think could it be so that, let's say, 5 years from now that the country where you will open most new capacity will be Denmark rather than Sweden?

It could be. It could be, depending on how things will develop here in Sweden. Because needs are high as I mentioned before, so hopefully, something will happen to start more construction of elderly care in Sweden because otherwise, society will end up in a care crisis in the near future, which I assume that all politicians want to avoid, and here we can help. So I hope that we would also be able or given the opportunity to help also in Sweden. But it is, the elderly case, a strong growth opportunity going forward, absolutely. And then in terms of profitability in Denmark, as you know, the quarter 3 is seasonally very strong in Denmark. It's absolutely the strongest quarter during the year, and it's more so in Denmark than in our other markets and this year was exceptionally strong. We have been clear on our expectations for the full year in Denmark. But guaranteeing there will be no more quarters with losses in Denmark I think would be a little too offensive at the moment. So let's see. But we believe we are on a good track in Denmark. We believe the team is doing a great job establishing a solid platform and building from that and we see positive signs in many areas. So we're absolutely getting there, but we need a little more time before we can make promises like the one you asked for.

Okay. The third question, if I can remember it correct, is -- was if the working capital flat over time was related to the next coming quarter or over time. And the answer to that question is over time. Predicting quarterly cash flows are really hard because it's a lot of the calendar effect and how the payments is on the very last day of the quarter. So we're not doing that predictions. But over time, we think that, that item in the graph will be neutral. And then the next question was around buybacks. We have a mandate from the AGM last year in May that we can hold up to 10% of the shares in ourselves, and that represents 8.9 million shares. As of now, we have 6 million shares in our own holdings, which means that there is a possibility to buy back another 2.9 million shares until the AGM in mid-May. So the half of the year is still remaining in that, so to speak, AGM to AGM gear. And there is, of course, many possibilities for the Board to decide on buyback programs during this half year.

[Operator Instructions] Please standby for your next question, which comes from Karl Bonnevier at DNB Markets.

First of all, congratulations to a very solid quarter development and good to see that you're getting close to your margin target as well. Just a couple of follow-ups. Looking at Vardaga, it seems like you are now closing the gap very rapidly between units that are in ramp up and mature. Is there more opportunities to come there? Or are you now on, say, your new base level in that operation?

You can say that, that is a result that we don't have had so many new units started the last two years, and that is one factor. We had only one, one year and two, one year. And the other factor is that we also have been able to take out some of the contracts that we didn't have an operations in. So that two factors are the most important one. Over time, we think maybe that the opening pace will be a little bit higher than we have had in the last two years, and that will keep the distance, you can say, in that margin of mature units and total units.

And when you're looking at the units that you have opened more recently, it seems like those are back to the old kind of ramp-up model if you are looking at it. It's not being a burden for 18, 24 months as it was for a while.

No. The two ones that we opened now in May, one in Uppsala and one in Stockholm are both municipalities with freedom of choice. So we see a good ramp up, a good start on both these locations and we had the possibility to compete against the others in these 2 municipalities. And that is always a much better situation to be in than rely on like political decisions and so on.

And when you look at Stendi and the continued strong performance from the child and youth segment, do you feel that the political ambition to in-source those services have taken a step back as you still now continue to see a good business output coming from that segment?

Yes. And I think we have seen that very clearly so since summer last year. And as a matter of fact, the Norwegian society has a quite high need for children and youth care and with children and youth, require complex needs, which in itself is, of course, not good. But in that perspective, it's good that we can help society with good care placements for these children and youth in need of that care. And I also believe that there is a good understanding both in the political environment in Norway and also between the -- among the authorities that -- to solve this challenge. I mean, all good forces are needed. Also private operators are spending. So that is nothing we have felt really and absolutely not in any way since summer last year.

Sounds promising. And looking at acquisitions, you are back on track finding targets in Nytida. With the good development that you see now in the other units as well, do you see the acquisition ambition spreading into the other parts of the operations as well?

Yes, possibly so. We are seeking for acquisitions in all our markets. We have been a little bit more not so keen on Denmark. But now when we see we are getting the Danish operations back on track. We're also looking at further acquisition possibilities in all 3 markets.

Excellent. And I just need to come back also on -- obviously, with your LTM trend from on the EBITDA margin now being close to that 9.5% target that you have. Looking back, that target was obviously initiated at the time before IFRS 16. And I guess if we adjust for IFRS 16 on the EBITDA margin, it's about 150 basis points or something like that. So do you feel that it is possible to stretch the current operation with the current operating mix all the way up to maybe the original EBITDA margin targets? Or is that with the current mix, too ambitious?

With the current mix, that would be too ambitious. And as I said, we hold on and feel that we have a good grip on the financial targets, and we think that they're working well with our strategy. And that's also the opinion of the Board. So we are working on delivering upon the financial targets and also doing that consistently, which we believe will be the first important milestone to reach.

Sounds excellent. And I guess if you can continue to do with that kind of free cash flow conversion you have for the moment, you have a basis for a very strong operation. So all the best.

Your final question comes from Kristofer Liljeberg at Carnegie.

Yes. Also a question on margin. So Norway, of course, running at a very high margin. So how sustainable do you think this is?

So the Norwegian market is higher than what we kind of forecasted ourselves if you look one year back. And the reason for that is the very strong demand and especially the strong demand in children and youth with the complex needs. And we have been able to kind of meet the demand because we have been able to, first of all, we had placements to offer. And we have also been able to recruit staff for these placements and to train the staff. And they're doing a very good job, which means that you're also getting more placements. When placements are working, you get more. But as I've said also today, it's difficult to forecast or predict that demand in the mid or the long term, first of all, because the placements are by nature shorter. Of course, it's children and youth, and you want them to get back on feet and move on in their lives. But also because, I mean, this demand in general, I mean, of course, can change depending on what society does in other areas of the welfare system, so sustaining a margin at this high level would be, of course, very strong, but more difficult because it will require a very strong demand in certain sectors and certain segments. And that's, as I said, difficult to predict. Would it remain then? I mean, of course, we could continue. But if there will be changes, which there always will be over time, also, that will, of course, impact margin.

There are no further questions. So I'll hand back to you for final remarks.

So no more questions. Thank you all for calling in. The year-end report for 2024 will be published on February 12, 2025. I wish you all a nice day. Stay safe and healthy. Thank you.

That concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.