Storskogen Group Ab Class B · OMXSTO:STOR_B
Storskogen Group Ab Class B — Investor Day (November 2024)
94 slides from Storskogen Group Ab Class B's investor day presentation, Nov 27, 2024
Slide 1: Capital Markets Day
Capital Markets Day 27 November 2024 1
Slide 2: Agenda
01 02 03 LOOKING BACK WHERE WE ARE LOOKING AHEAD Looking back Foundation for growth Strategic direction Christer Hansson Christer Hansson Christer Hansson Break Operational model Åsa Murphy Collaboration Fredrik Bergegård Operational excellence Panel discussion Perspectives from a CEO Daniel Odéhn B
Slide 3: Key takeaways
Key takeaways Foundation Capacity to drive Trajectory for for growth organic growth acquired growth 3
Slide 4: Looking back
01 Looking back 4
Slide 5: The Storskogen journey
The Storskogen journey 2012-2014 2015-2020 2021-2022 2022-today… 1.0 2.0 3.0 4.0 5
Slide 6: The journey
The journey Services, # BUs Trade, # BUs Industry, # BUs 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Q3 2024 Phase 1 Phase 2 Phase 3 Phase 4 2012 - 2014 2015 - 2020 2021 - 2022 2022 - today… 6
Slide 7: The journey
The journey Services, # BUs Trade, # BUs Industry, # BUs 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Q3 2024 7
Slide 8: Founded in Sweden
Founded in Sweden SME opportunity Infinite ownership Decentralised 8 Note: Includes operational presence of business units
Slide 9: The journey
The journey Services, # BUs Trade, # BUs Industry, # BUs 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Q3 2024 9
Slide 10: International foundation
International foundation Business areas Growth Active ownership 10 Note: Includes operational presence of business units
Slide 11: The journey
The journey Services, # BUs Trade, # BUs Industry, # BUs 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Q3 2024 11
Slide 12: Accelerated growth, diversification, turbulent macro
Accelerated growth Diversification Turbulent macro 12 Note: Includes operational presence of business units
Slide 13: The journey
The journey Services, # BUs Trade, # BUs Industry, # BUs 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Q3 2024 13
Slide 14: Balance sheet, operational focus, portfolio review
Balance sheet Operational focus Portfolio review Cash flow 14 Note: Includes operational presence of business units
Slide 15: Where we are
~ mi oe NG al storskogen
Slide 16: Where we are
02 Where we are 16
Slide 17: We acquire and develop leading small and medium-sized businesses
DESCRIPTOR We acquire and develop leading small and medium-sized businesses in selected industries with a long-term ownership horizon MISSION Our mission is to empower businesses to realise their full potential VISION Our vision is to be the leading international owner of small and medium-sized busi
Slide 18: Core values
Core values We are… Entrepreneurial Respectful Professional Long-term 18
Slide 19: Business model
Business model 1. Opportunity 2. The Storskogen model 3. Result 19
Slide 20: 1. Opportunity
3. Result 1. Opportunity • Evergreen opportunity • Attractive valuations • Value-creation opportunities 2. The Storskogen model 20
Slide 21: 2. The Storskogen model
1. Opportunity 2. The Storskogen model • Long-term perspective and stability • Decentralisation • Active ownership and financial governance • Diversification 3. Result 21
Slide 22: 3. Result
2. The Storskogen model 3. Result • Resilience • Profitable growth 1. Opportunity 22
Slide 23: Corporate functions, business areas and business units
Corporate functions 19 53 Business area organisation & Finance 10,852 Business units 23 Note: Adjusted for staff allocated from HQ to business units, as well as parental leavers
Slide 24: Net sales and adjusted EBITA
Net sales and adjusted EBITA Net sales, LTM (SEKm) Adjusted EBITA, LTM (SEKm) 36,845 3,459 34,589 3,500 1.0 3,086 0.9 30,453 3,000 2,759 0.8 2,500 0.7 2,000 0.6 0.5 14,037 1,500 1,371 0.4 1,000 0.3 8,173 794 0.2 500 0.1 0 0.0 Q3-20 Q3-21 Q3-22 Q3-23 Q3-24 Q3-20 Q3-21 Q3-22 Q3-23 Q3-24 24 Note: Q3-20
Slide 25: Services, Trade, Industry
SERVICES TRADE INDUSTRY 30% 28% 42% 25 Note. Net sales (LTM) as of Q3-24
Slide 26: Sales distribution across business units
Sales distribution across business units Net sales, RTM (SEKm) The 20 largest business units with 2,000 an average age of c. 45 years 1,500 1,000 500 0 61 63 69 65 67 3 5 15 75 1 7 9 11 13 19 17 23 51 71 25 27 35 45 53 55 57 73 79 101 103 115 77 105 107 93 109 111 113 21 29 31 33 39 59 37 41 43 49 4
Slide 27: A strong portfolio of business units
A strong portfolio of business units Sales distribution1 Finland 1% Other non-EU 4% Sweden Switzerland 5% 46% Denmark 4% USA 5% Germany 8% Targeted acquisitions Selective divestment of business units of underperforming and add-ons business units 2012-2022 2023-2024 Other EU 7% UK 10% Norway 10% 27 1
Slide 28: Impact of current exposure in portfolio
Impact of current exposure in portfolio Impact on Relatively high organic growth Relatively high exposure to exposure to Sweden and volatility cyclical businesses 28
Slide 29: Strong cash flow from operations
Strong cash flow from operations Cash flow from operations, LTM (SEKm) 3,175 2,876 1,022 1,055 705 Q3-20 Q3-21 Q3-22 Q3-23 Q3-24 29
Slide 30: Focus on organic growth
Focus on organic growth Sales initiatives Pricing Investments Cost control Increase sales volume Margin protection Improve scalability Margin protection Gain market shares Strengthen profitability Enhance professionalism Increase efficiency 30
Slide 31: Looking ahead: Strategic direction
03 LOOKING AHEAD Strategic direction Christer Hansson Break 31
Slide 32: Looking ahead
03 Looking ahead 32
Slide 33: Strategic direction
Profitable growth Strategic direction Resilience Resilience 33
Slide 34: Achieving resilience and profitable growth
Achieving resilience and profitable growth Increasing Increasing Increasing exposure to exposure to geographic exposure selected investment non-cyclical outside Sweden themes businesses Profitable growth and resilience Resilience 34
Slide 35: Improving resilience in the portfolio
Improving resilience in the portfolio SERVICES TRADE INDUSTRY Health and Wellbeing Automation Energy and Sustainability Digitalisation Infrastructure 35
Slide 36: Ambition to acquire throughout cycles
Ambition to acquire throughout cycles Underlying organic Ambition to acquire Ambition to enter growth in portfolio growth throughout contraction phase impacted by business cycle with low leverage business cycle 36
Slide 37: Capital allocation model
Capital allocation Expansion model Capex/Opex Capital to New ALLOCATION allocate platforms Acquisitions ALLOCATION Add-ons 37
Slide 38: Financial targets 2025-2027
Financial 01 >10% Adjusted EBITA margin (LTM): targets 2025-2027 02 >70% Adjusted cash conversion (LTM): 03 15% Adjusted EBITA growth (CAGR): 04 2.0–3.0x Interest-bearing net debt / Dividend RTM adjusted EBITDA: policy: 0-20% 38
Slide 39: Break
Break 27 November 2024 39
Slide 40: Looking ahead: Operational model
03 LOOKING AHEAD Operational model Åsa Murphy Collaboration Fredrik Bergegård Operational excellence Panel discussion Perspectives from a CEO Daniel Odéhn 40
Slide 41: Organic growth
03 Organic growth 41
Slide 42: The Storskogen model
The Storskogen model 42
Slide 43: Decentralised yet active
Decentralised yet active Promoting entrepreneurship and decentralisation Active governance Organic growth Added value creation 43
Slide 44: Promoting entrepreneurship and decentralisation
Promoting entrepreneurship Accountability and decentralisation Local ownership Entrepreneurship Promoting entrepreneurship and decentralisation 44
Slide 45: Active governance
Active governance Board of Directors Financial reporting Legal & Compliance Governance structure Succession planning Active governance 45
Slide 46: Annual board wheel
Annual board wheel Budget Q4 Q1 Performance & Risk Continuous / ad-hoc support Business plan Q3 Q2 Strategy & ESG Active governance 46
Slide 47: Succession planning
Succession planning ~54% change of CEOs ~45% of company sellers still active CFO recruitments in more than 50% of business units 50% female CEO recruitments in 2024 Active governance 47
Slide 48: Business area organisation
Business area organisation SERVICES TRADE INDUSTRY Added value creation 48
Slide 49: Added value creation
Added value Digital & AI competence Networks & collaboration creation Frame …and other agreements tailored support Knowledge Best practice exchange sharing Added value creation 49
Slide 50: Decentralised yet active
Decentralised yet active Promoting entrepreneurship and decentralisation Active governance Organic growth Added value creation 50
Slide 51: Collaboration & networking
Collaboration & networking 51
Slide 52: Value creation through collaboration & networking
Value creation through collaboration & networking Mgmt Cost Sales CEOs teams savings growth 52
Slide 53: CEO testimonials on serving on other boards
By serving on other boards, I can support my own company, Storskogen and help other CEOs to find practical, effective solutions. Niklas Näslund CEO, Alfta Kvalitetslego (Contract manufacturer) Serving on the Boards of Albin, ÅMV and GMV Board involvement fosters a meaningful exchange of experiences,
Slide 54: CEO and CFO meetings and groups
CFO meetings Services "No Dig’ Group meetings ("Schaktfritt’) The Production efficiency group UK CEO meetings The "Norrland” project across BAs The Steel purchasing group CEO meetings Industry Health and Beauty cluster meetings DACH CEO meetings Global CEO meetings CFO meetings Industry
Slide 55: Cost savings through joint agreements
Supply agreement with Ahlsell in Annual savings: partnership with LRF SEK ~10m Samköp Freight agreements Annual savings: Mgmt Cost Sales CEOs with DHL, PostNord, teams savings growth Fedex, UPS, APC and SEK ~20m Antalis Green electricity Impact: agreement with Vattenfall Reduced CO2 55
Slide 56: Internal sales between business units
IVEO provides webshop solutions to other BUs Mgmt Cost Sales CEOs teams savings growth PV System delivers automation solutions to Swedstyle and Wibe Storebro supplies castings to Vinab 56
Slide 57: Value creation through collaboration & networking
Value creation through collaboration Organic growth & networking Mgmt Cost Sales CEOs teams savings growth 57
Slide 58: Selection of brands
Selection of brands Sales 2023 SEK ~760m Adjusted EBITA 2023 SEK ~116m 58
Slide 59: Break
Break 27 November 2024 59
Slide 60: Looking ahead: Acquired growth
03 LOOKING AHEAD Acquired growth Alexander Bjärgård Financial update Lena Glader Q&A Concluding remarks Christer Hansson 60
Slide 61: Acquired growth
03 Acquired growth 61
Slide 62: Prepared for acquired growth
Prepared for acquired growth Local Capital allocation competence Portfolio Global best governance practice 62
Slide 63: Capital allocation objective
Capital allocation priorities Profitable Capital allocation Resilience growth objective 63
Slide 64: Capital allocation priorities
Capital allocation priorities EBITA growth Business mix EBITA margin Capital ESG allocation Cash conversion priorities Return on Volatility investment Geographic mix 64
Slide 65: Focus on selected investment themes
Capital allocation Focus on selected priorities investment themes SERVICES TRADE INDUSTRY Health and Wellbeing Automation Energy and Sustainability Digitalisation Infrastructure 65
Slide 66: Refined capital allocation priorities
Capital allocation Refined capital priorities allocation priorities Allocation % Add-on acquisitions Platform acquisitions Business Units 66
Slide 67: Evaluating platform acquisitions
Capital allocation Evaluating platform priorities acquisitions What Whatwe welike don´t like Examples Examples Political Underlyingrisks growth > GDP Technical Proven andrisks sustainable offering Concentration Strong in its niche situations Low Business or expensive stickiness scalability Strong Ma
Slide 68: Evaluating platform acquisitions
Capital allocation Evaluating platform priorities acquisitions What we do not like Examples What we like Examples Political risks Strong in its nisch Technological uncertainties Business stickiness Low or expensive scalability Value chain negotiation power Too high key person risk Margin protection
Slide 69: Clear add-on strategy in place
Capital allocation Clear add-on priorities strategy in place Business unit strategy and financial performance Business unit Add-on Business unit management Add-on strategic Add-on target financial financial capability and rational and portfolio performance performance operational synergy potential i
Slide 70: Local competence
Local Local competence competence Market Industry M&A competence competence competence Stronger Improved More Better relationship sourcing adequate deal owner for local building capability assessment businesses locally 70
Slide 71: High quality M&A through common ways of working
Global best High quality M&A practice through common ways of working Applied across all local markets Investment Case Financial Best practice Due Terms & Onboarding Post themes Assessment modelling M&A process diligence conditions processes acquisition Tool Tool guidelines best practice guidelines &
Slide 72: Portfolio governance
Portfolio Portfolio governance governance Governance model Executive management team Capital Acquisition Capital allocation proposals allocation priorities decisions Local teams Market Industry M&A competence competence competence 72
Slide 73: Prepared for acquired growth
Prepared for acquired growth Local Capital allocation competence Portfolio Global best governance practice 73
Slide 74: Financial update
Financial update 27 November 2024 74
Slide 75: Diversification brings resilience
Diversification brings resilience Historical BU performance1 14% 12% Current downturn 10% 8% 6% Global financial crisis 4% IT bubble 2% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 EBIT margin 75 1 Source: Value8, AllaBola
Slide 76: Storskogen's confidence indicator
Storskogen’s confidence indicator 200 150 100 50 0 -50 -100 -150 -200 Confidence indicator Industry Confidence indicator Services Confidence indicator Trade Weighted confidence indicator Storskogen 76
Slide 77: Sustainability targets
Sustainability Environment targets • 42% Scope 1 + 2 reduction by 2030 (baseline: 2023) • 64% Scope 3 reduction by 2034 (baseline: 2023) • Net zero by 2050 Social • 40-60% among employees in senior roles in our central organisation • 40-60% among our board appointments in business units Governance •
Slide 78: Financial targets
Financial 01 >10% Adjusted EBITA margin (LTM): targets 2025-2027 02 >70% Adjusted cash conversion (LTM): 03 15% Adjusted EBITA growth (CAGR): 04 2.0–3.0x Interest-bearing net debt / Dividend RTM adjusted EBITDA: policy: 0-20% 78
Slide 79: Recovering margin
Financial targets 01 Recovering margin… Adjusted EBITA margin, LTM 12% 10% 8% 6% 4% 2% 0% Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 79
Slide 80: Positive margin trend across all business areas
Financial targets 01 …supported by recent positive margin trend across all business areas… Services Trade Industry 15,000 12% 15,000 12% 15,000 12% 10% 10% 10% 10,000 8% 10,000 8% 10,000 8% 6% 6% 6% 5,000 4% 5,000 4% 5,000 4% 2% 2% 2% 0 0% 0 0% 0 0% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Slide 81: An evident diversification effect
Financial targets 01 …and an evident diversification effect Adjusted EBITA margin, QTD 14% 12% 10% 8% 6% 4% 2% 0% Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Services Trade Industry Storskogen Group, excluding group operations 81
Slide 82: Financial targets
Financial 01 >10% Adjusted EBITA margin (LTM): targets 2025-2027 02 >70% Adjusted cash conversion (LTM): 03 15% Adjusted EBITA growth (CAGR): 04 2.0–3.0x Interest-bearing net debt / Dividend RTM adjusted EBITDA: policy: 0-20% 82
Slide 83: Strong operational cash flow
Financial targets 02 Strong operational cash flow Operating cash flow1 (LTM) 5,000 120% 4,500 110% 100% 4,000 90% 3,500 80% 3,000 70% 2,500 60% 2,000 50% 40% 1,500 30% 1,000 20% 500 10% 0 0% FY 18 FY 19 FY 20 FY 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 1 Operating cash fl
Slide 84: Improved NWC management
Financial targets 02 …supported by improved NWC management Working capital ratio 17.5% 15.2% Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Net working capital as % of proforma net sales 84
Slide 85: Financial targets
Financial 01 >10% Adjusted EBITA margin (LTM): targets 2025-2027 02 >70% Adjusted cash conversion (LTM): 03 15% Adjusted EBITA growth (CAGR): 04 2.0–3.0x Interest-bearing net debt / Dividend RTM adjusted EBITDA: policy: 0-20% 85
Slide 86: Ample cash flow to invest in EBITA growth
Financial targets 03 Ample cash flow to invest in EBITA growth Q3 LTM (SEKbn) 2.9 2.4 1.6 Net interest Cash flow Change Cash flow Capex Net Leasing Free cash flow from in working from investments after leasing expenses operating capital operating in non- activities activities current assets before c
Slide 87: Non-interest-bearing liabilities
Financial targets 03 Non-interest-bearing liabilities Minority options and Earn-outs (SEKm) Earn-outs Minorities 997 320 65 936 1,991 1,937 1,908 1,302 2021 2022 2023 2024 Q3 87
Slide 88: Financial targets
Financial 01 >10% Adjusted EBITA margin (LTM): targets 2025-2027 02 >70% Adjusted cash conversion (LTM): 03 15% Adjusted EBITA growth (CAGR): 04 2.0–3.0x Interest-bearing net debt / Dividend RTM adjusted EBITDA: policy: 0-20% 88
Slide 89: Debt structure
Financial targets 04 Debt structure S&P BB (stable) IB debt and cash1 (SEKm) Debt structure Interest rate Book SEKm Maturity Type % value Interest-bearing net debt Cash and cash equivalents RCF 2027-2029 Floating 1.50-3.15 1,700 Bond 2025 Stibor 3m 3.0 843 Bond 2027 Stibor 3m 6.9 2,000 Bond 2027 Sti
Slide 90: Better aligned reporting
Financial update Better aligned reporting 90
Slide 91: Aligning with operational Profit and Loss
Aligning with operational Profit and Loss SEKm, adjusted for IAC 2023 YTD 2024 Net sales 36,006 25,592 Raw materials and supplies -19,422 -13,778 Other external expenses -4,132 -2,917 Personnel expenses -8,547 -6,016 Other income & expenses 388 314 Adjusted EBITDA 4,293 3,195 Depreciation -1,055 -81
Slide 92: Q&A
| storskogen Qé&A 27 November 2024 mh storskogen
Slide 93: Key takeaways
Key takeaways Foundation Capacity to drive Trajectory for for growth organic growth acquired growth 93
Slide 94: Thank you!
Thank you! 94