HusCompagniet A/S (HUSCO) Earnings Call Transcript & Summary

Good morning. My name is Pauly, and I will be your conference operator today. At this time, I would like to welcome everyone to the HusCompagniet First Quarter 2022 Presentation. [Operator Instructions] I would like to hand the presentation over to CEO, Martin Ravn-Nielsen. You may begin your conference.

Thank you so much, and thank you all for diving in to this conference call for Q1 '22 trading statement. Today with me, I have Mads Winther, our CFO. Let's go to the disclaimer and to the summary on Page 2. Let's start with Q1. I will say an absolutely decent result for the first quarter. We saw our revenue growth actually of DKK 1.173 billion. It is 23% up compared to last year. But we also see -- saw the sales decreased 40% from a very extraordinary high level in Q1 that we have talked about earlier as well. But the EBITDA, it is in DKK 99 million. It's in margin with 8.5%, despite an extraordinary challenged market that we see now. What I am very satisfied around is that we actually do deliver 98% of our houses still on time. It's a proof that we have a very strong business model that we succeeded to have the materials on site, the building plots as well. I will come back to also the highlight here around the factory in Esbjerg, that we have acquired last week. And also the market, actually, in the next page, I will keep a bit -- have a deep dive in the market. So I will come back to that and the outlook for '22 we have adjusted. Mads will come back to that later. So let's go to Page 2, where we see here the -- sorry, Page 3, here we can see the market updates. And I will -- you can say some here and now words around the current market around the sales activity, our supply chains, our subcontractors for now and also, of course, our resilient business model as well. When we saw the sales in Q4, there was a decreased demand, and we also saw that in the first 2 months on '22. But what we also talked about when we were around our call with the results for '21, we saw into a better March actually in the sales, and we also succeeded with a better March sales. We have a more normalized level. And also here in April, we see a more normalized sales. And therefore, yes, it is absolutely better what we have seen in March and April compared with 5 months before then. But of course, often some ask me why we're seeing that actually, we have a better sales now it is that when the market overall is in -- you can see it is burning a bit out there. There's a lot of customers who is going to safe haven. And absolutely, who's gone -- this is a safe choice so therefore, we see that the demand overall in the market, it is less than before. But we, in HusCompagniet is associated with some normalized sales. But looking into the months for the rest of the year, yes, is absolutely a very big question. How will the market be seen there because there's a lot of you can see price increases and so on, and therefore, some of our customers are holding their horses for now and waiting maybe to build the new houses. So it is, therefore, that we also come back to sales where we have a [ larger ] split in our expectations. Around the supply chains, as I mentioned before, that 98% of our houses still delivered on time. We are having the materials as expected. So overall, that is a strong result for us. But what we are seeing, the Russian invasion in Ukraine, it has absolutely reduced our visibility. So it is the dark horse you can see for the rest of the year as well. But what is extraordinary because we saw in '21 that we have a very strong model against -- having the right sales pricing around -- against the customers versus our cost prices. You can see that we have some strong margins as well in our results for '21. We also see here in the first quarter of '22, that we have strong results also in our margins. But for the last -- I would say in the last 2 weeks, we have seen some very extraordinary here because we have a lot of -- you can see here and now extraordinary prices from our suppliers and subcontractors as well, mainly because the energy costs have increased significantly. And therefore, we see now some cost prices that we haven't seen before. And therefore, the visibility going forward is on another level that we have seen before, and it is what -- why we have adjusted our guidance. Mads will come back to that later. The subcontractors we see in Jutland and Funen that it is starting to normalize our order backlog there, you can see back on a more normalized level. So therefore, there isn't the kind of bottlenecks in Funen and Jutland as we have seen before, around the subcontractors. But in Zealand, we still have some challenges here that will be -- what we can see that we will expect that we have a kind of bottlenecks for the whole '22. Do we deliver the houses that we have expected? Yes, we are, but there is an extraordinary pressure on Zealand, also a price pressure as well. But overall, we still have a very resilient business model because we have a strong supply chain, and we do deliver, as I have mentioned before, the houses on time. So it's the market where overall, what we are looking into for now. On Page 4, I will give you some words around our acquisition in the factory in Esbjerg, Danhaus. Let me be clear that it is absolutely a part in the strategic area what we are going forward. So it is a way that we see and also with the -- in the management team, as and I and with the Board, we have a clear focus on we are calling the 4 Ss. And it is that our semi-detached that is the strategy we were giving to that market in 2020. We have succeeded with selling more than expected. But we want to go faster and in a higher level on the semi-detached and therefore, sustainability factory produced semi-detached houses. It is absolutely what the big funds the customers want. And therefore, we have now a significant, you can say, change in our industry because we now can offer that. And it will be a kind of a game changer as well in the semi-detached business that we have. And therefore, we also have increased our guidance with 50% actually up to 750 sales in the end of '25. The other S is the supply chain. We will -- that way, we will eliminate the bottlenecks in the current situation around the subcontractors and other things when we are talking before it is sustainability. We will, in the future, see more sustainable houses. We are the absolutely market lead that we will drive that agenda as well. And therefore, you will see much more sustainability around the semi-detached houses, but we also now have some possibilities around sustainable detached houses going forward as some very standardized models because when we are talking factory, we're also talking standardized production. So therefore, it has also given us some possibilities that way. And the last S in the 4 Ss, it is the synergies because a lot of people have asked Mads and I during the last years, VårgårdaHus, is a factory in Sweden as well, but it is only around less than 10% of your total company. And here, we can see now that we now have a lot of -- you can see more synergies because we now will have factory-produced houses in Denmark and Sweden as well. And there's a lot of things that we can look here what is best in class, is it a factory on some areas in Denmark or is it Sweden in some as well, so we can learn a lot over the border actually. So it is the 4 Ss who is a very strong strategic focus in the coming years that you will see more and more that way from us. If we are going to Page 4 -- sorry, Page 5, it is -- you can see the detached demand decreased in the sales. We have a dip in the sales in Q4, as I mentioned before, a bit better sales in Q1, and it was primary very low sales in January and February, and March is much more normalized. And we are looking into a better Q2 actually in the sales. But again, the visibility is a bit a challenge for now. So all is that the way that we are thinking. We have adjusted the organization in February with 28 of our FTEs. And it is reflecting what we are looking into the orders that we have to build for the rest of the year. And we have to have sales on the normalized level, not only just in March or in April, but also in the coming months. So we have the normalized level also in '22, '23. And do we not succeed with that, then we have to adjust the organization again for '23. And that is -- we are ready for that. We are on top on that as well. In the bottom of the figure, you can see the permits. Yes, you can see the permits normalized is around the 6,000 every year. '21 have a pickup, and it is because the sales in '21 have been better. Also important for me to see that from sales to the permits, there is a period shift around 4 to 6 months. So it's also what you can see in the figure there as well. But over to you, Mads, to dive into maybe some more highlights and numbers.

Yes. So if we move to Page 6. Here, we have reflected our Q1 numbers, which Martin also alluded to. I think, as Martin mentioned, a very decent Q1. So a strong Q1 for us, also historical seen. We expected this due to the very high sales we had, especially in the first half of '21. And without these sort of -- what we have seen here, we would probably also have seen higher margins without these turmoils we've seen in -- around the world, et cetera. But generally, as Martin said, close to DKK 1.2 billion in revenue. We delivered 480 houses, which is 22% more than we did last year. Martin mentioned almost DKK 100 million in EBITDA. Our margins of 8.5%, still quite strong EBITDA margins in the environment. And then looking at, I think, EBIT close to DKK 90 million, also again, up quite significantly from '21 with 42%. And our EBIT margin, 7.5% versus 6.5% in Q1 '21. Then clearly, we still have a lot of cash available. So very strong financial position also illustrated by the financial gearing, which is 1.8 at the end of the quarter. Moving to Page 7. We -- very clearly, we can see that we were able to increase our deliveries, which hopefully also will lead to a year where we have more even deliveries then we saw in 2021. We expect this year to be more even distributed throughout the year. Clearly, we're also seeing that these deliveries are mainly benefiting from our new -- our 2 segments that increased the activity quite a lot. So it's semi-detached, but also Sweden, we can see there are more activity versus in the past. So very happy to see this. We're utilizing our factory a bit more in Sweden, and we're seeing semi-detached starting to ramping up from the sales we have delivered throughout the '22 -- sorry, 2020 and '21. Moving to Page 8. This is around the sales. So clearly here, we can see the decrease from sales versus Q1 '21. Not a surprise. We have flagged that we are seeing the market more normalized and even that it was a weak Q1. And you can see to the graph to the right, that is, of course, mainly driven by our detached being very, very -- we're happy to see that our semi-detached keep momentum. And in Sweden, with the 52, we saw less there. That's a deliberate choice, not a surprise to everyone on this call. We sold a lot of houses throughout '21. And of course, we are now very focused on making sure that our agents are and our customers are taking these sales and make sure that they are moved to production. So we had a much higher focus from regions to actually get this orders into production than necessarily selling a lot more. So you will also see this probably in the next quarter, and then we will start seeing sales ramping up again just to manage expectations. Then moving into Page 9 on our segments. I think first on the pie chart to the left, we are continuously seeing that our detached business despite it actually growing, we are still -- we are seeing that semi-detached and Sweden are starting to gain ground and especially around the semi-detached. So we are quite happy to see that. So I think generally, I think worthwhile noting is, of course, that our gross margins, especially in our semi-detached and Swedish business has taken a small hit, but still a quite strong quarter in Q1. Moving to the order backlog on Page 10. Here, we have, of course, and we should note that we just move the gross out to the left. So it's a more intuitive hopefully, you think that as well. So on Page 10 here, the backlog cost is this DKK 3.7 billion, noting that the mid order backlog that is what we are still lacking to put into our P&L. And that is DKK 2.7 billion. It's 62% of our revenue. We still have a order backlog. So we feel very comfortable of our revenue coming into '22. I think so this is a very important point for us to highlight that our revenue targets, and you can also see that from updated guidance that we are quite comfortable of what we are delivering in '22. So quite a solid business model from that sense. And it's very much driven by, of course, still from the change in Q1. It's mainly driven by semi-detached and Sweden as also we've seen in the other numbers, so no big surprises there. Then moving to Page 11. This is our outlook for '22. We have taken the outlook down on different metrics. So starting with revenue, we are taking down DKK 100 million. But please bear in mind, we also had the DKK 100 million in here we have from Danhaus. So the fact to downwards with DKK 200 million. Our EBITDA, we have taken that down from previously the DKK 420 million to DKK 450 million. It's DKK 370 million to DKK 410 million. And the reason for us expanding the guidance a bit on EBITDA is, of course, the bigger change in the market that we are experiencing right now. We still believe this is a quite solid result taking into the -- to what has happened in the world. Remember, we guided this in November, 5th of November. So we believe that with what we have seen in the world, it's still a quite strong result. And you agree with us. But unfortunately, we have to downgrade it due to the war in Ukraine and increase in prices. Then EBIT, we take that down along the lines, so DKK 320 million to DKK 360 million is the new EBIT guidance versus the DKK 370 million to DKK 400 million previously. The leverage ratio, we signaled when we bought Danhaus. We bought it for approximately to DKK 100 million, and we are increasing our leverage ratios with approximately the same. So that is -- we will have a leverage ratio of below 2.25 moving upwards the previously 2x. So that's clear. Then on the assumptions, we're taking a wider spread in our sales. Martin mentioned that the sales, that is the big question right now. Mainly this, of course, will hit us in 2023, but we are taking it down with opening the bottom with 200 units. We still feel that we have good momentum, as Martin mentioned, both in March and in April. We also think that May will be good, but still uncertainty around price increases and interest rate environment, what that will do to the market as well as consumer companies. [ Deliveries ] we're taking those down a little bit, mainly due to that we might have some phasing into '23 due to the harsh supply chains. So we might agree with customers that we're extending a little bit on some of the projects we are selling now that we are taking a little bit more safety margin on delivery of those houses when we agree that with the customers. Semi-detached, we're not changing anything on the outlook for our revenue, not changing anything on the share of land that we are delivering. CapEx remains unchanged. We are still unwavering in our efforts on digitalizing, automating and investing in our sustainability together with the factory we acquired. Our cash conversion, we're taking that down a bit together with our lowering of EBITDA to 50% versus the 60% we had previously. And special items was made clear when we did the Danhaus, that we will have special items in between DKK 2 million to DKK 5 million. And then as we also expressed when we announced the Danhaus that we have -- we're expecting a revenue around DKK 100 million and a breakeven around the EBITDA result the first year and then cost basically more from the factory. To the right, we're still reflecting we have positive development in our business. Clearly, we will hope for a little bit better guidance in '22, but I still believe we are quite -- we're delivering quite strong results. I think you should follow the industry moving ahead. And then hopefully, you will see that our data-driven efforts, we are ahead of the market, and this will be a very strong year from us in comparison to the industry. Moving to Page 12. We're just highlighting that we are very focused on distributing our earnings to the shareholders unless we have better needs for it, which we actually believe we did in the acquisition of Danhaus, but still a very strong flows coming out to the shareholders, either in the form of dividends or in form of dividends illustrated well by the dividends we paid out here in April. Happy to distribute to our shareholders the DKK 132 million equals to DKK 7.35 per share, which is a fairly good dividend versus the share price we listed at and also where we are trading at the moment. So with that, I think we are moving over to Q&A. So moderator, over to you.

[Operator Instructions] Your first question comes from the line of Claus Almer of Nordea.

Yes, I have a few questions. I will take them one by one. The first question goes to your new updated guidance, what is actually the assumptions behind the low and the high end of the range? That will be the first question.

Thank you, Claus. So I think that it's fair to say that if things is not turning out worse than today, then we would expect to be in the mid to the higher range. If they expect to worsen, which we are expecting a little bit, we are seeing things coming in, in the next months or so, then we would be in the mid- to the low range.

Can you just repeat that? So you say you are seeing a worsening situation in the last month, and therefore...

Yes, we are expecting that things will come our way, and that's why we leave the guidance, right? So you should see us at believing that when we guide, we expect to be in the middle of the guidance. And we are seeing that in the next month, we would expect that they come more price increases. And with that, we would be in around the middle of the guidance.

Sorry, you just broke out. So you think prices will increase further in the coming months, and then it will improve? And if it do not improve, you're in the mid- to lower? I don't understand it, actually.

No. Okay. I'll try again, Claus. So I think what we are saying is when we guide, we, of course, guide towards something that is in the middle range or at least middle to high where we guide, right, because we perceive ourselves as conservative. So we expect that the next months, there will still come price increases. And with that, we will be in where we would normally guide so in the middle to high end. Then what we are saying is that we saw gas prices 1 day go up by 17%. If this kicks in and it's a reality continuously throughout the year, then we will not be in the middle to high end.

Okay. Then also -- I understood what you said.

I might have been unclear, so I apologize for that. But hope we're clear now.

Second question goes to the comment, you are including that you saw a lower level of provisions in Q1 versus Q1 last year. What does that actually mean? And if you could put a number to this.

Yes. So of course, when we are -- so we had a massive sale or we have a very good year of sales in '21. So clearly, we paid sales commission...

Okay, so sales commission. Okay, that makes sense. Can you put a number to that?

First of all, we're not disclosing these numbers, but I think it's fair to say that, of course, I think -- as we said, we had an extraordinary around this. I think we spoke about DKK 5 million to DKK 10 million at some point, and you should expect that it's the same [ reversal ] in any other instances. Of course, it's versus the normal sales, right?

Okay. And then the last question, which given the profit warning, that makes your upgrade of semi-detached segment just one week ago looked a little bit strange. So maybe you could put some color to the way you are working out these guidance. So upgrading one segment for what is going to happen in 2025, and then the week after you're probably warning for the short-term outlook just looks a little bit strange. So maybe a few words on that.

What we are -- Martin here. What we are looking into now, Claus, it is 2 different kind of customers because a lot of the B2B big areas, it is for -- they want to build a house also for rent out. And therefore, the professional customers are still on track. It is also what we are looking into. And when we also now have the factory, then we see that we have some advances against the competitors, and therefore, we can take market share. So yes, maybe the market also will decrease in the semi-detached, but we see we have now a position that's not before. and therefore, we are comfortable around that guidance.

Yes. I think as -- so one thing is, so we announced a deal where we have a clear, as Martin alluded to, the strategic logic around our acquisition of the factory. And here, we are talking about midterm guidance, but we feel quite comfortable about the interest we are seeing from semi-detached. As Martin said, it's very different customers. We have a lot of dialogues. We've also got clear indications of where they would like to go with the customers. So I can fully appreciate your comment. I think one thing is the medium term in our -- semi-detached market is a growing market. And the other one is more, you can say, are current market elements where we are seeing extraordinary energy fluctuations and mainly increases, of course. And that's 2 little bit different things. So -- but I appreciate your point. And we appreciate that coming 1 week with an acquisition we upgrade our medium targets and then next week coming with a downgrade of our 2022 results looks odd. And we appreciate that, but that was just the timing of things. So we had to announce the acquisition when it's done, and it changes our medium-term outlook for semi-detached. And we had to announce straightaway when we can see that we need to downgrade our guidance. And unfortunately, those happens within 1 week, but they are actually not that correlated as such.

Now it's all about visibility -- no visibility short term, but very good visibility to 2025. It always looks a bit odd. But maybe to ask a slightly different, so when are we going to see some proof for this 750 units ambition? So when are the pipeline starting to be converted to more firm projects? Is that this year? Or is it next year? Or -- yes.

I would think that we will start seeing it this year, the sales, absolutely, because we already now, for the last week, have spoken with a lot of investors who really look into that as a good way. So yes, I think that we will see it for this year and the coming years. So -- but already in this year, we will see small sales.

So you don't see professional investors saying, okay, prices of these houses are going up significantly, interest rates going up quite dramatically, too? Maybe we should wait half a year, a year to see if things are stabilizing? And how do you actually price your semi-detached house for professional customers as to inflation?

Yes. We see that -- I think that we'll see some of the professional investors will step up and take a break. There will be some of those. So therefore, we can see also the market and the semi-detached will decrease. But we still believe that we will take the market share. We will increase our market share. So we still believe that also because we are already now in a dialogue with a lot of the investors also for this year. And we're also looking into some new sales and new areas that they still want to make some deals around. So therefore, we are actually rather confident around that. And how we talk about the prices, we have some index in our contracts with the professional investors that help us that way. And we don't have it in the private investors in B2C sales. We don't use the index regulations as we do in the B2B.

Your next question comes from the line of Kristian Johansen from SEB.

Yes. I also have a couple of questions. First question goes to these suppliers charges and if you can elaborate a bit more on that. So obviously, you say up to 30%, which is a pretty amazing increase. So what's the kind of materials is this primarily hitting? And I mean, being a surcharge, what does that mean? Is it temporary? And if so, when does it go away?

We're seeing steel. We're seeing concrete. We're seeing insulation as some of the big factors for now who had significant increases. But we're also seeing that a lot of other things, but it is mainly -- you can see some of the materials is up with around 30%. Yes, we see it is as temporary for now, but it has an impact for the '22 and therefore, we have reduced our guidance. But it is -- to be honest, it is very, very difficult to say how will the world actually see out there for the coming months. And therefore, we are a bit conservative.

And I think, Kristian, what we're doing is we're getting surcharges, but we are, of course, making all efforts that these -- the surcharge that is there for only a certain period. So it's only for something that you remove, right? So it's a charge that come on top of the pricing of the product. So that's -- I think that was also your question, right?

Yes. This is not list price increases, right?

No.

And typically, what's the duration of such a surcharge. Is that possible to say?

Not really because I think it's the market. So I think everybody -- the reality we live in is that everybody comes with force majeure-like increases and ends up -- but it is really contractual force majeure, and then you have a debate with your supplier and then they said, "Yes, but we can, of course, go into a lawsuit, but you're not going to get your materials, right, because we are closing down the factory or we'll give it to somebody else because everybody else wants it, right?" So I think where we have really accomplished, which I think is probably something that is not -- that we potentially are not good enough in explaining is that we are still looking at delivering 98% of our houses, and that is extraordinarily high in this current market versus other people. And that is due to our size, so the scale of our business, and it's due to the relationships we have. But are we hit by price increases? Yes. And is it like force majeure? Yes, it is. But we are trying to make sure that it's on list prices, [ with ] these surcharges. But sort of the duration of these is a little bit unknown. What is important for us is that we continuously try to narrow it out that we have this specific price increase that is related to energy prices. And if those comes down, then we have a different dialogue, then they are gone.

Okay. That's quite clear. Then to sort of the other part of the equation on this topic, what you sort of can do on your own sales prices. So in your statement, you say that these surcharges have hit in the past couple of weeks. So what actions have you taken so far on your own sales prices?

Yes. So we can say, we increased our prices by mid of April by 5%. So this, of course, a significant increase. You will also see us increasing here in May in Zealand, and that's mainly due to the subcontractor area in Zealand, as Martin also explained in the previous slide. That's still a very congested or a very heated market, and we need to make sure that Zealand can cater for those specific issues that we have here. So this is what you may see, and you'll probably see more from us if it continues in this environment. For us, we want to protect our margins. And as Martin said, we are seeing and we can see that. But our leads, et cetera, really we expected versus our competitors that we are seen as the ones that will stand no matter what happens, and we stand by our prices, et cetera, and there has been a little bit of turmoil on our -- the tax market, but also just adding Claus Almer here asked us so what about the [indiscernible] margin, I think here, you have professional investors that looks at the solidity of the companies. They are actually asking to produce something for them. And I think if you look at us versus the competitors in our semi-detached market, I think you see much more realism coming into the investors that they really want to team up with people that are actually able to deliver on what they promise. So I think that is why we are quite comfortable also on the semi-detached when we look in the next few years. So I think, yes, we feel quite sort of -- we feel that we are in a good spot. But of course, we're also working -- we have great suppliers, great employees that are fighting every day. So it's not an easy market, right?

No, no, that's quite evident. Just getting back to the 5% price increase you've done in April, is that then fully compensating the price surcharges you've seen from suppliers so far? So the gross margin is on you...

Yes, it is. The 5%, it is, but also in the 5%, we are -- we here have to what we are expecting from increasement going forward. So -- and we actually have done that all the time also in '21. We have increased the prices to what we are looking into now and what we see from expectations in our order backlog. But what is extraordinary and significant here, it is the extraordinary, you can say force majeure, not list -- price list increasement with some extra who is here now. It is what we have been -- what we have been hitting now with extraordinary.

Okay. That's quite clear. And then just to your comments on sales in April and also an optimism for May. So obviously, if we take Danish consumer confidence, it hit a lower point in April and during the financial crisis and with the price increases you flag here, surely, the customer dialogue must be more difficult yet it doesn't seem like you've seen any negative impact so far. Can you maybe just elaborate a bit on sort of your current customer dialogues, so fully appreciating visibility is extremely low. But what can you see at this point?

If you imagine the customers who is the market for now, maybe they have sold their old house and so on. They have bought a plot and they have to make the family dream to be realized. So therefore they have to make a decision, what company do we have to build our house. And here, we see now and we absolutely who goes into the safe haven as I mentioned before, so therefore, the current customers have to make a decision because they are in a situation in the family that they have to build a new house. So what we are looking into, it is more there in the future, there can be some customers who don't want to start up the process. And therefore, is it the visibility going forward is not on a normal level as we are looking into just to -- I hope that it makes sense. That it's the current...

Yes. But I think, Kristian, so the question is, of course, what we are uncertain around is, of course, the element that we have increased our prices quite a lot, so it is becoming more expensive to buy a new house and people are getting scared. So will they wait a bit to see if things clear up? That we don't know. But I think sort of generally, I think all of us are sort of into the accepting the notion that things are getting more expensive, and we are seeing inflation, and it's happened quite fast, right? So when people are coming, they are not surprised that prices have increased. So I think -- so we just don't know the reaction on that. But it's not like when you come and you say the price have increased, they're like, "Whoa, what has happened?" that they understand, but we don't know how they will react on that pricing. If they hit the -- it will hit our sales volumes moving forward, that's a big question.

Just one thing more, Kristian. It is also important that the old -- you said the old -- the current house market is increased in the house prices over the last couple of years, around 15% to 20%. And maybe it will decrease a bit now. We don't know. But it is the level. As the new house, we did increase our prices with 10% in '21. And if we are increasing the prices around 10% again here, in '22, then is it 20% and together actually for the 2 years. And it is around the same level of 15% to 20% that the current house market has increased. So it is also one of the things in the great perspective that you have to take with you in your mind.

I understand. Maybe just a follow-up. The sale you have on your own land blocks, have you seen any hesitation there?

No. We haven't. But our own land blocks for now, it is on a low level. We only have 10% around in this year. So what we have into -- what we are looking into, you can see in the future on land, we haven't sold that yet. So therefore, it is with the strong margins that we will sell that. So yes, it is actually a good position for our own land in the future.

Okay. Great. Then if I may, just 2 quick housekeeping questions for me, and then I'm done. So in the semi-detached, obviously, the gross margin in Q1 is quite low, and you talked about this intersegment impact. Can you maybe just help us a bit for the coming quarters? Should we expect the level to remain around this 7% due to this [indiscernible] continuing? Or how is the dynamic for producing such a gross margin going forward?

They will go up. So this is mainly due to the, of course, the [indiscernible]. So when we have a lot of B2C, which we had here in H and Q1, then you see the margins being low. If you have less, they go up, of course, because you don't have this intersegment-related revenue, right? So you will see it go up. And -- yes.

Yes. Okay. So a bit different mix on B2B versus B2C in the current quarter?

Yes, because there you have the whole you had the full basically P&L lower in semi-detached, and then, of course, you have much higher gross margins.

Perfect. And then my other housekeeping question, just on the acquisition of Esbjerg. So you say breakeven this year on EBITDA, what level of depreciation should we expect for this asset?

That I can send to you, Kristian, because I can't remember in my head or -- I'm just looking in my notes, I'm not sure I had it just -- we'll just send it to you and Claus.

[Operator Instructions] And your next question comes from the line of [ Frederica Dawson ].

I also have a couple of questions, and I'll also be taking them one by one. You have downgraded your revenue guidance for 2022 by DKK 100 million, which, as you said, Mads, is expectedly a downgrade by DKK 200 million, taking into account the revenue from your new factory. With the visibility you have with your order backlog, I would expect that around March, you would have practically no downward risk on your guidance. So could you maybe comment on that? And what has changed since you reiterated your revenue guidance in March? Also relating to that, maybe a quick comment on your lowered expectations on deliveries for 2022? And what segments the effect from phasing these deliveries into 2023 primarily relates to?

Yes. So thank you. Good question, Frederica. So I can just -- I just found the number on the depreciations on Danhaus. That's DKK 2 million for Kristian and the rest of you, which I have sort of skipped. And then on basically on your question around our visibility on revenue, then the way we take our P&L, we, of course, also have 3 months in -- basically, we have 4 months in 2023 that also affects the revenue, right? So if the sales is lower in March, you still have basically 1 year revenue, and we haven't had sort of 1 year of booking of P&L. So you basically have 2 month drive. So given when we sell a house, so it's the work in progress we are taking for the first 4 months of '23 we would have that in, right? So if you're delivering a house in January, you will see -- at the end of January, you will have 80% of that revenue in P&L would be in '22. And it is end of February, it will be 60%. So the reason why we are taking the revenue down is, of course, because if we have lower sales, we have lower activity. And part of the revenue we will generate in the work in progress at the end of the year as well as we are selling in Funen, for example, we are selling in a shorter distance from sales strategy deliveries and can be even as close as 6, 7 months. So there is also areas in Funen and in Jutland where we also have an impact. But it's a fair question, but that's also why we are not taking it down more due to the sales that's because of these -- yes, of this. Then you asked about sort of the second question, just come again for what that was?

Just relating to your lowered expectations on deliveries. If you could comment on -- what segments do we effect from phasing?

Yes. Yes. It's mainly our detached. And then it's a little bit semi-detached, but mainly detached. As I -- think of it as detached. So it's mainly due to that if we have -- as I mentioned, we would have these -- you come in to buy a house from us now in Funen, and we will deliver this by in December. Then what we would do now is potentially saying we will deliver it in end of January. So we have a little bit more wiggle room around the deliveries. So we are taking a protection perspective from our view that we will put in a little bit more cushion around deliveries, and that's why we are moving a little bit on deliveries. We just want the cushion, we are concerned, right? So we will have different areas where we have different challenges.

And it's also important for us that, as I mentioned before, that 98% of our houses we do deliver right on time. And therefore, when we are talking about to talk against the customers what can they expect from us, then it is important for us to maybe now have a bit more wiggle room, as Mads mentioned. So therefore, better that way not to overpromise.

Okay. That's clear. Then on your margin guidance, you're taking this down by close to 1 percentage point. And I know that's not a lot, but you've previously stated that, of course, some months, we will be a little bit behind and some months, you'll be a bit ahead of the curve, but that you're overall very comfortable around your margins. So just wondering how we should think about this downgrade. Is it primarily due to lower activity levels? Is it uncertainty around raising your selling prices? Or what are the primary reasons for this downgrade?

Yes. So I think the main reason for it is this force majeure-like, the energy prices. So I think we have been extremely -- we hope you feel at least that we have been very good at foreseeing what comes ahead of us. And therefore, we were expecting increase in margins. Then what has happened is that we have seen these very instant price increases that takes effect immediately. And those we haven't foreseen and we haven't foreseen the war in Ukraine, et cetera. So what I said here is unprecedented. And therefore, it's these elements that made us downgrade. When we talk about the sales, yes, we are making a wider spread in our sales. And if the sales go down, it will hit us, but that's not necessarily a 2022 thing. It will marginally, but of course, we had some that it will mainly be a margin on this because it might hit it into the [indiscernible] of the first period of '23, but it's not that, that is -- that we would have moved forward, but it's more the sort of the energy prices that basically escalates the impact on our results. So this is very extraordinary. So that's why we are saying that -- or at least we think it's extraordinary. It might be that this is the future we're looking ahead of. Hopefully not. But if we get sort of more normalized world, what we have been used to in the last 20 years or at least the last 10 years, then we would be very much in control of our margins, and you would see us increase them. But here, we are just seeing something that is a little bit different than what we've been used to.

Right. That's clear. Then with these new and lower expectations for your houses sold in 2022, will you be making any additional changes to your organization? And maybe relating to that and just taking a step back, could you talk us through the organizational changes you did in 2021 where I believe you spoke about ramping up the organization in the first 3 quarters and then adjusting the new organization with 28 people in Q4. So maybe a comment on that, please.

Yes. So it's a very good question. So clearly, if we see lower activity, you will see us decreasing our staff. That's just a fact. So alongside our activity, we will adjust organization, as Martin also said. So I think that's the comment we add to that. Then when we saw -- we ramped up around sales around the draws, our [ tech ] around the construction, and just we upgraded that -- we upscale those throughout '21, which as we alluded to here. Then in February, we did the adjustment of the organization of these 28 people. And those were also reflecting -- it was mainly in our Jutland part of our business, which has the shorter backlogs that we adjusted our organization. And it is within these 3 areas that we also adjusted but, of course, less around our construction vendors given that we are still having a high activity, as you saw in Q1, right? So this is to the extent then that we can probe information around that.

But for Q4 '21 and January and February '22, it was low sales. Therefore, we adjusted the organization to what we have to deliver in '22. And what we saw here was that March and also here in April that we now again have increased our sales. So now we are in a more normalized sales situation. So therefore, our FTE level now is actually in the right position against what we are looking into in our order backlog. But if we see now, as I also mentioned before, the current customers for now, we see that they want boost community and they are buying from us. But what happened in the coming months, it is a big question. And therefore, if our sales are going down again from the summer and the month after, then we can see into our activity in '23 is not as expected, and therefore, we will do adjust the FTE again. So we are on top of that every month.

Your next question comes from the line of [ Marcus Zalando ].

Just one question, if I may. Your net debt to EBITDA is 2.25 now. It's a little bit above your target. And the macroeconomic situation is a little uncertain to say the least. I'm just wondering if you are doing any kind of contingency planning or taking any measures to sort of bring your debt down quickly. And if you are, what kind of measures are those?

As just making clear, Marcus, our net debt is 1.8 turns. So that's what I said. We said our guidance for the year is that we are below 2.25 turns. So currently, we had 1.8. We will be managing our leverage. We have sufficient facilities in place. So we had -- as also in one of the pages of the highlights that says that we have DKK 400 million already available cash. So we feel very comfortable around our financial position. We will be moving down towards below 2 turns again. We have said that this transaction because we have spent money, we are upgrading our guidance. So it's going from 2 to 2.5, which is exactly the number where we acquired the company for, but we are at 1.8 turns, so we will be below -- the end of the year we will be below 2.25 turns. And what actually sort of affects whether or not we will be in the higher end or even lower than 2 turns, that is more how successful we are at acquiring attractive land and some of these lands just to calm people down. Some of the land that we will acquire is something that we have been looking at for many years. And other instances, the reason why we might have land on our books might be because we sell a product -- or we sell a project, sorry, in our B2B, where we have a back-to-back with the customer, let's say, a pension fund where we then keep the land on our books and then we deliver the projects in phases or in different stages, and then we basically also deliver the land together with the projects. And I should probably not have mention the pension fund. It's mainly because it's real estate funds where they get allocated cash. And when they call the money like a privilege, they start -- the clock start ticking on carry, et cetera, right? So on these, we might take the piece of land, but we have a full firm agreement that we will deliver the land plus the houses we're building on the land. So our leverage will depend on these 2 elements. So we're very comfortable around our leverage position. And if we are at the end of the year around these 2.2 turns or 2.1 turns, it will be because we've gotten a lot of land on our hands either to B2B, with back-to-back or to B2C, which we're very comfortable that we can sell, and we have bought the net prices that was from the past and not at current levels.

That's reassuring. Maybe just a follow-up. Have you disclosed your covenants?

So basically -- yes. So we have agreed basically. So we did disclose it together with our listing, we can send it to you, Marcus, but we had covenants are way above the current levels, and we more have agreed of our interest payments and they are affected by the different loans and -- but we are paying 145 basis points below turns and then you take 10 basis points up when you move up above that. So it's insignificant in this sort of -- we're very comfortable in [ light ] documentation facilities in placement in terms of financing from our 2 great banks, [indiscernible].

There are no further questions at this time. I would like to turn the call back over to our presenters.

Yes, from Mads and I will just say thank you for this call with a lot of good questions, and have a nice day. Bye.

Have a nice day, everyone, cheers.

This concludes today's conference call. You may now disconnect.