Systemair AB Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Carl Ragnerstam - Nordea Markets - Analyst : Good morning, it's Carl here from Nordea. A couple of questions from me. You mentioned that the margin pressure stemmed from the SG&A shortfall here during the quarter. Could you help us a little bit more -- I mean, explain the dynamic behind the SG&A overrun? I mean, what measures you're taking? And also, what time frame you expect the SG&A to sort of come down a bit, please? Would it take a quarter or two? And also, where on a geographical basis, you are focusing efforts?

Question: Carl Ragnerstam - Nordea Markets - Analyst : So the 110 net FTE reductions, are you happy with that? Or is it more to come? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 7:00AM, SYSR.ST - Q4 2024 Systemair AB Earnings Call

Question: Carl Ragnerstam - Nordea Markets - Analyst : And how long time will it take to, sort of, for it to be fully materialized? I guess, if you're taking out FTEs, you tend to take some time, right, before you see the full effect?

Question: Carl Ragnerstam - Nordea Markets - Analyst : Okay. That's fair. Also on the gross margin side, quite healthy level, of course, in historical terms as well. Could you help us understand the drivers a bit and whether you see the 35% level here as a sustainable, I mean, rate here over the coming few quarters as well, especially, I guess, in a more -- a little bit more price-sensitive market?

Question: Carl Ragnerstam - Nordea Markets - Analyst : You mentioned Menerga here as one driver. Could you give some financials on where you are margin-wise in the quarter, maybe in comparison to last year or Q3, or whatever you think is a good comparison period?

Question: Carl Ragnerstam - Nordea Markets - Analyst : Okay. Sounds fair. And also, I think you also mentioned that the market is -- has troughed out the health activity level. Could you help us understand also on -- if you're referring to quotations or also in terms of actually signed orders? Or is it too early for the improved sentiment in the market to actually be visible in the orders? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 7:00AM, SYSR.ST - Q4 2024 Systemair AB Earnings Call

Question: Carl Ragnerstam - Nordea Markets - Analyst : That sounds fair. And also the final one from my side, if I may. I mean, we saw one of the heating players entering the air handling unit market quite recently here. I mean the market is -- even though we see better activity in the market, it's still seemingly a bit soft in, I guess, Western Europe and also parts of the Nordics. How worried are you about the pricing situation over the coming few quarters here?

Question: Carl Ragnerstam - Nordea Markets - Analyst : Okay, sounds great, thank you so much.

Question: Lina Blume - Handelsbanken Capital Markets - Analyst : Good morning and thank you for the presentation. You --

Question: Lina Blume - Handelsbanken Capital Markets - Analyst : Good morning. You reported a high activity -- higher activity among many of your customers. Is your view that volumes will start to come back? Or is it more a market that has stabilized? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 7:00AM, SYSR.ST - Q4 2024 Systemair AB Earnings Call

Question: Lina Blume - Handelsbanken Capital Markets - Analyst : Super. And then on the topic of drivers, you mentioned recently adopted EU Energy Performance of Buildings Directive and that you see this as a positive opportunity. Is it possible to say if you have noticed any increased demand as a result of this yet? Or is it too early to tell?

Question: Lina Blume - Handelsbanken Capital Markets - Analyst : Super. And, thank you. And then just one last question for me. You report that Germany continued to record negative growth. Are you seeing any signs of stabilization in that market? Or are you expecting continued negative growth in the near term?

Question: Lina Blume - Handelsbanken Capital Markets - Analyst : Perfect. That's clear. Thank you very much for answering my questions.

Question: Adela Dashian - Jefferies - Analyst : Thank you and good morning. I'm going to continue on this topic of the healthy activity levels that you're experiencing or healthier, I should say. We know that you divide your business into two segments. Maybe it's the right way to phrase it, the project business and then the standard ventilation products. Would you say that these comments that you're making now reference to both of these segments? Or is the clear visibility that you have within the standard ventilation products segment portraying most of the commentary here?

Question: Adela Dashian - Jefferies - Analyst : Okay. Would you then say that it would be fair to say that given your late cyclical nature that the vast majority of the discussions that you're having currently with customers is going to materialize into orders starting next year that the second half of the year is not really when you would see the spike in volumes take place? It seems like it's still too early when I listen to your vague comments about the current conditions, would you say?

Question: Adela Dashian - Jefferies - Analyst : All right. Got it. And then if you look at the different geographical areas and exclude Turkey, what type of price increases are you able to implement currently in the other markets, if any?

Question: Adela Dashian - Jefferies - Analyst : All right. And then lastly, your appetite for M&A. You kind of hinted here that given your financial position and lowering of the leverage ratio, it is increasing both your willingness and ability to do further acquisitions. Are we looking at mostly bolt-ons, and if so or if not, what geographic segments, what product areas are you mostly looking into currently with the pipeline that you have? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 7:00AM, SYSR.ST - Q4 2024 Systemair AB Earnings Call

Question: Adela Dashian - Jefferies - Analyst : Thanks a lot.

Question: Douglas Lindahl - DNB Markets - Analyst : Yes, hello, gentlemen. Thanks for taking my questions. I wanted to start off by talking a bit more about Western Europe. You already said that you expect Germany to continue in negative territory for at least one or few quarters. I think I heard you say that. Can you give a bit more flavor on the other regions in Western Europe, given how it seems to be so impactful with regards to profitability? Interesting to hear.

Question: Douglas Lindahl - DNB Markets - Analyst : And is Germany specifically profitable region for you, would you say?

Question: Douglas Lindahl - DNB Markets - Analyst : But I guess the region as such is quite profitable. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 7:00AM, SYSR.ST - Q4 2024 Systemair AB Earnings Call

Question: Douglas Lindahl - DNB Markets - Analyst : Okay. And on the Middle East, Asia, and Africa strength that we've seen here, appreciate the comments on the price impact from Turkey, but we've seen quite strong growth here for some time. And I guess you've revised prices upwards as well. But are you expecting this underlying strength to continue for this region?

Question: Douglas Lindahl - DNB Markets - Analyst : Okay. And any comments in terms of what that might do on the mix effect for profitability?

Question: Douglas Lindahl - DNB Markets - Analyst : Okay. Good. I think those are my questions. Thank you.