Sitowise Group Oyj · OMXHEX:SITOWS
Sitowise Group Oyj — Non-Deal Roadshow (November 2023)
61 slides from Sitowise Group Oyj's roadshow presentation, November 2023
Slide 1: Redefining smartness in cities
Redefining smartness in cities Sitowise roadshow presentation November 2023 H E I K KI H A A S M A A , C E O HANNA MASALA, CFO
Slide 2: Our talking points today
Our talking points today 01 02 03 04 Sitowise is a Q3 / Outlook Appendix: leading player Jan-Sep 2023 Governance Business Areas with competitive performance advantages and clear in detail strategic direction
Slide 3: Sitowise in brief
SITOWISE IN BRIEF 1 Awith leading player in a growing technical consulting market clear strategic targets and implementation plans 2 Broad technical consulting service offering with unique opportunities to combine capabilities in different business areas 3 Broad customer base that provides a solid p
Slide 4: Redefining smartness in cities and maintaining our industry leading profitability
Redefining smartness in cities and maintaining our industry leading profitability 4
Slide 5: Nordic expert in technical consulting with a strong focus on digitality
Nordic expert in technical consulting with a strong focus on digitality Four established Business Areas Q3 2023 net sales breakdown Sweden by Business Area Buildings Design and consulting services in the The services cover the entire life cycle of following areas: structural engineering, 19 % buildi
Slide 6: Company history and milestones
SITO Oy Entry to Successful established established Sweden IPO 1976 2017 2018 2019 2020 2021 2022 2023 1984 2010 Over 200M€ net Wise Group Digital Solutions Comprehensive sales and industry established expansion service offering leading profitability Insinööritoimisto Ylimäki & Tinkanen Oy founded A
Slide 7: We have steady growth profile…
We have steady growth profile… NET SALES EUR 204.4 million Strong track record of …with industry leading net sales growth… profitability ADJ. EBITA-% +13% 12.9% 10.0% 216 11.8% 204 11.5% 179 10.8% 10.0% 160 9.2% 143 126 OVER 21 21 20 20 2,200 experts 15 16 2018 2019 2020 2021 2022 LTM 2018 2019 2020
Slide 8: …and we are the most efficient company in our industry
…and we are the most efficient company in our industry Avg. EBITA margin (adj.) 2018-2022 Sitowise’s long-term financial target 13% 15% Sitowise revenue Sitowise CAGR 2018-2022 Peer 7 10% Peer 1 Peer 2 5% Peer 6 Peer 4 Peer 5 11.4% Peer 3 Sitowise adj. EBITA margin 0% Avg. 2018-2022 -10% -5% 0% 5% 1
Slide 9: We strive to provide the best value for our clients
We strive to provide the best value for our clients Broad and diverse Sitowise is client base We help clients to differentiate a pioneer Net sales by Client category and build innovative solutions 53% 25% 29% Product / Would re-select We help clients to succeed and service quality Sitowise reach the
Slide 10: Megatrends continue to drive demand for technical consulting
Megatrends continue to drive demand for technical consulting URBANISATION MAINTENANCE BACKLOG DIGITALISATION AND CLIMATE CHANGE SECURITY OF THE BUILT THE INCREASE OF THE ENVIRONMENT AMOUNT OF DATA Urbanisation will increase Climate change will force Security threats affect the the demand for new cit
Slide 11: Sustainability at Sitowise
Sustainability at Sitowise In our sustainability program for 2025, we are guided by the Sitowise strategy and its three pillars: most sustainable, most innovative and most effective. The program has four goals: We are carbon We are the most equal We aim for We actively contribute to neutral in 2025
Slide 12: Sitowise strategy 2025
Sitowise strategy 2025 ratios We understand our clients The most innovative Weworkas “)x a , a one team al 0 é OUR PURPOSE » Ya) Wetrust . d each other han Empowering 2°" The most passionate experts “sustainable to solve complex : challenges. WE WILL FOCUS ON > + Creating new smart + Becoming a thou
Slide 13: Sitowise business KPIs
Sitowise business The most The most The most innovative sustainable efficient KPIs Sitowise is forerunner in new Sitowise is the most sustainable partner Sitowise reliability as a partner innovative solutions 59% 53% ≥60% 3.5 3.5 ≥4.0 4.2 4.2 4.3 4.3 ≥4.4 45% 48% Client > n/a n/a 19 20 21 22 25 19 2
Slide 14: M&A principles give focus in target pipeline management
M&A principles give focus in target Way of working in acquisitions pipeline management Co-operation between the 1 Alignment with Sitowise strategy business and group experts 2 Conservative valuation, Attractive financial profile payment consisting of cash and own shares 3 Good cultural fit Relativel
Slide 15: Our talking points today
Our talking points today 01 02 03 04 Sitowise is a Q3 / Outlook Appendix: leading player Jan-Sep 2023 Governance Business Areas with competitive performance advantages and clear in detail strategic direction
Slide 16: Strong performance in Infra and Digi, challenges in Buildings and Sweden
Strong performance in Infra and Digi, challenges in Buildings and Sweden What went well?_ What were the challenges? • Infra and Digital Solutions continued • Market headwinds their strong performance • Continued market deterioration in • Adaptation to current market situation Buildings in Buildings
Slide 17: Q3 Key figures
Q3 Key figures €45.6m -1% +1% Net sales Net sales growth Organic growth (Adjusted for currency and calendar effects ) €3.5m 7.6% €165m Adjusted EBITA Adjusted EBITA Order book margin (%) 17
Slide 18: Transition towards a more balanced business portfolio
Transition towards a more balanced business portfolio Q3/2022 Q3/2023 19 % 19 % 34 % The shares of Infra and 40 % Digi increasing, while Share of net sales share of Buildings 12 % 15 % by Business Area declining. 29 % 32 % 16 % 18 % Share of FTEs in Number of FTEs significantly down in Business Area
Slide 19: Net sales at the level of the comparison period
Net sales at the level of the comparison period Net sales Net sales growth and Factors impacting Q3 EUR million organic growth, %* % + Organic growth clearly ahead of 19% the market in Infra and in Digi 15% 16% - Challenging market in Buildings 14% 14% Net sales growth target >10 11% % - In Sweden r
Slide 20: Order book still at a good level
Order book still at a good level Order book Examples of recent tenders won EUR million -5% 181 172 169 175 176 175 162 167 2. Increasing number of cross Business Area tenders in pipeline Framework agreement with Service agreement with Neoen on environmental Solkompaniet Sverige AB on surveys and per
Slide 21: Market environment and internal initiatives reflected in utilization rate
Market environment and internal initiatives reflected in utilization rate FTE Sickness absences Utilization rate -0.6%-point 76.3% 76.0% +1% 4.0% 75.7% 76.0% 76.8% 74.4% 74.7% 3.6% 2 223 2 213 2 232 2 219 2 236 2.205 3.2% 2 034 2 054 2.9% 2.9% 2.6% 2.3% 1977 1977 1987 2018 1989 1902 1817 1745 Q421 Q
Slide 22: Weak performance in Buildings and Sweden key drivers for the decline in adjusted EBITA margin
Weak performance in Buildings and Sweden key drivers for the decline in adjusted EBITA margin Profitability Key factors impacting Q3 M€ % 11.8% 12 7.0 11.1% 10.6% 10.7% 1. 2. 10 9.5% 6.0 9.2% 8.0% 7.6% 5.0 Continued deterioration of Weaker than expected 8 the underlying market in performance in Swed
Slide 23: Seasonally weak cashflow further pressed by lower profitability
Seasonally weak cashflow further pressed by lower profitability – Net debt and leverage typically decline towards year-end Cash flow from Net debt Leverage operating activities EUR million Net debt / Adjusted EBITDA multiple Before financial items and taxes, EUR million 62.9 62.2 2.9x 2.9x 13.1 58.3
Slide 24: January-September 2023: Net sales up by 7.7%, adjusted EBITA margin 9.2%
January-September 2023: Net sales up by 7.7%, adjusted EBITA margin 9.2% • Market environment continued to be mixed. • Net sales up by 7.7%* to EUR 158.1 (146.8) million, organic growth was 3%. • Adjusted EBITA totaled EUR 14.6 (15.1) million. Adjusted EBITA margin 9.2% (10.3). • Operating profit in
Slide 25: YTD performance ahead of comparison period
YTD performance ahead of comparison period EUR million Q3 2023 Q3 2022 Change 1-9 2023 1-9 2022 Change 2022 JAN-SEP Net sales 45,6 45,9 -0,7 % 158,1 146,8 7,7 % 204,4 NET SALES EBITA, adjusted 3,5 4,9 -29,5 % 14,6 15,1 -3,1 % 20,4 % of net sales 7,6 % 10,7 % 9,2 % 10,3 % 10,0 % 8% EBITA 3,3 4,5 -28,
Slide 26: Our talking points today
Our talking points today 01 02 03 04 Sitowise is a Q3 / Outlook Appendix: leading player Jan-Sep 2023 Governance Business Areas with competitive performance advantages and clear in detail strategic direction
Slide 27: Outlook for 2023
Outlook for 2023 Guidance for 2023 • The stable long-term growth in the demand for (updated on 19 October) Sitowise’s services is supported by megatrends. • Several uncertainties in the market. Sitowise Group estimates that its net sales in year 2023 in euros will increase compared to 2022, and • Ma
Slide 28: Long-term financial targets
Long-term financial targets Growth Profitability Leverage Annual net sales growth, Adjusted EBITA margin of at Net debt in relation to adjusted EBITDA including acquisitions, over least should not exceed 10% 12% 2.5x except temporarily in conjunction with acquisitions Dividend policy Sitowise target
Slide 29: Margin increase driven by growth in attractive sub-segments and further operational efficiencies
Margin increase driven by growth in attractive sub-segments and further operational efficiencies Operational efficiencies M&A • Sales excellence Organic • Smartest ways to work growth • Cost efficiency • M&A aligned with our • Value from data ≥12% strategic priorities • Focus on accelerating 9.9% •
Slide 30: Well diversified portfolio helps driving profitable growth in changing market
Well diversified portfolio helps driving profitable growth in changing market Growth Targeted outlook margin level Key drivers 2022-2025 2025 • Rebound in new build volumes • Energy repairs and renovation backlog Buildings • Increasing demand for special expertise and smart services Sustainable grow
Slide 31: Governance
Governance siTowise
Slide 32: Shareholders
Shareholders Owner sITows Capital Votes A Capital Verified # 1 Intera Partners Oy 5121573 14.36% = 14.36% 2023-10-27 Camis 2 Paradigm Capital AG 3975309 10.02% +=—-10.02% 2023-09-28 3 Lannebo Fonder 2,286,888 6.41% 6.41% 2023-09-30 © 60.2% Finland @ 19.3% Sweden 4 Handelsbanken Fonder 2,135,079 5.99
Slide 33: Management Team
Management Team Heikki Haasmaa Hanna Masala CEO (M.Sc. Eng.) CFO (M.Sc. Economics) In early 2022, Sitowise’s Board appointed Heikki Haasmaa as the new CEO of Hanna Masala has worked as Sitowise’s Chief Financial Officer since October the Group to lead company’s Nordic growth strategy. Haasmaa has ha
Slide 34: Board of Directors
Board of Directors Eero Heliövaara Petri Rignell (M.Sc. Eng., M.Sc. Econ.) Chairman of the Board (M.Sc. Eng.) – Board Member Prime Minister’s Office, Corporate Governance, Director General (2013– Kreate Oy, acting CEO (2016−2017). IVG Polar, CEO (2010−2012). 2017). SRV Group, CEO (2006−2009). Pohjol
Slide 35: Thank you!
Thank you! Contact us: ir@sitowise.com 35
Slide 36: Our talking points today
Our talking points today 01 02 03 04 Sitowise is a Q3 / Outlook Appendix: leading player Jan-Sep 2023 Governance Business Areas with competitive performance advantages and clear in detail strategic direction
Slide 37: A uniquely vast combination of expertise for the development of a built environment
A uniquely vast combination of expertise for the development of a built environment Buildings Infrastructure Digital solutions • Structural engineering • Road and street design • Customer-oriented software development • MEP expert services • Railway design • Software products • Electrical design • L
Slide 38: Services from underground to the sky
Services from underground to the sky Real estate and Infrastructure and Digital buildings urban development services Transportation Environment and Sustainable and traffic water development Strategies and Construction Studies operational contracting, project and surveys development management and su
Slide 39: Buildings
Buildings siTowise
Slide 40: Buildings: Extensive design and technical consulting for the entire lifecycle
Buildings: Extensive design and technical consulting for the entire lifecycle Net sales evenly split Diverse clientele Strong organic and M&A between new builds and – we serve all but based growth renovations private individuals Key success factors M€ Net sales split Net sales split (2022 PF) (2022
Slide 41: Continued headwind from markets, good progress in building the foundation for future growth
Continued headwind from markets, good progress in building the foundation for future growth Net sales per quarter, Factors impacting Q3 Outlook for Q4 2023 figures in EUR million ─ The outlook for the rest of the year in the ─ The underlying Finnish new construction Buildings business area is weak,
Slide 42: Buildings seeks growth with a sharpened focus
Buildings seeks growth with a sharpened focus CHANGE NEGOTIATIONS COMPLETED FUTURE GROWTH BY Objectives Increasing focus on services with high margins: • Securing conditions for future growth • Special services • More agile ways of working 1. • Energy efficiency planning • Developing national cooper
Slide 43: Buildings seeks growth with a sharpened focus
Buildings seeks growth with a sharpened focus CHANGE NEGOTIATIONS COMPLETED FUTURE GROWTH BY Objectives Increasing focus on services with high margins: • Securing conditions for future growth • Special services • More agile ways of working 1. • Energy efficiency planning • Developing national cooper
Slide 44: Infra
Infra Infra
Slide 45: Infra: A leading player in Finland with steady growth and stable cashflows
Infra: A leading player in Finland with steady growth and stable cashflows Net sales growth The widest service outperforming the market offering in the industry Loyal client base Key success factors M€ Net sales split Net sales split (2022 PF) (2022 PF) • A well-known player with CAGR +7.4% more tha
Slide 46: Infra continues to grow ahead of market
Infra continues to grow ahead of market – Strong performance measured with all KPIs Net sales per quarter, Factors impacting Q3 Outlook for Q4 2023 figures in EUR million + / – The division of the market into weaker + As a whole the outlook for Infra remains and stronger segments continued: good. Ef
Slide 47: Digi Digital Solutions
Infra Digi Digital Solutions
Slide 48: Digital Solutions: Nordic excellence in geospatial solutions
Digital Solutions: Nordic excellence in geospatial solutions Organic growth and Diversified offering with Balanced and loyal M&As driving net sales SaaS driving growth client base Key success factors M€ Net sales split Net sales split (2022 PF) (2022 PF) • Over 20 years experience from digital busin
Slide 49: Continued strong organic growth driven by successful product sales, pricing and utilization
Continued strong organic growth driven by successful product sales, pricing and utilization Net sales per quarter, Factors impacting Q3 Outlook for Q4 2023 figures in EUR million + / – Mixed market environment with private + As a whole the outlook for Digital sector demand slowing down Solutions rem
Slide 50: Ryhti project is typical for us
Ryhti project is typical for us: transformative, multi-stakeholder, with geospatial data in the core WHAT? BUILT ENVIRONMENT HOW? RYHTI PROJECT, 2020-24, INFORMATION SYSTEM SITOWISE AND SOLITA JOINT TEAM A new, national home for land use and • Deep business process understanding building information
Slide 51: Curated offering and strong RnD pipeline drive further growth in product business
Curated offering and strong RnD pipeline drive further growth in product business Product offering sharpened to ensure value for Bitcomp Leafpoint – business and customer Client use case by the Finnish Forest Association Louhi: a comprehensive GIS platform for state & municipalities, construction, e
Slide 52: Infracontrol Online – enables better street maintenance in cities
Infracontrol Online – enables better street maintenance in cities Combining our digital solutions with knowledge of our clients’ needs • Our SaaS IoT platform for municipalities and cities is a well structured and proven solution • Different front-end detecting solutions adds value to the taxpayers
Slide 53: Sweden
Infra Sweden Digi Digital Solutions
Slide 54: Sweden: Industry leading expertise in selected segments
Sweden: Industry leading expertise in selected segments Net sales growth Services focused in 3/4 of our clients in driven by M&A three segments private sector Key success factors M€ Net sales split Net sales split (2022 PF) (2022 PF) • Established platform with Sitowise Brand CAGR +63.4% 9% 12% 14%
Slide 55: Growth in Sweden slowed down
Growth in Sweden slowed down Net sales per quarter, Factors impacting Q3 Outlook for Q4 2023 figures in EUR million + / – Slightly softer, but overall still + / – Mixed market environment expected to In constant currency +7% reasonably good market continue. + Local infra market growing fast + / – Th
Slide 56: Building a strong core for Sweden
Building a strong core for Sweden 2019 -2021 2022 2023 > New leadership in Sweden Sitowise brand Merger of BTB Mergers of V-kompetens (H1) Mergers of Mavacon, E60 and and K&S and TFIP (H2) Convia in H2 2023 Continued exploring and evaluations of M&A opportunities Favorable markets Gradual softening
Slide 57: Our actions to restore performance in Sweden
Our actions to restore performance in Sweden FUTURE GROWTH AND PERFORMANCE Higher external focus, especially sales • Proactive sales efforts (short-term) and building new sales 1. culture (mid-term) • Pricing excellence • Focus on selected high growth segments Increased focus on project performance
Slide 58: Additional Group slides
Additional Group slides 58
Slide 59: Balanced mix of different revenue sources
Balanced mix of different revenue sources The portion Net sales by Hourly based revenue of strategic Business Area approx. 2/3 of net sales growth areas Digi and Sweden 4% expected to 21% grow 2022 39% 32% 2022 net sales net sales 11% 204 M€ 204 M€ 64% 29% Recurring revenue target ~10% of Buildings
Slide 60: Pricing and personnel availability key topline drivers
Pricing and personnel availability key topline drivers Key topline drivers: 250 90% 91% 92% 92% 90% 100 204 200 179 184 80 165 Pricing and accurate 160 143 147 project hour 150 130 60 estimation 126 113 100 40 Pricing and sales Gross margin % excellence work 50 20 Net sales, M€ Gross Margin, M€ 0 0
Slide 61: High variety of projects in the order book
High variety of projects in the order Order book contains a wide range of projects… book Net sales development steadier than order book’s due to project mix impact > 4,000+ different clients 250 200 150 Duration ranging from 1 month to several years 100 50 0 Sizes from 1k€ to 16M€ (median size 16k€)