tbd30

INTERIM PERIOD 1 JULY – 30 SEPTEMBER

• The Group’s net sales amounted to SEK 217.4 million (115.9), adjusted EBITDA amounted to SEK 25.3 million (6.9) and adjusted EBITA amounted to SEK 11.1 million (-2.9).
• Operating profit (EBIT) amounted to SEK 4.7 million (-11.3). Items affecting comparability during the period totalled SEK 3.4 million (5.6) and primarily pertained to costs related to change of listing to Nasdaq Stockholm and corporate acquisitions.
• Tebede’s primary subsidiary, Spolargruppen, continued to report a strong trend during the quarter with proforma net sales amounting to SEK 233.0 million (196.6) corresponding to sales growth of 18.5% (11.6). Adjusted EBITA amounted to SEK 14.5 million (4.1). The adjusted EBITA margin was 6.2% (2.1). The adjusted operating margin was impacted by acquisition costs of SEK 1.6 million (5.6) Underlying operating profit continued to be impacted by investments in new establishments.
• The Group’s net earnings amounted to SEK 4.4 million (-4.5). The Group’s net earnings were negatively impacted during the quarter by SEK -4.2 million (7.2) from remeasurements of cash-settled warrants (see also Note 5).
• The Group’s basic and diluted earnings per share amounted to SEK 0.32 (-0.34).

SIGNIFICANT EVENTS DURING THE QUARTER

• On 29 September 2023, the newly founded company SPG BidCo 2 Oy (under a name change to RELINER Oy and hereinafter named “RELINER Oy”) acquired the relining company Consti Sukitus from Consti Building Services Ltd, further strengthening Spolargruppen’s position in Finland.
• On 19 September, the company repurchased 250,000 series 2021:2 warrants (TO1A) and 250,000 series 2021:3 warrants (TO2A) at an average price of SEK 2.65 per TO1A warrant and SEK 2.65 per TO2A warrant.
  

1 JANUARY – 30 SEPTEMBER PERIOD

• The Group’s net sales amounted to SEK 681.3 million (220.9), adjusted EBITDA amounted to SEK 85.9 million (26.3) and adjusted EBITA amounted to SEK 46.6 million (11.3).
• Operating profit (EBIT) amounted to SEK 26.2 million (-17.5). Items affecting comparability during the period totalled SEK 11.6 million (23.9) and primarily pertained to costs related to the change of listing to Nasdaq Stockholm and corporate acquisitions.
• Proforma net sales for Tebede’s primary subsidiary, Spolargruppen, amounted to SEK 742.1 million (642.2) corresponding to a sales growth of 15.6% (15.8). Adjusted EBITA amounted to SEK 59.3 million (56.0). The adjusted EBITA margin was 8.0% (8.7).
• The Group’s net earnings amounted to SEK 6.1 million (-5.3). The Group’s net earnings were negatively impacted during the quarter by SEK -9.9 million (12.0) from warrant remeasurements.
• The Group’s basic and diluted earnings per share amounted to SEK 0.45 (-0.40).

SIGNIFICANT EVENTS DURING THE PERIOD

• On 2 January 2023, the acquisition of Suomen Sukittajat Oy was completed, which established Spolargruppen in Finland.
• On 28 February 2023, Dansk Ventilationsforing ApS was acquired, which strengthened Spolargruppen’s position in Denmark.
• On 28 April 2023, the acquisition of RPL Talotekniikka Oy was completed, which further strengthened Spolargruppen’s position in Finland.
• On 15 June 2023, the newly formed company Repipe Norrköping AB, and the operations and assets in Norrköping Relining AB were acquired.
• At the Annual General Meeting on 26 April, the Board of Directors’ proposal to change the company’s name to Tebede AB was approved.
• On 29 September 2023, the newly founded company RELINER Oy acquired the relining company Consti Sukitus from Consti Building Services Ltd, further strengthening Spolargruppen’s position in Finland.
  

SIGNIFICANT EVENTS AFTER THE PERIOD

• On 11 October 2023, Tebede’s Class A shares were approved and admitted to trading on Nasdaq Stockholm, and on 13 October, the company published a prospectus approved by the Swedish Financial Supervisory Authority. On 20 October, the company’s shares were delisted from First North Growth Market and the first day of trading on Nasdaq Stockholm was on 23 October.
• On 17 October 2023, the Board of Directors resolved, with support from the Extraordinary General Meeting held on 3 October 2023, on an offset issue of 172,948 Class A shares for completion of the company’s offer to repurchase series 2021:2 and 2021:3 warrants. This will substantially reduce the potential future share dilution, lower earnings volatility and increase liquidity in daily share trading.
  

OUTLOOK

• Despite uncertainty in the market, the aim is for Spolargruppen, for the year as a whole on a comparative basis, to achieve organic growth that is at least in line with Spolargruppen’s long-term financial targets and profitability (proforma adjusted EBITA margin) in line with or close to the preceding year.

CEO Comments

CONTINUED STRONG PERFORMANCE IN ALL SERVICE AREAS
(All comments and figures in the CEO comments refer to Spolargruppen proforma for the third quarter unless specifically stated)

In the seasonally quieter third quarter, we could report healthy sales growth in all of our service areas despite markets remaining cautious in parts of the business. Spolargruppen reported sales growth of 18.5% to SEK 233.0 million (196.6) for the quarter. The adjusted EBITA amounted to SEK 14.5 million (4.1) for the quarter corresponding to an adjusted EBITA margin of 6.2% (2.1) and 7.9% excluding new establishments.

It was gratifying during the quarter that all service areas – pipe relining, pipe inspection, flushing and geothermal – reported growth that far exceeded the long-term financial target of organic growth of more than 10%. In addition, the EBITA margin strengthened 2.1% to 7.9% adjusted for new establishments.

We noted an earnings improvement in the Swedish business in the quarter due to a healthy performance in many large units including the pipe relining business in southern Sweden and in our operations in geoenergy and pipe inspection. The Danish operations continued to perform weakly, although we see signs of market conditions improving, which together with a number of key recruitments means that we have high hopes of improving earnings over the next few quarters.

Our newly established operations in pipe relining in Lidköping, Borås, Linköping and Örebro performed in the right direction despite a sluggish start to the year, with sales in line with the seasonally strong second quarter. Sales amounted to SEK 8.8 million and the negative impact on the market for Spolargruppen as a whole was 1.7%. In the long term, we continue to expect new establishments and acquired operations to achieve growth and adjusted EBITA margins in line with Spolargruppen’s long-term financial targets.

Furthermore, the quarter was dominated by a focus on Spolargruppen’s academy and on efforts to establish Spolargruppen as a market leader in sustainability. Access to talented personnel is crucial for the Group’s success and the academy will help attract and retain the market’s best employees by offering further training. As part of sustainability initiatives, Spolargruppen received ISO 26000 certification during the quarter, which highlights our commitment to delivering high-quality and sustainable solutions to our customers. These strategically important areas impact the share of central overheads, although these will level out as volumes rise.

FOCUS ON PROFITABILITY AND HEALTHY FINANCES
Over the last 12 months, we reported an adjusted EBITA of SEK 101.8 million corresponding to an adjusted EBITA margin of 9.9%. We are currently working on a number of initiatives to strengthen profitability, including a general review of project pricing, efficiencies in staffing and planning, and a general more intense focus on costs. Given the prevailing uncertainty concerning the economy and interest rates, focus in the quarters ahead will be directed on profitability rather than growth. We will also strive to uphold our strong finances, meaning that we will prioritise acquisitions that are strategically important and create clear value even in the short term.

Our long-term financial targets for Spolargruppen remain organic growth exceeding 10% and an adjusted EBITA margin of 15%. In the third quarter, we continued to deliver growth that exceeds our long-term financial target and improved profitability compared with last year.

CONTINUED HIGH RATE OF ACQUISITIONS WITH FURTHER ACQUISITIONS IN FINLAND
During the quarter, we further strengthened our position in pipe relining in the Finnish market by acquiring the relining business of the listed Finnish company Consti Building Services. The operations generate sales of approximately SEK 60 million and this acquisition means that Spolargruppen has assumed a leading position in Finland. As previously communicated, the operations in Finland had a total adjusted EBITA margin that is lower than the average for Spolargruppen, which entails a negative impact on Spolargruppen’s overall margin for the year. However, with the leading market position that has been established and synergies between the operations, we believe that over time the Finnish business will be able to contribute to Spolargruppen’s long-term financial profitability targets.

In addition to the announced acquisitions, we remain engaged in a large number of discussions, and have high hopes that we will be able to complete many transactions over the next few quarters.

LISTING OF TEBEDE ON STOCKHOLM STOCK EXCHANGE’S MAIN LIST
During the year, we announced our aim to list Tebede’s share on the main list of the Stockholm Stock Exchange and thus move over from First North. We were delighted to ring the bell on 23 October and thus achieve yet another milestone. We view the move to the main list as a mark of quality that creates better conditions for a broader base of shareholders and higher share liquidity.

The Parent Company Tebede’s impact on the Group’s adjusted EBITA in the quarter was SEK -2.7 million, of which personnel costs accounted for SEK -1.5 million.

OUTLOOK
The positive long-term trend driving Spolargruppen’s markets is expected to continue even if rising interest rates and costs could postpone investment levels in the Nordic housing market for a period of time. At the same time, there is increased interest in energy-saving projects such as pipe inspection and geothermal solutions for apartment buildings. With the uncertainty among our customers in pipe relining, a sluggish start for our new establishments and the incorporation of the Finnish operations with, to date, an overall lower margin than for Spolargruppen as a whole, there is the risk that our performance in the seasonally strong fourth quarter will not be able to fully compensate for this. Having said this, our the aim for the year as a whole on a comparative basis is to achieve organic growth that is at least in line with Spolargruppen’s long-term financial targets and profitability (proforma adjusted EBITA margin) in line with or close to the preceding year, and where we, after adjusting for the aforementioned factors, see an underlying healthy performance and improved profitability.

Stockholm 6 November 2023.

CEO, Anders Lönnqvist

For full interim report, see appendix.

For more information, please contact:
Anders Lönnqvist, CEO
+46 70 566 62 18
Anders.lonnqvist@Tebede.se

Caesar gezelius, CFO
+46 708 333 136
Caesar.gezelius@Tebede.se

About Tebede
Tebede's operations are mainly conducted via the subsidiary Spolargruppen, which is active within property related pipe flushing and relining. Spolargruppen's customers mainly consist of commercial property managers and housing cooperatives. Tebede has a clear growth strategy with a focus on both acquisitions and organic growth, including through greenfieldings in new locations. The head office is located in Stockholm.