Makes it easier to be professional Handelsbanken Nordic Mid/small Cap Seminar June 8, 2017 President and CEO Johan Nilsson
2 2 Introduction
One-Stop-Shop multi channel offering for professionals Branches Other services Suppliers Online @ Phone and E-mail Customers External One-stop-shop 3
Unique value proposition in the supply chain Suppliers 3.300 Assortment 180.000 SKUs Distribution Customers 100.000 HVAC & Plumbing 36% Central Warehouse 50% Installers 47% Industry 20% Electrical 25% Branches 22% Infrastructure 15% Tools & Supplies 39% Directly from suppliers 28% Construction 8% Other 10% 4
Leader in Nordic markets with attractive growth dynamics Market split: net sales RTM, March 31, 2017 1% 2% 12% 20% 65% 49 (51) branches 37 (36) branches Market split: EBITA RTM, March 31, 2017 7% 5% 1% 0% 114 (102) branches 86% 4 (4) branches 13 (14) branches 5
Strong underlying trends drive future demand Urbanisation Sustainability Outsourcing & specialisation Digitalisation & technical development 6
Market growth supported by multiple structural drivers Construction and renovation Industrial Infrastructure New construction Renovation Residential Non-residential Residential Non-residential Industrial production Infrastructure Population growth Number of dwellings Interest rates House prices Vacancy levels Number of buildings/ commercial space Number of dwellings Regulations and subsidies Housing stock age Building stock age Leasing Manufacturing output Industry capex Population growth Urbanisation Age of existing infrastructure Political initiatives 15% 15% 35% 20% 15% of Sales of Sales of Sales of Sales of Sales Ahlsell benefits from diversified structural growth drivers 7
Leading positions in a SEK105bn market, and the journey continues Market size in SEKbn (Ahlsell market share) Sweden Norway Finland Total Market position HVAC & Plumbing 20 (30%) 13 (23%) 9 (17%) 42 (25%) = 1-2 = 3-5 Electrical 18 (27%) 13 (10%) 8 (7%) 39 (17%) Tools & Supplies 12 (33%) 7 (10%) 5 (8%) 24 (21%) Total 50 (30%) 33 (15%) 22 (11%) 105 (21%) Ahlsell 2016 Sales SEKbn Ahlsell 2016 Adj. EBITA Margin 15.9 12.2% 4.9 3.0% 3.1 3.7% 24.6 8.7% Relative size vs largest peer ~2.3x ~1.0x ~0.4x ~1.6x 8 Note: Market size and market shares based on 2015 data. Adj. EBITA is adjusted for items affecting comparability Source: Management estimate and third Party Analysis
Proven track record of growth and model expansion through M&A Ahlsell s unique market position built from a long track record of successful acquisitions and scope expansion 1995 2005 Current HVAC & Plumbing Electrical Top 2 position Sweden HVAC & P Electrical T&S #3-5 position Sweden Norway Finland HVAC & P Electrical T&S New areas Sweden Norway Finland New geography Well-defined acquisition model Experience of tracking and maximising synergies Well-known targets Clear target profile Price discipline ~4-5% EBITA margin ~7-8x EV/EBITA valuation ~Margins in line with the group (post synergies) ~3-4x EV / EBITA (post synergies) 9
Extensive and growing pipeline of M&A targets Sweden Norway Finland Pipeline growth # of Targets ~120 ~12 ~40 Target company revenues (2014, SEKbn) ~40 Increasingly challenging for independents to operate and thrive as markets consolidate More willing sellers ~4 ~8 ~8 Expansion of product and customer segments Growing universe ~5 ~5 ~8 ~3 ~3 Expansion and deepening of Nordic presence Growing universe <500 MSEK >500 MSEK ~200 M&A targets of varying size in pipeline across current main geographies and categories 10
11 Performance
Robust and resilient cash flow generator Net sales growth 2011 RTM March 2017 (SEKbn) Profitability 2011 RTM March 2017 (SEKbn) Adjusted EBITA Adjusted EBITA-margin Cash conversion 2011 RTM March 2017 (Operating cash flow / EBITDA) 30 25 20 20,4 20,6 20,4 21,8 22,6 24,6 25,7 3 2,5 2 10% 9% 8% 120% 100% 80% 15 1,5 7% 60% 10 1 6% 40% 5 0,5 5% 20% 0 2011 2012 2013 2014 2015 2016 RTM March 2017 0 2011 2012 2013 2014 2015 2016 RTM March 2017 4% 2011 2012 2013 2014 2015 2016 RTM March 2017 0% 12
Asset light business model with strong return on capital Highlights Cash conversion 100 % - in line with financial target Strong deleveraging capacity Organic growth with limited CAPEX Excellent capital efficiency and profitability RTM 2016 31 March Jan-Dec Operating cash flow/ebitda 100% 90% External net debt/adjusted EBITDA 3.0 3.3 Investments, % of sales 0.6% 0.6% Working capital, % of sales 8.3% 8.3% Average working capital, % of sales 8.8% 8.9% Net working capital, % of sales 8.0% 7.1% Return on operating capital (excluding intangible fixed assets), % 70% 67% Return on working capital % 97% 94% 13
Financial targets and outcome Robust and resilient cash flow generator Customer base with complex needs Growth Adjusted EBITA margin +2-3pp. Above market growth Continuous increase FY 2016 +9%* +0.4pp YTD March 2017 +18%* +0.5pp Leader in Nordic market with structural growth Accretive M&A growth machine Unique value-adding distribution model Cash conversion Leverage Dividend 90% Annual average 2.0-3.0x Net debt / Adj. EBITDA 40-60% subject to strategic headroom 90% 3.3x 40% 100%** 3.0x n.a. 14 * Total growth excluding currency effects **RTM
15 Market outlook and business focus
Sweden on continued strong trajectory, with Norway and Finland showing improvement Current momentum Quarterly organic sales index Margin Strong activity in the construction sector Major infrastructure projects Industry production picking up Confidence indicators at high levels Expected real GDP growth ~3 % 115 105 95 85 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 2014 2015 2016 2017 12.4% LTM Adj. EBITA Margin Positive development of mainland economy Housing sector has positive impact on demand Expected real GDP growth ~1,5 % 115 105 95 85 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 2014 2015 2016 2017 6.5% 3.4% LTM Adj. EBITA Margin Strong residential sector in larger city regions Market conditions improving, but still challenging Expected real GDP growth ~1 % 115 105 95 85 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 5.7% 3.8% LTM Adj. EBITA Margin 2014 2015 2016 2017 High point since 2013 16
Upside potential driven by macro improvements and management initiatives Maintain momentum Sweden Strong market- and operational backdrop Release Norway s potential Macroeconomic environment improving Revitalise Finland Macroeconomic environment improving Expanding business organically and through M&A Improve customer interface and multi channel offer Increase cross selling and cost efficiency Broader offer Improved branch network Initiatives in facility management, aqua culture and PPE M&A Focus on regaining market share in HVAC & Plumbing, and building position in 2 nd product segment Program aiming for increased efficiency M&A Leverage Scale Customer interface Sales efficiency Cross sales Continued private label efforts Pricing Central purchasing efforts Ahlsell 2020 a robust plan supporting market expansion and profitable growth 17
18 Q&A
Appendix 1 Financials 19
Income Statement 2017 2016 RTM 2016 SEK million Jan-Mar Jan-Mar 31 March Jan-Dec Net sales 6,568 5,480 25,694 24,606 Cost of goods sold -4,784-3,976-18,725-17,916 Gross profit 1,784 1,504 6,970 6,690 Selling expenses -1,237-1,104-4,692-4,559 Administration expenses -114-92 -465-443 Other operating income and expenses 9 6 35 31 Operating profit, EBIT 443 314 1,847 1,719 Net finance income/expense -14-303 -851-1,140 Profit before tax 428 11 996 579 Income tax -94-38 -293-237 Profit/loss for the period 334-27 703 342 Attributable to Owners of the parent company 334-27 703 342 Non-controlling interests Basic earnings per share, SEK 0.77-0.09 2.03 1.11 Diluted earnings per share, SEK 0.77-0.09 2.03 1.11 20
Balance Sheet 2017 2016 2016 SEK million 31 March 31 March 31 Dec ASSETS Customer relationships 3,176 3,287 3,249 Trademark 3,837 3,767 3,837 Goodwill 7,053 6,671 7,028 Other intangible assets 124 127 123 Property, plant & equipment 783 728 781 Financial assets 56 31 8 Deferred tax assets 7 9 7 Total non-current assets 15,036 14,621 15,033 Inventories 3,227 3,039 3,287 Trade receivables 3,512 2,844 3,054 Other receivables 1,024 806 1,091 Cash and cash equivalents 1,375 2,313 1,209 Total current assets 9,138 9,003 8,641 TOTAL ASSETS 24,174 23,624 23,674 2017 2016 2016 SEK million 31 March 31 March 31 Dec EQUITY AND LIABILITIES Equity 8,415 709 8,089 Non-current interest-bearing liabilities 7,927 16,063 7,930 Provisions 55 56 55 Deferred tax liabilities 1,406 1,301 1,426 Other non-current liabilities 26 25 Total non-current liabilities 9,413 17,419 9,436 Current interest-bearing liabilities 727 690 724 Trade payables 4,677 3,754 4,599 Provisions 17 8 19 Other current liabilities 925 1,044 807 Total current liabilities 6,346 5,496 6,148 TOTAL EQUITY AND LIABILITIES 24,174 23,624 23,674 21
Cash Flow Statement 2017 2016 RTM Whole of SEK million Jan-Mar Jan-Mar 31 March 2016 Profit after financial items 428 11 996 579 Adjustments for non-cash items 108 299 810 1,001 Tax paid -145-7 -383-245 Cash flows from operating activities before changes in working capital 392 303 1,423 1,335 Changes in inventories 72-97 4-165 Changes in operating receivables -367-216 -705-554 Changes in operating liabilities 192-78 900 630 Cash flows from changes in working capital -103-390 199-89 Cash flows from operating activities 289-87 1,622 1,246 Cash flows from acquisition of assets, liabilities and operations -63-514 -451 Other cash flows from investing activities -60 40-179 -79 Cash flows from investing activities -123 40-693 -530 Cash flows before financing activities 166-47 929 716 Cash flows from financing activities -1,871-1,871 CASH FLOWS FOR THE PERIOD 166-47 -942-1,155 Exchange rate differences in cash and cash equivalents 0 1 3 4 Cash and cash equivalents at end of period 1,375 2,313 1,375 1,209 Additional information Interest received 5 4 20 19 Interest paid -27-103 -499-575 22
23 Appendix 2 First quarter 2017
First quarter in brief Good growth across all main markets Strong EBITA growth One acquisition completed and another two signed 24
Q1: Net sales up 20 percent in strong market Highlights Total sales growth of 20%, of which organic growth was 9 pp Positive effect from trading days and no Easter EBITA increase of 33% Events Acquisition with annual sales of approximately 120 MSEK, and another two signed with sales totaling approximately 105 MSEK Cash flow and financial position Cash conversion 100%, RTM Net debt/adj. EBITDA 3.0x Net sales per quarter and RTM Q1-2017 Q1-2016 Change RTM FY-2016 Net sales, SEK Million 6 568 5 480 20% 25 694 24 606 Organic growth 9% 6% 7% Adjusted EBITA, MSEK 530 397 33% 2 263 2 131 Adjusted EBITA Margin, % 8,1% 7,3% 8,8% 8,7% Operating cash flow / EBITDA (Cash conversion) 100% 90% External net debt / Adj. EBITDA 3,0 3,3 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016 2017 30 000 28 000 26 000 24 000 22 000 20 000 18 000 16 000 14 000 Net sales, MSEK Net sales RTM, MSEK 25
Q1: Group net sales driven by organic growth and increased number of trading days Sweden +19% Norway +28% Finland +12% Group +20% Strong market growth driven by macroeconomics, demographics and shortage of housing Organic growth +9%, supported by successful market initiatives Strong positive effect from number of trading days including no Easter-effect* Positive currency effect Sales Bridge (MSEK) Gr Growth Gr Growth 5 480 3% 9% 6% 2% 5 480 156 5 636 486 321 125 13% 6% 1% 0% 0% 689 308 76 3 13 20% MSEK 6 568 Q1 2016 Sweden Norway Finland Denmark Other Q1 2017 20% MSEK 6 568 Q1 2016 Acquisitions Q1 2016 Pf Organic Trading days Currency Q1 2017 Sales Bridge per market segment (MSEK) 26 * When comparing the level of activity during a normal week with corresponding working days during an Easter week, the higher level of activity, is equivalent to approximately one more business day overall for the Group.
Q1: Group adj. EBITA up 33 %, driven by increased sales Sweden 12.0% adj. EBITA margin Norway 2.8% adj. EBITA margin Finland 1.9% adj. EBITA margin Group 8.1% adj. EBITA margin Strong net sales effect EBITA-improvement mainly in Sweden and Norway Gross margin affected primarily by higher share of sales to larger projects Increased operating expenses due to volume increase, acquisitions and initiatives Adj. EBITA Bridge (MSEK) G Growth 397 75% -5% -37% 33% 299-19 -147 530 Q1 2016 Net sales effect GM effect Op expenses Q1 2017 Adj. EBITA margin per quarter 12% 10% 8% 6% 4% 2% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016 2017 MSEK Adjusted EBITA margin 27
Sweden: Market Strong activity in the construction sector, encouraged by a favourable investment situation with low interest rates and housing shortage Major infrastructure investments Highlights Q1 Net sales up 19% driven by strong organic growth and an increased number of trading days Lower share of sales via branches slightly affected gross margin Adj. EBITA rose 30%, adj. EBITA-margin at 12.0% Acquisition of G-ESS with annual turnover of approximately SEK 120 million and two additional acquisition agreements after the end of the interim period Sweden 2017 2016 Rolling 2016 Jan-Mar Jan-Mar change 12 months Jan-Dec External net sales, SEK million 4,261 3,572 19% 16,563 15,874 Organic growth 9% 7% 8% Profit (EBITA), SEK million 510 391 30% 2,055 1,936 Adjusted EBITA, SEK million 510 391 30% 2,055 1,936 EBITA margin, % 12.0% 10.9% 12.4% 12.2% Adjusted EBITA margin, % 12.0% 10.9% 12.4% 12.2% Net sales and adj. EBITA margin per quarter 28
Norway: Market Positive development of the mainland economy and housing sector has had a positive impact on market conditions Highlights Q1 Net sales up 28% driven by organic growth, currency effects and an increased number of trading days The shift of Easter to the second quarter has had a positive impact on sales and result during the period Gross margin slightly lower due to increased sales to large customers and projects Adj. EBITA margin increased to 2.8% Establishment of a new organisational structure with clear regional accountability for performance Norway 2017 2016 Rolling 2016 Jan-Mar Jan-Mar change 12 months Jan-Dec External net sales, SEK million 1,390 1,082 28% 5,217 4,909 Organic growth 12% 6% 7% Profit (EBITA), SEK million 39 13 207% 168 142 Adjusted EBITA, SEK million 39 13 207% 176 149 EBITA margin, % 2.8% 1.2% 3.2% 2.9% Adjusted EBITA margin, % 2.8% 1.2% 3.4% 3.0% Net sales and adj. EBITA margin per quarter 29
Finland: Market Strong residential sector in the larger city regions Market conditions are, to some extent, considered challenging, both in terms of recovery in certain sectors, as well as increased competition Highlights Q1 Net sales up 12% driven by increased number of trading days and organic growth Increased operating expenses due to initiatives Adj. EBITA margin increased to 1.9% Continued investment in branch network expansion Plan for new organisational setup and increased cost efficiency Finland 2017 2016 Rolling 2016 Jan-Mar Jan-Mar change 12 months Jan-Dec External net sales, SEK million 727 651 12% 3,126 3,050 Organic growth 4% 2% 7% Profit (EBITA), SEK million 14 10 44% 118 114 Adjusted EBITA, SEK million 14 10 44% 118 114 EBITA margin, % 1.9% 1.5% 3.8% 3.7% Adjusted EBITA margin, % 1.9% 1.5% 3.8% 3.7% Net sales and adj. EBITA margin per quarter 30
Denmark and Other Denmark Market conditions remain challenging despite positive signs Net sales grew with 3% due to currency effects Organic growth was -5% due to market conditions Adj. EBITA margin increased to 8.8% Denmark 2017 2016 Rolling 12 2016 Jan-Mar Jan-Mar change months Jan-Dec External net sales, SEK million 96 93 3% 367 364 Organic growth -5% 3% -1% Profit (EBITA), SEK million 8 7 14% 34 33 Adjusted EBITA, SEK million 8 7 14% 34 33 EBITA margin, % 8.8% 7.9% 9.3% 9.1% Adjusted EBITA margin, % 8.8% 7.9% 9.3% 9.1% Other Net sales grew with 15% due to currency effects and organic growth in Estonia The slower growth in Russia and Poland is attributable to a subdued market, especially with respect to projects Adj. EBITA margin of 1.1% Other (Est, Pl, Rus) 2017 2016 Rolling 2016 Jan-Mar Jan-Mar change 12 months Jan-Dec External net sales, SEK million 95 82 15% 422 410 Organic growth 5% -10% -7% Profit (EBITA), SEK million 1 1 13% 9 9 Adjusted EBITA, SEK million 1 1 13% 9 9 EBITA margin, % 1.1% 1.1% 2.2% 2.2% Adjusted EBITA margin, % 1.1% 1.1% 2.2% 2.2% 31
Distributes to 100,000 customers, small and large - in all product segments Customer Segment ~10% Other ~15% Infrastructure Example of customers Comments >80% of net sales in 2015 from customer relationships >5 years 3 Customer segments (% of 2015 sales) 1 ~8% ~20% ~46% Construction Industry Installers SME 2 SME 2 SME 2 Large Large Large Top 10 largest customers accounted for 6% of sales in 2015 SME 2 customers contributed to 43% of group sales Country wise SME shares: Sweden 41%, Norway 27% and Finland 55% Focus on continuously increasing SME share Breadth and scale enables profitable cross-sales across categories 32 1. Not to scale 2. SMEs refer to small and medium-sized enterprise customers. The definition of an SME varies across Ahlsell s product segments but is based on sales thresholds in some cases and the number of employees in other cases 3. Based on first historical registration date of customers that purchased from Ahlsell in 2015. Source: Company information as per financial year ended Dec 2015, Third Party/Company Analysis