Angel Oak Income ETF Price & Performance (CARY)

Okay. Thank you very much, Alan, and thank you everyone for coming in and listening to our 2nd quarter report. So the Q2 could be summarized as one with strong demand in a good market Good environment. We had sales growing by 81%, organic growth of 5% and 7% if you adjust The high sales led to an increase in adjusted EBITDA of 62 We continue our acquisition strategy and consolidation of a fragmented And the closed acquisition of Express Glass in Portugal and Charlesview Holding in the UK. The fast expansion Leads to a growing share of sales in rest of Europe and then initial dilutive Dilution effect of the margin before we realized synergies and have made the full integration of the company. We continue to compensate for higher input costs in the quarter, which helped the margin. Jeff, we had a strong cash flow and cash conversion, and this will lead to that the leverage will gradually Turning into Slide number 3. The market in which we operate this is driven by Strong structural drivers. We have larger and more advanced vehicle class. We had a mix effect in the car fleet, The higher share of ADAS calibration, increased glass prices transferred to customers and distance driven.

The second quarter was no exception on relying on these Historical recession proved factors and showed a good organic growth. Our M and A growth of 75% is driven by our The consolidation journey in the fragmented market. Turning into Slide 4. As mentioned in the beginning of the presentation, we are happy that sales developed strongly. In of the total sales of 75% was M and A growth. Organic growth was accounted for 7% adjusted for number of working days. The lower number of working days particularly affected sales in the U. K. Due to the Queen's Jubilee in Thank you. Organic growth was strong in the Nordic region, but we saw some Difficulties in the U. K. In the quarter. I will come back to that later. The newly acquired and consolidated Company MPS in Norway, Librlaarza in Spain and Central Autogloss in Germany together noted a double digit organic sales increase. Turning into Slide 5. Adjusted EBITA amounted to SEK 100 and SEK 68,000,000 in the 2nd quarter. The adjusted EBITA margin amounted to 16.1%. Increased input cost was pushed through in the Nordics, and we were made progress in the rest of Europe during the quarter.

We saw increased margins in the Nordics and stable margins in the rest of Europe. As mentioned, due to our rapid growth Expansion in Europe, we will initially have a margin dilutive effect before synergies are realized and the companies are fully integrated. Turning to Slide 7. As you are aware, we have On M and A strategy, which risks on 3 pillars. We do platform acquisition, add on acquisitions and smaller amounts of public In the quarter, we completed our largest acquisition so far with the Schall SKU Holding in the U. K. We also continue to with our add on acquisitions in Spain, which is important in their growth strategy. We are working across all regions with our structural approach to onboarding and integration of of acquired companies as well as with operational excellence initiatives to improve productivity. These two main focus areas are U. K. And Norway. Turning to Slide 8. So in Norway, our glass business has been struggling with low profitability for some time. As you Probably recall, we acquired FBS Bilskate in the beginning of the year, and we are now merging the 2 companies to create a Stronger core. We're closing on profitability workshops and consolidating administrative functions between the Structive functions between the two companies.

So this will lead to savings of approximately SEK 5,000,000 in 2022 and 15 minutes in 2023 and ongoing. The new combined businesses will offer both vehicle glass repair collision and water repair. This will result in a broadening and attractive offering to insurance companies as well as leasing companies. Turning to Slide 9. In the quarter, we closed the acquisition of Charles Pugh, which now, together with our Sysed U. K. Business, the mobile wins we are making up for the U. K. Business. As a first step in the integration Of the companies, we have established a joint a strong joint management team who will take the combined business to next level. In the Q1, we started an operational excellence program with which we have now further implemented. The project will lead to higher capacity utilization by simplifying processes that practice sharing and combine Charles View and mobile purchasing and procurement organization. We're also looking into synergies and cost savings From the combined businesses with staff optimization, shared IT system and an optimized distribution. These initiatives will lead to savings in 2022 of SEK 5,000,000 to SEK 10,000,000 From SEK 23,000,000 and ongoing SEK 25,000,000 per year, just as we communicated when we made the acquisition of Schalzberg.

So we will turn it to Slide 11 now, and I will leave the word over to Jorgen.

Thank you, Anders. We'll go through a breakdown of the income statement based on our regions, with the Statement based on our regions, starting with our business segment, Nordics. We increased net sales by 30 Percent to SEK 538,000,000,000. And the organic growth in the Nordic region was 9%. The adjusted EBITA increased by 36% in the quarter, mainly as a result of the strong sales increase. The adjusted EBITA margin increased to 26.7% due to the high revenue and also strong cost control. And as Anders mentioned, higher input costs were pushed through to customers in the quarter. Moving to the following Slide number 12 and business segment Rest of Europe. In the segment, sales increased by 2 0 3 percent and of course, driven by The acquired companies that we have made in the LTM period, the biggest one being We just want to speak with Alarsa in Spain, Centrale Autoglas in Germany, Express Class in Portugal and Charles Pure Holdings in the UK. We saw strong organic growth in Central de Outoklass and also Randharza in Spain and a good I'll start into the group for an express class. Adjusted EBITA increased to SEK 49,000,000 and the adjusted The margin amounted to 9.6% in the quarter.

Acquisitions contributed positively through the margin. The UK saw lower organic growth in the quarter and also somewhat lower profitability. We're now speeding up the transformation in the UK With savings in both 20222023, as mentioned by Anders on the previous slide. Regarding revenue growth in the UK, our view is that the UK market is still performing well, but we have We've been struggling with internal capacity issues in the quarter. We are now addressing those, and We see good potential for revenue growth going forward. I'll now move on to Slide 13, which demonstrates our profitability development for the group with price increases, operational efficiency and acquisitions How can the impact on margins in Q2, but also how these factors provide opportunities for us going forward? So looking at this breakdown of the development of the EBITA margin compared to 1 year ago, we are now at 16.1% in the quarter compared to 18% same quarter Thank you. The dilution is, as has been mentioned before, and to a large extent, an Next on our acquisition strategy. From left to right on this slide, the first So, box gross margin, the gross margin was largely maintained in the quarter.

As We commented on we have been able to pass through the increased input costs, mainly in the Nordic regions and making progress also outside the Nordic region. The second component here, operating leverage. We So good operating leverage, mainly in the Nordic region. And we are now focusing on Improving that in the UK with the measures that were mentioned previously, and we also expect Gradually improved revenue growth. The 3rd component to the margin development, then the dilution from the acquisitions in the LTM period. And just as planned, the high acquisition pace initially leads to lower margins. We are now integrating these acquisitions into the group Focusing on extracting synergies and achieving economies of scale across all geographies. And combined with our increased sector organizations, which is Needed for our active expansion strategy, the impact from expansion and Build up of corporate functions was minus 2.9 percentage points to the margin in the quarter. Now turning to Slide 15, Anders will give some comments on the development Yes. So as said, we strive to be a leader in the industry with regards to Time to impact and the key tools for this is having a digitalized customer journey, proximity to the customers, increased The increase of the repair rates and electrified courtesy car fleet and of course, recycling of repaired glass.

So in the Q2, we repaired over 50,000 windscreen compared to 42,000 last year, which saved 2,200 tons of carbon per se. We have 84 Electric courtesy cars in the Nordisk, which is 26% of the total car fleet in Sweden and Norway. In the quarter, more than 250 customers per day used our artificial intelligence to talk in the Nordics and the U. K, reducing mild travel to and from our workshops. As already communicated, we're also happy to announce that we are from 2021 are climate neutral. Turning to Slide 17, and Jorgen will share some more details of the financials.

Yes. Slide number 17, a summary overview of our P and L in the quarter. I'm just highlighting a few items here. As mentioned previously, net sales grew by 81% in the quarter to SEK 1,000,000,000.15 SEK 1,000,000,000. And the adjusted EBITDA grew by 77 Our margin, a weak amount in Before items affecting comparability was 15.8% in the quarter. And items affecting comparability were Minus SEK 2,000,000 in the quarter net. Amortization of acquisition related intangible assets Amounted to SEK 19,000,000,000 and the increase is an effect of the acquisitions we have made over the last 12 months. Adjusted earnings per share amounted to SEK0.76 per share The corresponding figure here previously is not comparable due to the change of capital structure that we and the web in connection with the IPO. Moving on to Slide 2018 and looking at our balance sheet and financial position. The leverage ratio was 4.3 times at the end of June. The increase is driven by financing of our acquisitions And most notably, the acquisition of Charles Q in the quarter. A weakening of the Swedish tuna also We have increased the net debt in our reported currency. Net debt at the end of the quarter amounted to SEK 3,000,000,000, Which was an increase of approximately EUR 800,000,000 in Q1.

Of this Amount in prospect, that amounted to approximately SEK 2,400,000,000 and IFRS lease Kari Group, we stand on a stable financial basis, and the company generates strong cash flow, and we expect leverage to gradually We It's up SEK 678,000,000 at the end of the quarter and cash in bank SEK 256,000,000,000 We also, at the beginning of the quarter, ended Thank you to an interest swap agreement for the majority of our interest rate exposure. Moving on to Slide 19, overview of our cash flow development. We had cash flow operating cash flow in the quarter of SEK 199,000,000. Cash conversion remained strong at 91%. And as you recall, our business Moving on to Slide number 20, an overview of the acquisitions completed In the quarter, we made 12 additional acquisitions, the Acquisition of Charles Q being the biggest deal in the history of Kari Group, but also Danish business continued to acquire smaller franchise businesses with 6 acquisitions in the quarter and also one external version being acquired. Now moving On to Slide 22, I'm handing back to us.

Yes. So Q2 It was a strong quarter. We continue to execute on our strategy and are happy to see that our newly acquired companies delivered. We are very confident in the way we have managed to increase prices in the quarter, and we will continue to do so. We are now focusing on integrating new businesses and reach synergies and economies of scale. With a Strong cash flow leverage will gradually be decreased. We are confident there are initiatives in the UK and Norway will lead to increased So now we would like to open up for questions.

Thank Our first question comes from Rory McKenzie from UBS. Go ahead. Your line is now open.

Good morning. It's Roy here. Just three, please. Firstly, can you quantify how much You've increased prices so far in Sweden and the U. K. And how much further there is to go until you catch up with the cost inflation? And then secondly, should we expect you to incur any exceptional costs for the restructuring programs in Norway and the UK? And do you expect to see any negative revenue impacts of the branch closures? And then finally, can you just update us on the total finance costs You should expect the run rate from now onwards given this interest rate swap cost and the interest of the results. Thank you.

Thank you, Rory. I'll see if I can take these off. Remind me if I can, it's any one of them. Regarding the restructuring programs or the cost saving programs In both the U. K. And in Norway. We will come back to that at the end of this quarter in connection with The reporting of the Q3, so pass on that for now. There is no Significant restructuring during August. We'll have to come back in the next report. Regarding interest expenses, We as I said, we've responded over half of the interest rate exposure Into fixed was a big hit of this quarter. And the total costs at the moment It's an interest of 3.5% to 4%. But then that being said, less than slightly less than We just have to still be exposed to floating charges, so you have that in mind. The third question, Remind me again.

It was could you just quantify how much you've increased prices so far?

Yes. We've seen increased glass prices mainly In the Q1, there's been some slight increases also in the Q2. If we look at the Swedish or Nordic region, They have been roughly in the size of 5% to 10% on an annualized basis. And as you know, historically, We have contracts that allow us to pass this on to customers, which we have done as well in the Outside the Nordic region, the contract structures are different. We've had slightly larger Cost increases, I'm talking about input costs outside the Nordic region, and we are working continuously To pass this on to customers, it takes some time and contracts are usually on a 1 On a quarterly basis, we have been successful in many cases. And in the cases where we're still not successful, we continue So just a follow-up. So the minus 5% organic growth in the Rest of Europe division, I guess then in real terms, so in volume terms, that's probably a double digit negative Volume growth in the quarter, is that fair?

Well, as we said, in the UK market, And remember that the organic revenue development is only on Mobile Windscreen's business, Which was the comparable business 1 year ago. We have had we have been struggling with some capacity issues. It was also in In the Q1, we mentioned that the labor market and some difficulties to retain For key staff made it difficult to execute on the demand. This has to some And those continued into the Q2. So yes, we have had negative volume development. We've had some price increase in UK market, but still working hard to pursue the remaining price increases to customers.

Okay, understood. Thank you very much.

Thank you. Our next question comes from Olof Sjaderholm from ABG. Go ahead. Your line is now open. Yes. Hi, everyone. A couple of questions from me. You highlighted organic growth in Rest of Europe. You highlighted some of the acquired companies that were growing. How about Charles Pugh? Was that growing in Q2? And how do you see the U. K. Developing going forward? Are you still going to have some So the issues or labor issues or do you see a return to growth there in the second half? I have a few more, but please start with that.

So what we're doing In the U. K, to describe for everyone, we're merging those 2 big Companies into 1. That is quite significant work that needs to be done. We have As you recall, we did do operational excellence project there pretty much to know exactly how we want Merge them together. And we are not close to finalize yet. We have started, but we have a lot of more things to do there. And you should bear in mind that this is quite a huge Workload for us to do, but we are definitely on the way. We have not It hasn't developed as fast as we wanted to. I should be quite clear on that. But we will probably Struggled with it a couple of months more in this autumn. But in the long period, it's Still very, very we have huge opportunities there and looking very good goal. As we go ahead, we have a really good market and we have a really good potential, but we are not We haven't been as fast as we would have liked to be.

Sorry, a follow-up just so I understand correctly. You're talking about the integration of ChargeBlue into your existing business. Is that what's not been developing as fast as you hoped?

Yes. Or I should say, merging them together because we are not just integrating Kew into our business. We're merging the 2 And actually using a lot of what was good in Charles' Pugh and merging and integrating our mobile unit Into Q. So it's a combination. Sometimes we integrate the Q into mobile and sometimes we integrate mobile into So it's more a merge, I should say. And now I'm not happy with the speed of that. We would like to We've been able to do it a little bit faster than we have, but again, very good market and very good potential.

Okay. And on the targeted restructuring savings that you're doing in Norway and the UK, How much of those have already been supporting the earnings or if any, €5,000,000 in Norway, €5,000,000 €10,000,000 of the UK that are supposed to support 2022. Are that only in the second half of the year Or anything in Q2?

Yes. There's no effects of those programs in the second quarter. Okay.

And you're not highlighting potential synergy savings from other acquisitions. Are those still I'm talking about Ralarsa that were maybe late to generate synergies and Express Class and in Germany as well. So are those also expected to generate synergies going forward?

Yes. We wanted to emphasize The 2 markets where we have made more work in this quarter and have been made more structural approach. Of course, in the other markets, Both internally in the German market and internally in the Iberian market, there's a lot going on, both in terms of building Market size, which we know also leads to a better higher volumes and better margins over time. And there is also the continuous work of extracting synergies across the whole group. So that is ongoing, and that is part of of the work that we're doing to reach our financial targets. But we didn't single it out this quarter to give Fair enough. My last question is, I was just wondering if you could highlight which acquisition That's a earn out write down, it's related to.

It was in the Norwegian market On the MPSP, Scott, the reason why we did that was that We came to a situation and into discussion with the sellers that we wanted to have a A more room to maneuver when it comes to the restructuring and I don't know, sort of Put some restrictions on us, and that's why we came to an agreement to shut the I don't know, down Thank you. At this point in time, there are no further questions. I will hand over to the speakers for any closing remarks. Thank you.

Thank you, everyone. Starting today's call, if you have any follow-up questions, Please don't hesitate to contact anyone on that. Thank you very much.