Instalco AB (publ) (INSTAL) Earnings Call Transcript & Summary

Welcome to the Instalco Q4 presentation for 2022. [Operator Instructions] Now I will hand the conference over to CEO, Robin Boheman. Please go ahead.

Welcome to this Q4 presentation of 2022. My name is Robin Boheman, CEO of Instalco. And with me today, I have my CFO, Christina Kassberg; and Fredrik Trahn, Head of IR. So with that, I would like to open the call up. Just for new listeners, what is Instalco. We are a leading Nordic group within heating and plumbing, electrician, ventilation, cooling, industry and technical consultants. We do project planning, installation service and maintenance and system installation for property and facilities all around Nordics. We have a highly decentralized structure. As you can see on the map here, we have 125 subsidiaries, specialized local companies with unique skill sets that can collaborate within the organization. As you can see, Sweden is our largest market, but we are also establishing ourselves in Finland and Norway, which is one of our focus areas at the moment. We have roughly 5,600 employees within Instalco. Going into some key financials. So last 12 months being 2022 then, we surpassed the SEK 12 billion sales. We had an EBITA margin -- EBITA of SEK 916 million. which collaborates to an EBITA margin of 7.6%, with a strong cash flow of SEK 753 million. We managed this year to acquire companies with an annual sales of roughly SEK 1.1 billion, and we have a strong order backlog of almost SEK 8.4 billion. Going into Q4 and looking at some of the highlights, we had a really strong sales growth of 35%, which meaning that Q4 ended up at SEK 3.6 billion sales and EBITA of SEK 292 million, which is an EBITA margin of 8.1%, which is a really good, solid EBITA margin for us and also can contribute to a solid and good performance for the quarter. We also see that we managed to increase our EBITA margin from last year, which were in comparable numbers, 7.7%. If you deduct the repayment that we got from AFA health insurance. So we're able to increase our EBITA margin quarter-to-quarter. We also had a strong organic growth of above 10%. Like I mentioned before, continued strong order backlog, solid cash flow in the quarter. We see a strong demand for energy-efficient solutions. We have continued to grow our service business. We are increasing our presence in the rest of Nordics, as I said, which has been a focus area for us going forward. We managed to do a few startups and also a few add-ons for existing subsidiaries. And also, we increased our industrial development in Finland. So we are now present in Finland with some industrial installation companies as well. So overall, a really good solid quarter. And with that, I'll leave over to you, Christina, to go through a little bit of the numbers in more detail.

Thanks, Robin. I go ahead then. In this slide, we can see the increase in net sales with a comparison of Q4 present and prior year. Our strong position continued to generate growth -- strong growth in the quarter. Net sales increased by 35.6% compared to last year and amounted to SEK 3.6 billion. We are very pleased that the growth is especially strong in the service area, an excellent [ pre-rec ] for the coming year. The growth is driven by the high demand of sustainable investments and energy optimization and our high rate of acquisitions. We are satisfied that our organic growth rate that -- which was 10.7%, acquired growth just over 23%. This slide shows the quarterly trend of EBITA in both millions and margin. We continue to deliver a high and stable profitability. EBITA increased in absolute numbers by 28.9% and amounted to SEK 292 million, which corresponds to a margin of 8.1%. Despite continued high inflation pressure and higher interest rates, we defended our margins in the quarter. Our underlying margin for Q4 was comparatively stronger after having adjusted for the lump sum payment from AFA received in Q4 '21, then 7.7%. This slide shows the quarterly progression of the order backlog. We have a substantial order backlog with good quality, and this was further strengthened during the quarter. The order backlog has a good composition of both services and contract forms. Our order backlog grew by 23.3% and is at a record high level in absolute numbers. In total, SEK 8.4 billion, which corresponds to approximately 70% of annual sales. Organically, the order backlog grew by 5.3% and order backlog from acquired companies contributed with growth of 16.6%. Now over to a slide that summarizes segment Sweden in Q4. The business situation in Sweden remained strong in the quarter, and our companies have managed the market successfully with high profitability and strong growth. In general, the market situation is good. The supply of installation projects in certain regions has temporarily declined somewhat, but from a high level. Rising inflation and higher material prices is impacting the industry's profitability. New construction and renovation in the private and public sectors remain at a high level. For new production, we have noticed somewhat of dampening effect. Rising electricity prices and investments in Swedish basic industry are increasing the need for energy efficiency. Construction investments in the industry remain at a high level, particularly in Northern Sweden. For technical consulting, short-term demand is good. Overall, in Sweden, net sales increased by 27.4% to SEK 2.7 billion. Organic growth amounted to 10.7%, acquired growth amounted to 16.7%. EBITA was SEK 244 million, and the margin was 9.1%. The underlying margin was comparatively stronger after having adjusted for the lump sum payment from AFA received in Q4 '21 adjusted to 8.4%. And now for a summary of the rest of Nordic segment. Rest of Nordic is overall delivering a strong trend of growth. The demand for energy-efficient installations is increasing in line with rising energy prices. For new production of residential property as in Sweden, we noticed a dampening effect at a high level. The market in Norway remains stable in terms of both construction and renovation. The market in Finland as the pandemic has still not fully recovered. The financial situation is causing a delay in its recovery. Overall, net sales increased by 67.5% to SEK 0.9 billion. Organic growth amounted to 10.7%. Acquired growth amounted to 48.1%, which is a clear confirmation of our focus to grow in the rest of Nordic. The EBITA margin is still below the side level, but we have do a positive trend, primarily explained by the market in Norway and a positive earnings effect from acquired companies. The EBITA was SEK 50 million and the margin was 5.5%. The underlying margin was comparatively stronger before revaluation of contingent consideration, which had a negative impact of the margin. To summarize our performance in relation to our financial targets. All in all, over a business cycle, we are confident that we are delivering in line with our financial targets. Our well-proven business model with entrepreneur-led and decentralized companies quickly adapting to challenges as well as opportunities. And this has equipped us well for the future. Regarding growth, we are performing well beyond our financial target, and we're pleased that the EBITA margin were above our targets in Q4, yet somewhat lower year-to-date. Capital structure is well within target and varies between quarters. We are comfortable with the rate, and we are maintaining both a balanced level of indebtedness and a strong balance sheet. Cash conversion was below and -- but improved slightly compared to 2021. And finally, the Board proposes a dividend in line with the 30% policy. By that, Robin, over to you.

Thank you, Christina, for clarifying all the numbers. Looking at a little bit about operations. A few years ago, I think I've talked about this before. We made a strategic decision to go into hospitals since we saw a tremendous growth in that area. And yet again, we can be proud of a new large project together this time with ByggDialog and Regionfastigheter Dalarna with the expansion of Falu Hospital. This is a collaboration between 3 of our Instalco companies, Henningsons El, Dalab and Intec, our technical consultants. This is also a little bit extra exciting because this is a hospital project that is highly focused on energy efficiency and also environmentally -- being environmentally friendly with high energy-efficient solution. The total budget for this is SEK 140 million. So it's a quite large project for us, but it spans over a few years. And this is also taken in partnering. So it's not a fixed price project. So very excited about continuing to be the largest hospital installer in Sweden. Going into one of our other priorities, as you all know, is M&A. And one of the priorities, as mentioned before, is to increase our presence in rest of Nordics. And we can see in the quarter that we continue to go all acquisitions actually done in Q4 was in the rest of Nordics. Here, for instance, is an example of Imes, which is an electrical and technical installation in the fishing industry in the city of Tromso, Northern Norway. With this acquisition of Imes, we increased our presence in the interesting market in the Northern Norway. We also see opportunities for synergies and collaboration between Imes and our other subsidiary, JB Elektro, which is also present in Tromso. So this is also in the strategy, as we mentioned before, on making sure that we have more subsidiaries within the same area. Going into summarizing a little bit about acquisitions in 2022. First of all, I mean, Instalco is a niche acquirer in the installation industry. We exclusively focus on quality companies, and we made 16 acquisitions during the past year, 9 of them in rest of Nordics and contributing to about, as I said before, SEK 1.1 billion in annual sales. This is maybe a little bit slower pace than you've seen in the last 2 years. I think I'm very comfortable at this rate. I think it's a solid rate. And as you've seen, we're able to grow quite substantially. And I think the focus for 2023 will still be to make solid acquisitions, but we'll have a focus on profitability and making sure that we will come back to the levels that we have been at before. With that said, I mean, we started 2023 with some real solid acquisitions already. So I think it will be a very exciting year for 2023 as well. Summing up the quarter, we did 3 acquisitions, as I said, in rest of Nordics, Imes was one of the examples. So we had a solid quarter when it comes to acquisitions. And I would like to take the time at this call also to summarize up 2022 a bit and also look forward for 2027. And I think -- we can start with a little bit of the summary. So to start off the year, I think a lot of us forget about the global pandemic. I mean for us, January, February was maybe the worst year when Omicron hit us. We had a really challenging time with staffing, especially January, February. We saw uncertainties in demand for investments, major disruptions in the value chain. Then just when we kind of gotten through that we saw Russia invaded Ukraine, increasing raw material prices, disruption in value chain once again. We saw a kickoff of the energy crisis of expensive electricity fuel transportation. So -- and that kind of sparked off inflation as well and willingness to invest due to the rise of interest rates, slowdown in housing construction, cost pressure on material and label. So basically, what I'm saying here is that, I mean, even in all these macro trends that kind of worked against us, we still were able to deliver a solid 2022, which I'm proud of and the work that has been done in the company. But also during these times, we also took the time in 2022 to go through our vision and our road map for 2027. And we launched a quite extensive work on launching a new vision and a new road map for us. But we also took the starting point to look at some opportunities going forward where we see 3 major areas: sustainability, energy shortage and green transformation and also, as Christina mentioned, industrial investments, especially in the Nordics. And looking at sustainability, we really have a key play -- we are a key player here and take a big role in sustainability because at the end of the day, there is a lot of installations that needs to be done if we want to do the shift in society, as I think many of us believe we need to do. If we want to reach the Paris Agreement and so forth, we need to take action here today. And Instalco is very well equipped together with the installation market overall to make this shift. And looking at energy shortage, there's a lot of discussions at the moment regarding energy bills. But I think that's a very short-term discussion because we will be stuck with this for quite a while if you ask me. However, there are solutions to made in. And in a company like Instalco, we can really make a difference here today. We're making energy shortage, somewhat less of a stress for the society due to what we can make improvements in a lot of areas, and we can also make the green transformation. And that kind of comes in also to the large investments within the industry, especially in the northern part of Sweden, but also in the Nordics overall and the world, where we see industries making large investments in changing the way that they operate and also what they do, both in new companies being founded, but also in the older somewhat long-term companies that they're also changing their strategy. And here, we have a key role to play. And during this year, there's been an interactive process with the group to arrive at a new vision to clearly focus on our employees, our customers, our company's sustainability and the continued growth that we have seen in the past that we want to continue. And that's how we have developed our road map for 2027. In conjunction with that, we have also taken opportunity to adapt our leadership organization a little bit to be more optimal way of achieving this road map to 2027. I think it's important that with the new vision, we are now embarking on a next step towards the future by gearing up for a continuous growth journey and also making clear and challenging vision. I think it's very important for all of us and all our employees that strengthen us together and makes us also a more attractive company. But I would say, the decentralized business model with the local entrepreneurship is still lies in the foundation of this and has always been the foundation of Instalco and will continue to be that. And with that, our new vision is we enable our companies, employees and customers to grow by collaborating on installations for the transition to a greener society for the next generation. We are the most competent and effective installation partner for our customer. So I think this emphasizes a lot on that we are focused on our companies and our employees to make them grow. We can also make our customers grow. And by collaborating together, we, the installation market and Instalco specifically can help the transition for greener society and make sure that next generation also has a good setup for the coming future as well. So for me, this is a very important topic and something I really think is needed to take that steps towards the road map to 2027. But with that, I would actually just want to conclude and summarize the more shorter term. So the Q4 with a strong quarter, high growth and good profitability. We still see a strong demand for our products and services. We are a leading producer when it comes to hospital construction areas, and we confirm that in the quarter once again. And this also, I think, summarizes the whole concept that the Instalco model works very well also in challenging times. And with that, I would actually like to close off our Q4 presentation and open up for questions. So thank you, everyone, for listening in, and hope you had a nice listen.

[Operator Instructions] The next question comes from Karl Bokvist from ABG Sundal Collier.

My first one seems you highlighted a strong demand and the potential to continue to have a quite good sales development. Then my question will be on cost, margin trend a bit more positive this quarter. So I understand it's difficult, but best guess looking at your current project portfolio with less hopefully, [ also clearing ] in Q1 or Q2 next year? Do you feel that the kind of peak cost headwind is now behind you, even though it's building cost index and so on is still rising?

I think that we are more prepared and that we are more kind of -- I mean this is -- I would say the market is more on top of things, so to say. And I think it's more -- what we saw last year in 2022, I think, came a little bit to a surprise to a lot of us that you could see that kind of quick and fast increases of prices. So I think we still see very high prices in material and so forth. So we still have to work a lot in 2023 and making sure that we push those pricing to -- continue to push those price increases out to the customer and the end market. But in 2023, I think the visibility is better than it was when we started in 2022.

Understood. And then you highlighted the strong performance in Sweden. But in rest of Nordics, forgive me if you did cover it, but could you comment a bit on potential differences between the Norwegian and the Finnish market and -- yes.

Yes. I think as we've mentioned before, I think it is really good to see that Norway is picking up and some of these actions that we've taken during the last year, 1.5 years are starting to prove themselves and also that we are seeing some increases in margin in a few our subsidiaries that has been, so to say, quite hardly hit. Unfortunately, Finland market is not really back to former glory, so to say. So there is still some work that needs to be done in Finland. But there, I think it's more a discussion of market than, so to say, our specific subsidiaries. But we have done a few changes also in Finland, and we continue to monitor the situation quite thorough and working closely together with the new area managers in Finland as well.

Understood. And my final question, when looking at your contribution from acquisitions, still seems to be like a rough -- if we round it, 15%, 16% EBIT margin from acquisitions this year. Is it mainly related to one very strong performing unit or that there are a couple of these businesses performing at very high margin levels?

I mean we have managed actually to get out some synergies from a few of our acquisitions that we've done in the year. So there are a few of them that has been really profitable and that has also been able to grow within Instalco that we have been able to really quickly get out a few synergies that's maybe not as common with our sort of say, regular acquisitions that we do. But in these specific cases, we were able to really quickly get out some synergies as well to increase margin in a few of them.

The next question comes from Karl Noren from SEB.

A couple of questions. If we start on the order backlog, I mean it looks really solid here entering into 2023. And I think in the CEO letter and on the call, you don't really mention anything about the weakening in new orders, et cetera. Could you maybe comment a bit on like how you see the market right out there right now? And also maybe if you've seen any lower demand from newbuilt residential, et cetera?

Yes. Sure. I mean I think overall market, as I said, is solid, and we continue to take new orders and continue to constantly work with our order backlog. And I think also what we see today is that you only see the order backlog, you don't see the service. So I mean on top of this, you also have our service business that is not included in these numbers, which is also a growing percentage of our sales. So I think we still see strong demand in the market. As mentioned, I think the only thing where we see a weakening is in residential. However, that is not a big part of our business. And a lot of our residential projects are ongoing and quite booked for quite some time. So I think there's not a big risk in that area. However, we don't see demand picking up anytime soon in that. But that's a good thing with the installation business. We can change. So I mean, if you're an electrical installer, okay, you might be used to making a lot of apartments. However, you can also do other stuff as well. So to us, this is not a super big issue.

Okay. Great. And then a question on the margin side. I mean adjusting for a reversal of purchase price consideration, et cetera, I think you did 7.9% margin in Q4 and you have a target of reaching 8%. And usually, Q4 is the strongest quarter on a margin -- on a quarterly basis, the strongest margin quarter. How should we see the margin developing here going forward? Do you think that you could reach 8% margin already in 2023? Or what do you expect?

We don't guide -- give out guidance on the future, whatever I can say is that if you compare like-for-like for Q4 compared to last year, we were able to go, like you said, to 7.9% compared to 7.1% last quarter actually, if you deduct the AFA health insurance, I mean, we are on the right track and I mean the target is 8% and I am a competitive guy, and so is the rest of the management team. So I mean, we will do everything we can. And I think, as I mentioned also on the call, I mean, our focus is to improve profitability in 2023. However, we see it is a little bit tougher market than maybe compared to '20 and 2019. So I mean -- but we will -- the target is there and it's there that we want to reach it and go above it. So...

Good. And then just on the seasonality. I think everyone is a bit surprised on the strong sales there. And I think that industry -- your industrial customers are a bit more seasonal or a bit more seasonal stronger maybe in Q4 compared to Q3. So just can you give us some kind of information regarding your new, let's say, seasonality effects in Instalco after growing so much in the industrial segment?

Sorry, can you repeat that question again?

Yes. That I think Q4 was very strong on the top line side. And I guess it's somewhat driven by that industrial -- the industrial segment are a bit more seasonal compared to the normal installation business. Is that correct? And can you maybe give some kind of how we should think going forward here if Q1 is a bit weak or how we should think about that?

No, I think that -- sorry, now I understand the question, sorry. So I think you're absolutely on the right track here that Q4 is typically a strongest quarter for us due to that a lot of projects needs to be finalized during Q4. People want to kind of say, finalize their project and say, spend their budget for the year. Then especially in the industry, it takes a little bit of time before project starts in the new year. So the industry typically kicks off a little bit later on, they set budgets and so forth, and then they kick off their projects maybe Q2, Q3, which Q1 is typically somewhat lower, how do you say, there's somewhat lower activity in the industry in the beginning of the year, but so to say, raise in the end of the year. So when we build an industrial segment that we're doing, I think you need as an investor to have a little bit more patience on that seasonality will maybe grow even a little bit larger than we have seen before due to that the industry is typically slower in the beginning of the year, but typically raises a little bit faster in the end of the year. Was that kind of a...

Yes, that was exactly what I was speaking for. So that's great. And then I just have a last question on Intec and if you could give us an update on how many consultants you have in Intec right now and maybe some kind of run rate on revenues would be helpful.

Yes. So they have roughly around 320 technical consultants. And let's say, around 150 of them are running at full capacity, so to say, and then the rest are, so to say, working their way up when it comes to utilization rates and so forth. So we're in a good pace. We're on the right track. We still have a lot of work to do, but we're still growing the business and building an organization to cope with the growth and so forth. So you might not see as faster growth as we had in '21 and beginning '22. But we're still growing our business. And we still see collaboration increases together with our companies. So the goal for 2023 is to build a strong and solid company within the technical consultants.

Sounds good and promising.

The next question comes from Johan Skoglund from DNB Markets.

Following up on the strong Q4 report, I have a few short questions as well. So organic sales growth that was strong. Could you please elaborate what was the rough split between price and volume here? And about how much do you think it can increase prices next year?

It's a good question. We don't have any way of calculating exactly since we are running 6,000 different projects, it is very hard to see kind of what type of price increase, what -- how much of the growth was price increases and how much was, so to say, solid organic growth. Unfortunately, we cannot cope and get that type of information out. However, we can see that our number of FTEs has grown on an organic basis. So it's at least a proof that the solid organic growth within these numbers, which is very comforting. And we are also seeing that we are able to push over price increases to end customers. So there is still a possibility to continue to that we haven't reached, so to say, the maximum level yet.

Okay. Perfect. And the next question is on net financial costs, which is up. Is this the expected run rate going into next year?

I think it depends, of course, on how much debt we put on the balance sheet. So if we continue our M&A journey in the same pace as we've done, we will probably need to borrow a little bit more money. So I guess costs will increase. If we take a somewhat slower approach, we will be still be able to do it with our cash that we generate in the business. So it has a little bit to do with the M&A effect. But I mean since we've taken on that during the year, I think you will have to, in your model, then expect a little bit overall higher costs going forward.

Okay. So interest rates are -- are they double or the triple? Or how should we think about that?

I mean, as almost everybody has -- I mean our bank agreement is that it's a floating agreement on the -- I think it's on the [ seaboard ]. So if that increases, our interest rate increases, but so to say, the margin to the banks is same.

It's Carl from Nordea. So I'm a bit curious to know more about your 2027 vision. And maybe if it's possible to sort of provide any more tangible financial sort of results from it and where you want to reach? And I mean, you mentioned the continued growth as one pillar. Is it possible to sort of give more flavor on focus areas by 2027 from an organic point of view, obviously, industry is one of them, but do you have any other sort of incremental new focus areas, which you could comment on? And also if you could shed some light on the M&A road map by 2027 and whether it includes an expansion outside of the Nordics.

Carl, I think that at the moment, we are not only discussing the road map yet. I think we launched it quite recently, and we want to kind of work towards it internally a bit further. However, as soon as we have something to discuss openly, we'll definitely do so. But at the moment, it is an internal document for us. What we can say is that we're building an organization now that is building up itself for growth to continue our growth. And as I mentioned before, short-term goals is to improve profitability and come back to the levels we have been at. So that's the short-term focus area. Looking long term, I think it is necessary to look into new geographies and maybe nearby businesses. So that is absolutely something that is in the road map for 2027.

Okay. Very good. And also a bit curious to know more about your strategy in Finland. I mean it's been struggling a bit for some time maybe due to the market. But what is your sort of view of the strategy? Is it to do as you did in Norway to maybe downsize the business? Or is it maybe to do the opposite building more of a critical mass, which you also done in Norway nowadays. Yes.

I think it is -- I mean, we've already started with this process in Finland. We have already downsized a few of the companies. We have closed one entity down. We have changed a bit of the [ manager ]. So it's an ongoing project in Finland as well. And I say we have quite high expectations of the new team in Finland. It's a new young hungry team in Finland. So I don't like to blame the market, but I'm going to do it anyway is that I think that if we see projects coming back, I think we have the right team in the right place with some fine-tuning and getting this new management team, both in our subsidiaries, but also, so to say, on Instalco lever for Finland, giving them a little bit more time, I think we have a solid business in Finland going forward. And I mean it has historically been very good for us. So it's -- this problem started basically during COVID.

Okay. Good. And also, you managed to release some working capital in the quarter, which is very nice to see. I mean, however, from a historical point of view, I mean, in my book, at least working capital is still a bit elevated. I mean, what measures are you implementing to sort of take it down? And should we expect it to gradually come down [ maybe you're ] entering or even further entering first half, of course, acknowledge that the industrial installation is, of course, impacting given our prepayments in that business?

I think this is absolutely an area where we focus on and we follow up much more closely now and Christina is doing a good job on putting the focus back to working capital. And as I've discussed before with a lot of you guys is that historically, cash was free. Now it's not. So this is also becoming a more important area for our subsidiaries. They understand that the cost of capital has gone up and that they need to also help us, so to say, in a larger extent on keeping this working capital at a minimum level. So this is absolutely a focus area. We will try to push on releasing even more working capital. However, like you say, our focus on going into the installation business within the industry is putting some pressure on working capital due to payment terms and that type of contracts that are basically being used in the installation business when it comes to the industry. So it's putting a bit of pressure on us. However, we focus on it and try to keep it at the minimum.

And the final one from my side is back at the technical consultants. You said that 150 is running at full capacity of 320 consultants. If you look at those 150 running at full capacity, what would you say is the margin level for those? And is it in line with your ambition when you launched the initiative?

Yes, absolutely. I think they are -- we see that these technical consultants that are running within our business and have good utilization, they are on a, how should I say, the market level when it comes to profitability.

And on the sort of remaining 150, will you give it some time in order to sort of or give them the chance to get up to full speed? Or should we continue to see you taking out a few consultants, maybe some is not working in.

Yes. I mean that's always an ongoing process, of course, if you recruit that many people that fast, there is always some, so to say, that slipped through the net. So we are also always trying to look at effective work on, so to say, making them more profitable. And here, like I said before, 2023, the focus for the technical consultants is, of course, growth also, but it's also focusing on profitability, especially for these subsidiaries within Intec that has been with us for a year, 1.5 years or 2 years almost now. They need to focus on profitability and making sure that eventually, so to say, intake and pay for the growth themselves by the profitable consultants, so to say, paying for the newly employed or acquired consultants.

The next question comes from Markus Almerud from Penser Bank.

Yes. Markus here. A couple of questions left, I guess. Just trying to get a sense of where the markets are moving. You're talking a bit about it. Residential is still difficult and the other markets are still fine. But if you try to talk a little bit about direction also for the residential maybe sequentially and going into 2023, what you're seeing on the ground compared to Q3 and through Q4. Are they kind of flattish or deteriorating or moving a little bit up?

I mean when you look at residential, I think you have to understand that for us, new construction residential is basically 10% -- maybe 10% of our turnover. So it's not kind of the most key focus area for us. But with that said, the companies that are working solidly on installing for new construction, those order books are full for 2023. So they have -- they are running at full capacity at the moment because those projects that we are working on now, those, so to say, started 1 year, 1.5 years ago. So those are impossible to stop. So those are running. So we are running at full capacity when it comes to new build apartments. However, they are, of course, looking into further in the future of how much has started being produced in 2022. And there, we can see a drop, meaning that we can anticipate this up until maybe 2024 and try to take measures accordingly.

And outside of residential, the other 90% directionally?

Sorry, once again?

Directionally.

Directionally, I think that -- I mean, we don't see a change. I mean, we are constantly taking new projects. We don't see any big shifts yet when it comes to kind of projects. We have a full order book for the near term. So we have a strong outlook going forward as well so far.

Okay. Good to hear. And then my second question is on sick leave. I think around me at least I've seen a lot of -- I mean, not like last year, but still high levels of sick leave. Is this also something that you're seeing? Or are you managing that or not seeing it?

I think like for the overall year, it is higher than usual due to that, we had higher -- very high sick leave in the beginning of the year. You sometimes forget that in beginning of 2022, it seems very far away, but then we were in the middle of the pandemic. But looking at Q4 at the moment, we are basically at normal -- running at normal levels. Then maybe the site overall has shifted a little bit. So we might not get back to the real lower numbers that we had some years ago because society has changed a little bit on, I would say, but overall, I think coming back.

And looking into Q1, what have you seen?

I mean Q1, we have basically seen January and January is typically not a great month for installation. As I said, a lot of the run is towards the end of the year. And then a lot in construction is closed down during Christmas and also beginning of the year. So it's hard to tell anything like from what we know so far.

Okay. Fair enough. My final question is on the impact from the acquisitions, particularly in Norway. And how much -- we talked a little bit before about the scale and the scale, particularly in Norway, you've been a little bit too small and then you're focused on acquisitions in that area. And then we've seen, especially with the large acquisition you announced the other day, it's a little bit in a different area. But how much does it mean to kind of get the size up overall in that region for building profitability.

I think one of the key things here is that, for instance, if you take the example of the acquisition we did recently is Lysteknikk, which we signed and it's not close. It's how do you say in English, it's under competition analysis or not how to say it. But however, I think it's important to get a few of these companies in with really good profitability that can also coach-help other parts of the group on how they work to get more best practice within the group and especially also get a few of these somewhat larger ones in the group is also good to give a solid foundation within the different areas as well. So Lysteknikk, I mean the typical electrical installation company, they have a somewhat more focus on like data centers and so forth, which is, of course, an exciting field to be in these days. So I mean, we'll continue making good acquisitions. As I said, we look for quality companies within the installation business. We'll continue to do that. Then how much impact is hard to say. However, it's always good to get profitable companies within the group because they are doing something right. And if we can learn from that, that can, of course, improve our overall margin as well. But it's impossible to say how much that can affect.

The next question comes from Karl Bokvist from ABG Sundal Collier.

Just a couple of more technical follow-up perhaps more towards Christina, but I just noticed that, for example, PPA amortization is down compared to the level we saw in Q3, and we discussed net financials, but then also on the cash flow, there seems to be no payments to earn-outs of already made acquisitions in the quarter. So just a couple of questions around how should we think about potential payments of already made acquisitions in 2023? And also how we should think about the level of depreciation going forward since it seems to be a bit down compared to the Q3 level.

Yes. So thank you for the question. As you mentioned, we have a little bit lower depreciation of acquired intangible assets this quarter, and it -- you can be prepared that it can vary a little bit over the quarters. But in the long run, we have today a larger portion of these kind of assets related to the acquisition. So you can expect the growth to continue with these amortization in line with how we make the acquisitions, but it can still vary a little bit between the quarters.

Understood. And then the earn-out payments, at least when I try to look at it, it seems like there have been no payments of earn-outs either in Q3 or Q4, but how should one think of kind of like a payment level in 2023?

If I get your question correctly, is that the reason for that is that we don't pay out any earn-outs in Q3 and Q4 because you get earn-out payments once your annual report is completed. So there hasn't been any earn-out payments during Q3, if I understand correctly, because none of us [indiscernible] have made any sort of say, closed their books, they are closing their books as we speak. And that's when we start paying out if they reach the target, that's when we start paying out the earn-out payment. So they will come in Q1. If you want to talk about cash out, so to say.

Yes. That's helpful. And then for the full year, it was [ SEK 170 million ] roughly. Do you think that amount should we -- I mean, based on the current portfolio, should we assume that, that amount will be a bit higher in 2023?

Good question. I think that looking at the overall portfolio, I mean, since we've acquired a lot of companies in 2020 and 2021 and also in 2022, a lot of them -- so we are running a quite high portion of earn-out, so to say, due to that we have acquired a lot of companies. So I guess you could calculate at least with a similar or maybe a little bit increased is my on top of my head, but don't, so to say, hang me if I'm wrong, but -- this is my very quick analysis.

Yes, the ballpark figure, that's helpful.

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

We have to summarize a few comments or questions from the webcast. One is, again, on the technical consultant side, is it possible to say how much or how little the contribution was negative or positive during the quarter from technical consultant.

No we don't disclose that, no.

And the other question was, is it possible to comment on if there was a factor or if you can comment on that from price increases, if that has affected the organic growth or of course, it has, but any numbers on that?

No, as I said before, I mean, we are running what some 6,000 projects, and it's impossible to recalculate all the 6,000 projects to get out a specific number on how much price increases were in the organic. However, we can see that we are growing our business data, we can look at the FTEs in subsidiaries. And we also see that the price increase was definitely not 10.7%, then how much part of it that's unfortunately not something we can disclose or recalculate. So with that, I don't -- there's no further questions. So we say thank you, everyone, for listening. Thank you for the good questions. Now you know as much as we know about the company. So with that, thank you very much, and have a great day, everyone.