Inwido AB (publ) (INWI) Earnings Call Transcript & Summary

Hello, and welcome to today's webcast where Inwido will present its financial results for the third quarter of 2026. Joining us today are President and CEO, Fredrik Meuller; as well as CFO and Deputy CEO, Peter Welin. At the end of the call, we will have a Q&A. [Operator Instructions] With that said, I will hand over to you, Fredrik and Peter.

Thank you very much. Good morning, everyone, and a warm welcome to this webcast covering Inwido's third quarter of 2026. My name is Fredrik Meuller. I'm the President and CEO of Inwido. And next to me here in Stockholm today is Peter Welin, our Group CFO and Deputy CEO. We will follow the schedule in today's call, starting off with key group messages, followed by a deep dive into the business areas and our financials. And then as usual, towards the end, we will wrap up with an outlook and a Q&A session. As usual, the presentation material is also available on our website, inwido.com. The strengthened market conditions that we saw already in Q2 largely followed suit also in the months of July through September. There are signs of light on the horizon, best exemplified by the Scandinavian market and the project segment. Recovery is so far not fast, but it is happening. Also, at last, the Green Deal is starting to be implemented across the EU, offering some tailwind to the energy efficiency theme and order intake. It's of course, no surprise to anyone that the Middle East conflict has continued to put a wet blanket on the supply chain, in particular, and on demand in general, which is also now driving some fears about inflation and interest rates going up -- going forward. Looking at M&A, the M&A market has been impacted as well. Valuations are a bit trickier at the moment as many year-to-date figures are softer for many of the targets that we're looking at, while at the same time, sellers' expectations on valuation can still be quite high. As for Inwido, well, we continue to improve our performance, growing organically in both order intake and in sales, and we reached our highest operating EBITA to date for a single quarter. I think it's a sign of strength also to record organic growth in the order intake as well as a higher operating EBITA margin across all four of our business areas. Three of them also grew sales organically in the quarter. We have stuck to our recipe of profitability before growth, where the key ingredients are volume, pricing, operational efficiency, and cost control. And if you think that sounds simple, it's everything but, because the competition out there still remains razor sharp. Last but not least, our cash flow was strong once again, reducing our gearing and meaning in turn that we can be proactive and opportunistic when acquisition opportunities do arise. We've had reasons for some extra celebrations this past quarter. I'm very proud of these milestone achievements in three dimensions across the entire value chain actually. First, Inwido had one of the highest upgrades in Nordea's ESG rating to single A. Second, Spar Vinduer, our e-commerce business in Denmark, exceeded some 10,000 Trustpilot reviews. And worth noting is that more than 90% of those had a score of 4 or 5. And third, Elitfonster that was recognized for its professional sourcing and manufacturing work with aluminum. So well done, everyone. Keep it up. Now it's time to look at our four business areas. So I'll go through them 1 by 1. We have 1 slide on each. And in order of size, meaning that we will start with Scandinavia. This was again a strong quarter by Mads and his team, building on the momentum from Q2 and growing top line organically while also seeing a healthy rise to the bottom line. I think it's great to see that the operating EBITA margin is now close to 17%. Sentiment is improving in Denmark and Sweden and so far mostly within the project segment. Norway is also doing a bit better. We did get some tailwind from something called Villaeffekten in Sweden, which is a newly launched government incentive program for energy efficiency renovation, where some SEK 300 million has been allocated per annum up until 2030. And I think this is a concrete positive example of the much-needed EPBD directive now beginning to be rolled out in all of the EU member states. Moving on to BA West. As you can see, Jonna's business is growing rapidly. Integration of our newly acquired entities is proceeding nicely, including Sovereign Group that we took on in Q2. Profit climbed higher in both absolute and relative terms, driven by Ireland and Scotland in particular. In England, the consumer segment remains tough with both consolidation and price pressure prevailing still. Worth noting though is that both energy awareness and renovation of social housing is on the rise. And I think the new Labor government looks rather promising actually. Antti and his team keep fighting the fierce headwind blowing across BA East, primarily in Finland, where everyone is lacking volume, possibly with the exception of the project segment. Order intake, profit, and margin were all up, and we saw a nice contribution coming from our recent acquisitions. Market-wise, Poland and Croatia are quite strong with Slovenia a bit softish from the recent government change. And to conclude this BA run-through, let's turn our focus on BA e-Commerce. I know I'm beginning to sound like an old vinyl record, but Bo and his team keep pushing, raising profitability in yet another quarter, reaching 10% in Q3 and almost 11% on a latest 12-month basis, and with a strong organic top line growth as well. And here, we're seeing a successful mix of volume, pricing, efficiencies, and cost management. And now for more flavor on Inwido's consolidated Q3 financials, I'm handing over to you, Peter, please.

Thank you so much, Fredrik. We start with this page, the income statement. To the left, you can see the development in the third quarter. In the middle, you can see the year-to-date, and to the right, latest 12 months as well as full year for last year. Starting with the quarter, sales is plus 22%. Organically, it's plus 5%. We have a negative net impact from increased material prices in the quarter, and this has then been offset by improved volume and improved operational efficiency, and thereby, the gross margin is more or less on the same level as last year. The operating EBITA margin has been improved from 12% to 12.3%. And then we have also an efficiency when it comes to expenses and thereby an improved operating EBITA margin. The operating EBITA has been improved by 25% from SEK 268 million last year to SEK 334 million this year, a record so far for the quarter. Looking further down the income statement, we can see that profit after tax is plus 36% compared to last year, and the earnings per share is plus 32% compared to last year, SEK 2.65 to SEK 3.49. Looking at the year-to-date, January to September, sales is plus 15%. Organically, it's plus 2%. So we have now a growth -- organic growth in the year after a slow start in Q1. The operating EBITDA margin is above last year, and the operating EBITA margin is on the same level as last year, 9.8%. However, in SEK, we have an improvement by 15% or more or less SEK 100 million compared to last year. Further down in the income statement, we can see that profit after tax is plus 21% compared to last year, and the earnings per share has been improved by SEK 1.07 from SEK 6 to SEK 7.07. For the latest 12 months, we are just below SEK 10 billion or SEK 9.968 billion. We have an operating EBITA margin of 10.4%, and the earnings per share is just below SEK 10 -- SEK 9.96. On this page, we can see the development in the third quarter from Q3 last year to Q3 this year. To the left, you can see the development on sales then divided between the different business areas. And to the right, we can see the development in operating EBITA. All business areas have improved in the quarter, both in -- when it comes to results, both in sales as well as in margins. All business areas has a growth in the quarter, but not organic growth. Inwido East has a negative organic growth in the quarter. And for the group in total, we have then reached the highest operating EBITA so far in the single quarter with an operating EBITA result of SEK 334 million. This graph is showing the sales as well as operating EBITA margin in the third quarter from 2020 until 2026. The result in the third quarter was in SEK. We had the highest operating EBITA ever in SEK, but not the highest margin ever. However, the margin has been improved compared to last year, 12.3% this year compared to 12% last year. We have made acquisitions, and we have six acquisitions this year in the third quarter, which we didn't own in Q3 last year. All acquisitions, they have developed well and had good contributions to the profit. However, the combined profitability is below the rest of the group, and thereby, they have diluted the operating EBITA margin in the quarter when comparing to last year. So excluding acquisitions, we have a higher operating EBITA margin than the 12.3%. On this page, we are showing the cash flow before financing activities, excluding financial assets and acquisitions. And to the right, you can see the development when it comes to our CapEx. We have an improved cash flow in the quarter. We have a higher contribution from operating activities and improved results and also lower tax payments in the quarter this year compared to last year. Working capital has increased more this year compared to last year, and we have somewhat higher CapEx this year compared to last year. But in total, we have an improved cash flow of SEK 56 million this year compared to Q3 last year. And the improved cash flow, it means that we have then reduced the net debt. So this page is showing the net debt and the net debt in relation to operating EBITDA from Q3 2023 until Q3 2026. We can see that we have a good leverage. The leverage remains healthy, and we still have headroom when it comes to M&A. Net debt in relation to operating EBITDA is 1.9x, excluding IFRS 16. And if we then calculate on a pro forma basis from the latest acquisitions during -- in this year and last year, we are 1.8x. When it comes to net debt, including IFRS 16, we are at 2.1x. So still good headroom compared to the covenant and also good headroom compared to the target of maximum 2.5x. Return on operating capital has also been improved. This page is showing the return on operating capital development from Q3 2022 until Q3 2026. We have improved the return on operating capital during the last 2 quarters from 11.7% in Q1 to 12% in Q3. We can see an increased operating capital, and the increase is related to acquisitions during the last 12 months. Looking at the order intake, the total order intake has been improved in the quarter. Organic order intake of the group is plus 7%, and we have growth in all business areas. Scandinavia, plus 7%; East plus 4%; West plus 10%; and e-Commerce plus 6%. The growth is mainly within project markets, but the Consumer segment has also slightly growth of 1% in the quarter. And thanks to the improved order intake and acquisitions, we have then reached the highest order backlog ever with an order backlog of close to SEK 3.5 billion end of September this year. If we then divide the order intake a little bit differently, and this page is then showing the order intake for each market, so not this year, but markets. And this is then showing the organic order intake for the consumer market. The highest -- largest sales of consumer markets of Inwido is Denmark, stands for 40% of the consumer sales, followed by Sweden with 24%. So in total, they achieved 64%. And this graph is then showing the organic order intake development compared to previous years from Q3 2025 until Q3 2026. And as you can see, we still have a growth, or we have a growth in Denmark, and we have a growth in Sweden in the quarter. Sweden is then followed by U.K., U.K. stands for 15% of consumer markets, and then Finland, 7% of consumer market. And combined, those two have 22% of our consumer sales latest 12 months. And here, we have continued decline. So the consumer market in U.K. and in consumer market in Finland is still a challenging market. And as you can see, the percentage is actually more decline in Q3 compared to Q2. So still a challenging market for U.K. and Finland. And then the rest is also slightly growth. The rest stands at 14%. And the rest, that is Norway, Ireland, Germany, Poland, Slovenia, and Croatia. If you then look at the same thing for the project markets, and then I must say the project market is much more volatile compared to the consumer markets. On previous page, when I showed the consumer market, the scale of the graph was up to 20%. Here is a scale up to 300%, just indicating that there is a higher volatility in the project market when it comes to the order intake, not when it comes to sales, it is then less to order intake. Finland is the largest project market of Inwido, stands for 30%, or second largest 30%. U.K., together with Ireland, is the largest market. So Finland has -- there we have a slightly growth in the quarter, and we have the highest growth in Ireland in percentage. So in total, a growth of 18% for the project market in the quarter compared to last year. Now handing over back to Fredrik.

Thank you very much, Peter. It's time to round things off. So let me reiterate today's key messages. Green is good, as you know. And here, we listed several green tick marks for Q3 that I'm really, really proud of. We do see a stronger performance at both group and BA level. We see it across both the top and bottom lines of our P&L, and we also see a better cash flow and a healthy balance sheet. Market sentiment is gradually improving, starting with Scandinavia and with the project segment that Peter just talked about. Yes, recovery will take time, but the Ferrari that we've built is picking up speed, which is kind of exciting. So if we look ahead then, there is now light at the end of the tunnel. We don't think it's an oncoming train this time around. So we're cautiously optimistic about our near- to medium-term prospects. We do stick to our clear game plan with priorities, including once again, first of all, managing the Middle East situation, i.e., securing the supply chain together with disciplined pricing and cost containment, and then pursuing selective M&A. As shown so far this year, we are ready for whatever scenario the market has in store for us. So with that said, Peter and I would now be delighted to answer any of the questions that you may have. Please go ahead.

We will now open up for a Q&A session. [Operator Instructions] The first caller is Albin Nordmark from SB1. The word is yours. Go ahead, please. Please unmute your line. [Operator Instructions]

Can you hear me now?

Yes. We can hear you.

Okay. Perfect. Some technical issues here. I actually have one question on Eastern Europe. Maybe you mentioned this, I didn't hear all of the call, but Eastern Europe gross margin down as it has been tough markets, but then you managed to hold the EBITA margin stable year-over-year. So maybe if you can dive into this and give us the reason behind it.

Well, generally speaking, yes, it's tough. We have continued to look at the cost base to prune it even further. Our largest entity in Finland is, given the circumstances, still doing quite okay. They have also raised prices a bit, of course, primarily linked to the situation in the Middle East. So it's a combination of those factors really. And where we have seen volume coming into the factories, again, we get the efficiency upside. So that's, I think, really well managed by them, and they keep fighting. The outlook is -- I mean, it's still challenging. We don't see any near-term at least improvements on the horizon for Finland in particular.

And then we're also somewhat dilutive when it comes to gross margins from the acquisitions. We have made acquisitions in Slovenia and Croatia. And looking at the adjusted gross margins, there are some dilution there when comparing to last year.

All right. And then you mentioned something about the underlying organic EBITA margin was better than reported. So what -- is there any of the acquired units that maybe didn't go as planned? Or is that just this normal dilution?

No. It's more normal dilution. I think most of them have gone just around plan or very close to the plan from acquisitions. But the margins on the acquired companies combined are lower compared to the rest of the group when it comes to the third quarter. Then, of course, some acquisitions have higher margins and some are lower, but the combined margin is lower compared to the rest of the group. So we are somewhat diluted for the group, but also when it comes to for some as well. And then look at the gross margin development for East, there is a dilution from acquisitions.

Okay. And then if we just -- maybe the final one on [indiscernible] or a final one from my side. So order intake positive mostly projects. Can you split in countries? Is this mainly Finland? Or are the order intake positive in Finland? And also the order intake since its projects, how much like is in a year? Or can you give us some sense of how long that the order book is for that order intake that you have?

The order intake is positive. The organic order intake is positive, meaning we have then excluded the order intake for the latest acquisitions. So Slovenia and Croatia is not included in organic order intake. Poland, there is more or less the same. It's a little bit higher order intake compared to the Finland. So the order intake improvement for East is mainly then related to Finland and then mainly then related to the project market where consumer market is still challenging. The orders we are taking now in Q3 will be -- some will be delivered end of this year, but it's more or less then going into 2027.

Maybe just to add something on the acquisitions that we made over the last year. I think the starting point for all of them is a little bit different. In some cases, of course, they have not been used to even producing a monthly report and have perhaps not been used to quite the extraordinary market conditions linked to the Middle East conflict. So I think they're all following plan more or less. Long term, they are, for sure, the right deals that we've done at the right multiples as well. And it already goes to show that we're up there when it comes to helping them with primarily sourcing, the purchasing side of things plus operational efficiency and the financial controlling. It just takes a while to get the full upside potential pursued here. So we're not there yet, but it looks good.

Okay. Nice for them to be under the Inwido umbrella now with better times.

We will now move on to the next caller, which is Linus from Nordea.

Can you hear me... Sorry, a bit of technical issues here on my end as well as Albin. Just starting off here on e-commerce, you have had a pretty nice margin development during the last quarters. And I'm just wondering here, where is the ceiling on R12 rolling basis, you're at almost 11%, right?

The sky is the limit. No, but the relevant question. I think what we have created here is a different animal compared to where we were just a year, 1.5 years ago. And that bodes really well also for the future because we must not forget that the volumes that they are seeing are far from normalized yet. But when they do get the volumes in, and as you know, they have three factories in Estonia, Poland, and Romania, then they see the margins improving. And on top of that, they have managed their -- what we refer to as costs, sales, marketing, admin, and development costs really, really well. And those are -- so the figures that we see today are actually linked to actions that they took again a year, 1.5 years ago, where they also embrace a lot of the new exciting technology in, for example, marketing. And on top of that, last but not least, they have been really, really good at working with value-based pricing. So of course, it's something we're looking at. So far, so good. I think they have quite a bright future. They're doing a really good job. We're actually also looking at bolt-on acquisitions in this field, something we haven't done for quite some time, but that could be exciting entering in some new territory. So yes, let's not forget that we are the only actor in this field making money. If you look at, for example, one of our larger Danish competitors, they made a loss of EUR 3.7 million in 2025. And here, we are at 10% in the quarter, almost 11% on a last 12-month basis. So -- no, we keep pushing. We haven't set a specific target for them, but it's obvious, of course, that when they get the volumes in, they make more money. So hopefully, they can continue.

All right. So hopefully, more to come then with recovering volumes then. Another question, just a follow-up on Albin's question here on the margin and perhaps underlying margin being a bit stronger than reported. Do you have a number on how much the acquisitions diluted the margin?

Slightly -- so we are slightly above this 12.3%. So we are not on the levels that we were 2 or 3 years ago, but we are above the levels of the 12.3%.

All right. Slight negative.

Just you're saying underlying margin compared to reported. The acquisitions are included now. So the underlying and reported is the same thing. So it's no extraordinary items, something like that in this statement. It's just stating that when we acquire companies, and this has been in the past -- has always been in the past, when we acquire companies, we are short-term diluted because the margins of the acquisitions are lower compared to the rest of the group. Then we work when it comes to pricing, we work when it comes to synergies in materials, our purchase, and we work with operations. And over time, we are improving the margins. So we have the same margin on acquisitions as the rest of the group in general. So this is normal for the business. So it's nothing unusual. There's no extraordinary things here. So it's just stating that when we acquire companies, the margin of acquisitions are lower compared to the rest of the group.

Yes. Got it. And a question here on M&A and the pipeline forward. You mentioned solar shading companies in the report as well. Could you perhaps elaborate on that and perhaps, I mean, the size of some of the targets in the pipe?

Yes, sure. As I said, I think I stated it already in our Q2 report that it's proven a little bit trickier in the last few months to get to a handshake on valuation. It's not for lack of targets, and we have quite a few interesting discussions ongoing that makes me cautiously optimistic about the next 3 to 6 months where we can hopefully announce a signing or two. But it is tricky because many of the targets that we're looking at have had a so-so year-to-date performance. And at the same time, they point towards a fantastic hockey stick going forward and meaning that their valuation expectations are on the high side as well. We have been, particularly over the last few weeks, flooded by teasers, i.e., prospective cases from all around, but primarily from the U.K. but it's on the same theme as before, i.e., many of them are in financial difficulties and then not something for us. The targets, the discussions that we are having are covering both existing and new markets. Again, the sweet spot for us these days is somewhere turnover-wise, between EUR 30 million and EUR 60 million, and that's where these targets are. On solar shading, as I said before, the companies that we would be looking at for some kind of entry into that segment are typically a little bit bigger, but we would still be looking for a majority stake, but they can be in the vicinity of EUR 100 million to EUR 200 million in size, but of course, also typically more profitable than the Inwido average. Some of them are in the 15% to 20% plus EBITDA margin category. So we're working on that. And again, I think it looks quite promising. I think it also goes to show that the Inwido model is very attractive. So quite a few are knocking on our door and want to involve us in various processes. But we are, for many reasons, selective and cautious.

All right. Got it. That's clear and exciting also. And just a question here ahead of Q4. I mean, as you stated, organic order intake was positive across the board. How do you reason when it comes to Q4 and perhaps price cost effects also?