Bufab Ab · OMXSTO:BUFAB
Bufab Ab — Investor Day (December 2023)
102 slides from Bufab Ab's investor day presentation, Dec 6, 2023
Slide 1: Discovering the Next Solution
DISCOVERING THE NEXT SOLUTION Bufab Capital Markets Day DECEMBER 6, 2023
Slide 2: Today's Key Messages
TODAY´S KEY MESSAGES OUR POSITION NEW STRATEGY OUR AMBITION - Well positioned & strong drivers - - Building on our success - - Raised Profitability ambition -
Slide 3: Agenda CMD
AGENDA CMD 1. Who we are 2. Market & Our position 3. Strategy 4. Our ambition 5. Closing remarks 6. Q&A
Slide 4: Who We Are
WHO WE ARE
Slide 5: From Trading Company to a Global Leader in C-Parts & Technical Components
NS FROM TRADING COMPANY Sustainability TO A GLOBAL LEADER IN Improved Logistics Solutions EasyTrack 8,9 Quality BSEK C-PARTS & TECHNICAL Management Improved EDI COMPONENTS First Logistics Solution (VMI) Investment Increased in Global Kitting Stronger Supplier Base Accounts focus with Shanghai and Ta
Slide 6: Strong Global Footprint
STRONG GLOBAL FOOTPRINT COMPANIES COUNTRIES SOLUTIONIST´S
Slide 7: C-Parts / Technical Components
C-PARTS / TECHNICAL COMPONENTS UNIQUE ITEMS SUPPLIERS
Slide 8: 45 Years of Profitable Growth
45 YEARS OF PROFITBLE GROWTH NS CAGR 16% 14-23LTM • Organic growth above market • + 50 acquisitions EBITA CAGR • Good profitability and cash flow – no new equity needed, ever 18% 14-23LTM • Attractive business model with low risk – no full- year operating loss, ever 1977 1987 1997 2007 2017 2023
Slide 9: Key Factor for Our Success
Key factor for our success
Slide 10: Our People - We Are Solutionists
OUR PEOPLE - WE ARE SOLUTIONISTS OUR VALUES Who we are How we work How we - We are a family - We always contribute of entrepreneurs deliver - We are a as a team responsible partner SOLUTIONIST OUR PROMISE Fast & flexible Dedicated Trustworthy
Slide 11: Market & Position
MARKET & POSITION
Slide 12: C-Parts Significant for A- and B-Parts
Significant for We give you C-Parts Peace of mind SIGNIFICANT FOR Direct cost 20% Indirect cost 80% SIGNIFICANT FOR Bufab can help reduce indirect costs A- AND B-PARTS • Low value parts C-PARTS and risks while securing sustainability, quality, and deliveries. • High value parts • • High procurement
Slide 13: C-Parts Are Present in Every Industry
C-PARTS ARE PRESENT IN EVERY INDUSTRY
Slide 14: Mega Trends Shaping Our Industry & Creating Opportunities
MEGA TRENDS SHAPING OUR INDUSTRY & CREATES OPPORTUNITIES 1. The C-parts market 2. Demand for a 3. Demand for continues to grow, full supply chain partner & sustainability change, and expand increased focus on total cost
Slide 15: The C-Parts Market Continues to Grow, Change, and Expand
1. THE C-PARTS MARKET CONTINUES TO GROW, CHANGE, AND EXPAND Market around C-parts is Our competitors are most of As Bufab continues to grow, Major opportunity: Drive the growing and still fragmented the times local players our market share may consolidation, reaching new decrease as our addressable
Slide 16: Demand for a Full Supply Chain Partner
2. DEMAND FOR A FULL SUPPLY CHAIN PARTNER Global trend for Few players meet up industrial companies to Data and insights leads with customer demand Only handful players reduce complexity of to increased focus on on global presence, with global scope and own Total cost offering, supplier base ambitio
Slide 17: Macro Factors Accelerate the Consolidation
2. MACRO FACTORS ACCELERATE THE CONSOLIDATION Supply chain constraints and Financial turbulence, inflation and near-sourcing accelerates the Trade wars and barriers focus on cost drives change trend
Slide 18: Demand for Sustainability
3. DEMAND FOR SUSTAINABILITY Regulatory Compliance Supply Chain Transparency Renewable Energy Adoption and Reporting
Slide 19: How We Create Value Beyond C-Parts
How we create value beyond c-parts
Slide 20: From Trading Company to a Global Leader in C-Parts & Technical Components
FROM TRADING COMPANY Sustainability TO A GLOBAL LEADER IN Improved Logistics Solutions EasyTrack Quality C-PARTS & TECHNICAL Management Improved EDI COMPONENTS First Logistics Solution (VMI) Investment Increased in Global Kitting Stronger Supplier Base Accounts focus with Shanghai and Taiwan offices
Slide 21: Large Value Made of Small Parts
SOURCE SIMPLIFY LARGE VALUE MADE OF SMALL PARTS SECURE IMPROVE
Slide 22: Source
SOURCE Supplier base Supply chain Full Range Offering
Slide 23: Simplify
SIMPLIFY Reduction Replenishment One delivery
Slide 24: Improve
IMPROVE Warehouse & Kitting & Engineering / logistics assembly R&D
Slide 25: Secure
SECURE Sustainability Quality On time delivery / Inventory Management
Slide 26: We Give Our Customers Peace of Mind
SOURCE SIMPLIFY We give our customers Peace of mind SECURE IMPROVE
Slide 27: The More Peace of Mind We Create the Higher Margin We Get
THE MORE PEACE OF MIND WE CREATE THE HIGHER MARGIN WE GET Product & Price Creating customer value Higher margins providing Peace of mind
Slide 28: We Take Care of High Value and High Volume Products
WE TAKE CARE OF HIGH VALUE AND HIGH VOLUME PRODUCTS 1) We drive C-Parts Customer value & Complexity consolidation 2) Value creation drives improved gross margin 3) Potential to improve our Product- and customer mix (ex. ABS) Regional C- parts players Local C- parts Local players store / Volume Amazo
Slide 29: Väderstad ~2000 Unique C-Parts
VÄDERSTAD ~2000 UNIQUE C-PARTS in 6043 bins 40 000 order lines 95% Special 140 Suppliers
Slide 30: Value Creation for a Bufab Customer
VALUE CREATION FOR A BUFAB CUSTOMER STARTING POINT YEAR 1 – We enters YEAR 2 – Value added YEAR 3 – Expansion • 1000 C-parts and 30 • Bufab takes care of 500 • Bufab takes care of 750 parts • Bufab takes care of 1000 parts suppliers parts and phases out 10 and phases out 10 suppliers and phases out
Slide 31: M&A – Part of Our DNA
M&A – PART OF OUR DNA acquisitions since 1977 acquisitions since 2014 employees MSEK
Slide 32: We Are a Different, More Diverse & Stronger Company Today
WE ARE A DIFFERENT, MORE DIVERSE & STRONGER COMPANY TODAY Net Sales (MSEK) 2018 2019 2020 2021 2022 Manufacturing Niche Trading
Slide 33: Bufab Sister Companies
BUFAB SISTER COMPANIES Manufacturing 5% • +50 Companies with full P&L • EBITA range: 2-30% Niche 31% Trading 64%
Slide 34: Trading Company
TRADING COMPANY • Traditional Bufab trading company with a broad range of C- Parts and technical components • When we grow with customers we can also supply B-parts • Sister companies with similar customers and local market knowledge. Focus on become local market leaders • EBITA range: 2-22% Trading
Slide 35: Niche Company
NICHE COMPANY • Supply chain partner with a special know how • Meeting complex customer demand • Own manufacturing when it creates value Niche 31% • In line with our new Strategy, no regional limitations anymore • Can accelerate growth through Bufab Trading companies when applicable • EBITA range: 7
Slide 36: Manufacturing Company
MANUFACTURING COMPANY Manufacturing 5% • 2 companies in the group - Lann and Hallborn NS 400 MSEK • Core offering in manufacturing capabilities • Majority of sales to automotive • Few growth synergies with group • EBITA range of 5-10% • ~ 40% of groups total CAPEX • Under evaluation as they are not
Slide 37: Our Diversity Reduces Volatility and Creates Opportunities
OUR DIVERSITY REDUCE VOLATILITY AND CREATES OPPORTUNIES • +30 industry segments • No sub-segment Aerospace Agriculture Automotive Construction Defence larger than 10% of NS • Broad range of materials and applications • Each sister can choose where to Energy Furniture and General Pharma and Railway a
Slide 38: Sustainability – Well Prepared to Lead the Development
SUSTAINABILITY – WELL PREPARED TO LEAD THE DEVELOPMENT Responsible sourcing Code of Conduct Sustainable Supplier and quality programs for all suppliers Development Goals Audits on the Ecovadis (SDG) suppliers 2016 2017
Slide 39: 2021 - Our Decarbonization Journey Begins
2021- OUR DECARBONIZATION JOURNEY BEGINS Science Based Recyclable & Sustainable Supplier Sanction scanning CSRD reporting incl Target initiative sustainable material Engagement Program RU and preventive EU-taxonomy Transparency actions reporting programs (CBAM) 2021 2022 2023
Slide 40: Advancing for Our Customers Net Zero
ADVANCING FOR OUR CUSTOMERS NET ZERO 70% of our spend in Our selected 80% of our spend. Net Zero, Scope 3 Sustainable Supplier Sustainability Goals Sustainability audited Scope 1 & 2 reduction 55% Net Zero Engagement program. 2025 2026 2030 2031 2050
Slide 41: Solid Financial Development
SOLID FINANCIAL DEVELOPMENT Revenues EBITA Margin% Fee Operating Cash Flow NWC, % of Sales 8 811 12,5% 1 380 40,6% MSEK, Q3 R12 2023 Q3 R12 2023 MSEK, Q3 R12 2023 Q3 R12 2023 Revenues EBITA Free Operating cash flow Net Working Capital MSEK MSEK MSEK MSEK 10 000 1 200 14,0% 1 600 4 000 000 60% 1 000
Slide 42: We Have Done Well but More to Come
We have done well but more to come
Slide 43: To Sum Up - Major Opportunities in Front of Us
TO SUM UP - MAJOR OPPORTUNITIES IN FRONT OF US 1. 2. 3. 4. Strong offering Improvement Market trend Major Growth and value areas behind us opportunities We give How we operate / We aim to lead We have just started our Peace of Mind Margin / NWC the market consolidation journey
Slide 44: We Have Just Started Our Journey
WE HAVE JUST STARTED OUR JOURNEY • Our Market share is less than a few percent • We can double our turnover with existing customers • Bufab Sweden NS 1 BSEK, market share 30% - If we reach 10% market share in Poland, Germany, Spain and France we will reach additional 13 BSEK in turnover Countries wi
Slide 45: Strategy
STRATEGY —
Slide 46: Discovering the Next Solution - Building on Our Success
Discovering the next solution Building on our success
Slide 47: Our Strategy for Profitable Growth
OUR STRATEGY FOR PROFITABLE GROWTH We give our customers peace of mind Our Mission By creating sustainable and outstanding value Customer M&A Accelerating Leader in World class Our focus areas Value Drive the market Efficiency Sustainability Supplier base Creation consolidation Profitable Growth Our
Slide 48: Customer Value Creation
CUSTOMER VALUE CREATION
Slide 49: Customer Value Creation
CUSTOMER VALUE CREATION American Bolt & Screws Bufab Ireland Bumax MD Cynthia Alvarez MD Kevin Donnelly MD Lars Holm • Trading Company • Trading company • Niche Company • ~ 800 MSEK in turnover, EBITA: 15-20% • ~ 100MSEK, EBITA: 15-20% • ~ 300 MSEK, EBITA: 25-30% • Role model in pricing, product- an
Slide 50: American Bolt and Screws, Cynthia Alvarez
American Bolt and Screws, Cynthia Alvarez
Slide 51: This Is American Bolt & Screws
THIS IS AMERICAN BOLT & SCREWS • Founded 1946 and acquired by Bufab 2019 • 85 Solutionists in 7 locations in the US and Mexico RV Industry Cargo Industry Modular homes, furniture, windows and doors
Slide 52: Value Creating Services Creates Growth
VALUE CREATING SERVICES CREATES GROWTH Engineering together Providing tailor-made with the customer – Kitting Logistics services VMI & JIT solutions and designs some products are patented
Slide 53: Customer Sales Trends and Margins Development
CUSTOMER SALES TRENDS AND MARGINS DEVELOPMENT IN GRAPH: ABS GP IN 2019 GP% 20 25 30 35 40 45 50 55 60
Slide 54: Margins Development per Customer Since the Acquisition
MARGINS DEVELOPMENT PER CUSTOMER SINCE THE ACQUISITION IN GRAPH: ABS GP IN 2023 GP% 20 25 30 35 40 45 50 55 60
Slide 55: Looking Forward
LOOKING FORWARD VMI That is how we Outperform Quality Control will grow with competitors in Consolidation existing and creating value Trust with local new customers presence
Slide 56: Bufab Ireland, Kevin Donnelly
Bufab Ireland, Kevin Donnelly
Slide 57: This Is Bufab Ireland
THIS IS BUFAB IRELAND • 100 customers • 4000 live part numbers • 46% Standard fasteners → 27% Sales Revenue • 54% Special Parts → 73% Sales Revenue • Advanced technical parts according to drawing • VMI Logistics Solutions to grow share of wallet
Slide 58: Major Customers and Products
MAJOR CUSTOMERS AND PRODUCTS Sulzer pumps LAPP UK & Moffett TMFL Sandvik Wright Bus Ireland Limited Ireland Ltd Truck mounted forklifts Waste-water and mining Crushing & screening for Single deck & double Electrical cable assemblies pumps mining industry deck buses
Slide 59: Customer Value Creates Results
CUSTOMER VALUE CREATES RESULTS Operate close to the Supplier Logistics Solutions Sustainability customer consolidation (VMI)
Slide 60: Looking Forward
LOOKING FORWARD That is how we will We aim for a VMI It creates customer outperform Bufab Logistics Solution satisfaction and Organic growth whenever possible profitable growth targets
Slide 61: Bumax, Lars Holm
Bumax, Lars Holm
Slide 62: This Is Bumax
THIS IS BUMAX • Founded in 1899, but just started our journey • Produced the first stainless steel bolt in the world in 1926 • Super-high-strength stainless fasteners. • The project pipeline is full of promising projects, and we will keep on growing in every segment
Slide 63: Market Segments
MARKET SEGMENTS Fusion, Nuclear Marine & Defense Aerospace Construction and Energy Offshore
Slide 64: Bumax Is Unique, and the Customers Love the Product
BUMAX IS UNIQUE, AND THE CUSTOMERS LOVE THE PRODUCT Great product Understanding solutions the customer´s Strongest bolt R&D knowledge Sustainability adding value product
Slide 65: Looking Forward
LOOKING FORWARD Independent Enhanced customer Double turnover in company with full focused R&D three years P&L
Slide 66: Accelerating Efficiency
ACCELERATING EFFICIENCY Johan Lindqvist Vice CEO, Director Segment North
Slide 67: Accelerating Efficiency – Example NWC
ACCELERATING EFFICIENCY – EXAMPLE NWC SISTER COMPANY SYNERGIES & KEY FOCUS SUPPORT METRICS • 3-year NWC plan in each company • Best practice & knowledge • Company level: 3-year plan with sharing NWC-target per company • Majority of our companies will decrease their NWC but some • Shared benchmark in
Slide 68: NWC Development
NWC DEVELOPMENT 55% NWC% in relation to Net sales, 2014-2023 50% • Historically between 40-45% except pandemic 45% • More or less back to normal level 40% • But Bufab level is not best in class 35% • Before pandemic growth was our focus, not NWC 30% 25%
Slide 69: NWC Improvements in Nordics
NWC IMPROVEMENTS IN NORDICS Deeper collaboration Demand Forecasting and planning Item management Suppliers Data Analytics and Machine Learning
Slide 70: Leader in Sustainability
LEADER IN SUSTAINABILITY Carina Lööf Global Sourcing & Sustainability
Slide 71: Our Decarbonisation Commitments
OUR DECARBONISATION COMMITMENTS Our selected Sustainability Goals 70% of our spend in Sustainable Supplier Net Zero, 80% of our spend. Engagement program. Scope 1 & 2 Scope 3 reduction 55% Net Zero Sustainability audited. 2025 2026 2030 2031 2050
Slide 72: Legal Compliance Makes Us More Competitive
CORPORATE SUSTAINABILITY REPORTING DIRECTIVE (CSRD) LEGAL COMPLIANCE MAKES US • CSRD rules will applying from 1/1-2024 MORE COMPETITIVE • 250 or more employees • 40 million EUR in turnover • 20 million EUR in assets Material Sanctions EU-taxonomy compliance Corporate Carbon border Regional sustainab
Slide 73: Our Commitments in Sustainability Creates Customer Value
OUR COMMITMENTS IN SUSTAINABILITY CREATES CUSTOMER VALUE Customer relased work Human Rights Due Carbon Border Carbon emissions Conflict minerals Trade sanctions Diligence Adjustment Mechanism
Slide 74: World Class Supplier Base
WORLD CLASS SUPPLIER BASE Carina Lööf Global Sourcing & Sustainability
Slide 75: World Class Supplier Base
WORLD CLASS SUPPLIER BASE PARTNERSHIP RISK EFFICIENCY & KEY SUPPLIERS MITIGATION DIGITALIZATION METRICS Consolidation A strong Sustainable Dedicated and trustworthy optimizing logistical Savings, 3% below Value Chain - Peace of Partners flows and decrease index mind worked hours Competent, competiti
Slide 76: M&A Drive the Market Consolidation
M&A DRIVE THE MARKET CONSOLIDATION Johan Sandberg Director Global Business Development
Slide 77: Acquisitions Have Contributed Strongly to Growth
ACQUISITIONS HAVE CONTRIBUTED STRONGLY TO GROWTH Net sales (MSEK) CAGR 10% + 6% = 16%
Slide 78: We Look For / We Avoid
WE LOOK FOR WE AVOID • Well-run companies • Companies that are not supply chain partners • …with growth synergies • Companies that do not supply C Parts • …and win-win deals • Production companies “with a smokestack” • Sharing Bufab values and culture • Avoid risky and complex countries and • Active
Slide 79: Sales and EBITA
SALES AND EBITA Normalized (year 1) Last five years First years before of joing BUFAB after joing BUFAB CAGR EBITA = 18% CAGR EBITA = 10% CAGR SALES = 6% CAGR SALES = 5% Sales (n=6) EBITA (n=6)
Slide 80: "Pull Integration" Is Key to Our Success
“Pull integration” is key to our success
Slide 81: Never / Always
NEVER ALWAYS Aggressive Sister Growth Top-down “Pull” Subsidiaries cost companies synergies integration synergies
Slide 82: New Sisters Use Bufab Best Practice Where It Helps the Most
NEW SISTERS USE BUFAB BEST PRACTICE WHERE IT HELPS THE MOST As a result: • Opportunities to acquire • Favourable pricing • Good development acquired companies
Slide 83: Acquire – It's a Cycle
Q4 2015 3,8 Q1 2016 3,4 Q2 2016 3,0 Q3 2016 Q4 2016 2,7 2,7 Q1 2017 2,4 Q2 2017 Q3 2017 Q4 2017 2,7 2,8 Net debt / EBITDA, adjusted, multiple Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 2,9 2,8 2,9 2,8 2,9 3,0 ACQUIRE – IT’S A CYCLE Q2 2019 Q3 2019 3,5 3,5 Q4 2019 Q1 2020 3,9 3,9 Q2 2020 3,6 PERFORMANCE
Slide 84: Our Fundaments
Our fundaments
Slide 85: Our People & Solutionist Culture
OUR PEOPLE & SOLUTIONIST CULTURE
Slide 86: Our People & Solutionist Culture
OUR PEOPLE & SOLUTIONIST CULTURE OUR VALUES Who we are How we work How we We are a family We always deliver contribute of entrepreneurs – as a team We are a responsible partner SOLUTIONIST OUR PROMISE Fast & flexible Dedicated Trustworthy
Slide 87: Decentralised Operating Model...
DECENTRALISED OPERATING MODEL…
Slide 88: Decentralised Operating Model...
DECENTRALISED OPERATING MODEL…
Slide 89: ...with Clear Empowerment and Accountability
…WITH CLEAR Decentralized operating model EMPOWERMENT AND 1. with strong execution ACCOUNTABILITY Empowered 2. people with clear accountability Clear KPI´s and strong Performance 3. management
Slide 90: Continuous Improvement Is Key for Success
CONTINUOUS IMPROVEMENT • The Trend – Top management follow the trend of NS, EBITA and Profit / NWC IS KEY FOR SUCCESS • 3-year plans in place and company in different phases • 1) Stability, 2) Profitability, 3) Growth • We benchmark and Learn from each other
Slide 91: Best Practice Circles & Committee
BEST PRACTICE CIRCLES & COMMITTEE Finance / IT Sourcing Sales controlling People Sustainability Quality Operations
Slide 92: Bufab Regions
BUFAB REGIONS Turnover Countries (MSEK) Region Americas 1 373 2 Region West 1 694 8 Region UK & Ireland 450 2 Region North & East 3 415 10 Region Asia-Pacific 495 7
Slide 93: Bufab Executive Management Team
BUFAB EXECUTIVE MANAGEMENT TEAM President & CEO Erik Lundén Sourcing & Finance, IT & IR Sustainability Pär Ihrskog Carina Lööf Region Region Region Region Region North & East Europe UK & Ireland West Europe Americas Asia-Pacific Johan Lindqvist Johan Sandberg Jörn Maurer Urban Bulow Mathias Torstens
Slide 94: Our Ambition
OUR AMBITION Pär Ihrskog CFO
Slide 95: Our Current Financial Targets
OUR CURRENT FINANCIAL TARGETS PROFITABLE GROWTH PROFITABILITY FINANCIAL STABILITY DIVIDEND POLICY 10% 12% 2-3x 30-60% Net Sales Growth YoY EBITA margin Net Debt/EBITDA Yearly dividend (Organic and Acquired) (To be reached by 2023) as % of Net profit 15% EPS growth YoY
Slide 96: Strong Performance
STRONG PERFORMANCE Net Sales Growth YoY EPS Growth YoY EBITA Margin 14% 60% 14% 12% 50% 12% 10% 10% 40% 8% 8% 30% 6% 6% 4% 20% 4% 2% 10% 2% 0% 0% 0% 2018 2019 2020 2021 2022 2023 -10% 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 LTM LTM LTM Actual Target Actual Target Actual Target Di
Slide 97: Our New Financial Targets
OUR NEW FINANCIAL TARGETS CONTINUED STRONG IMPROVED FINANCIAL STABILITY DIVIDEND POLICY PROFITABLE GROWTH PROFITABILITY 10% 14% 2-3x 30-60% Net Sales Growth YoY EBITA margin ND/EBITDA Yearly dividend (Organic and Acquired) (to be reached by 2026) (not exceeding 3,5 ) as % of Net profit 15% EPS growt
Slide 98: Significant Potential for Margin Improvement
SIGNIFICANT POTENTIAL FOR THROUGH MARGIN IMPROVMENT • Value creation drives improved gross margin • Product- and customer mix Operating Margin, % 16% • Improved Sourcing (pricing best practice, supplier base consolidation 14% and logistics efficiency) 12% • Improve productivity by best practice, 10%
Slide 99: Closing Remarks
CLOSING REMARKS
Slide 100: Today's Key Messages
TODAY´S KEY MESSAGES OUR POSITION NEW STRATEGY OUR AMBITION - Well positioned & strong drivers - - Building on our success - - Raised Profitability ambition -
Slide 101: Q&A
Q&A
Slide 102: Discovering the Next Solution
DISCOVERING THE NEXT SOLUTION Bufab Capital Markets Day