Bravida Holding AB

STO:BRAV

Earnings Call Transcript 2022-Q2

[Mattias Johansson, executive]

Good morning, everyone, and welcome to Bravida Q2's Report 2022. Yet another solid report that are going to be presented by Asa and myself, and I think most of you know us from before. I've been CEO since 2015. And Asa you started in?

[Åsa Neving, executive]

I started in 2019.

[Mattias Johansson, executive]

2019, yes. So welcome to this presentation and today's agenda is that we will start with our position in the Nordic market, follow up with some numbers from the Q2, of course, and then also will take you through the different countries, and then we end with a summary and Q&A session.

So again, warmly welcome to this presentation, and we start with our position in the Nordic market, and maybe that is more important than ever to try to describe what kind of company Bravida actually is. We are in the Nordic companies. Sweden is the biggest market, followed by Norway, Denmark and then we have Finland as well. And it's quite important to understand that being in different countries in many different places with a lot of different customers, different types of customers is, of course, some kind of insurance for us in times like this.

First of all, I want to express that, we are seeing good demand for service and a stable demand for installation. But you need to understand that, we are placed in 450 different addresses, 300 branches, meaning that we have a lot of different local market conditions, whatever the market looks like. And today, the demand is stable. On LTM basis, we have SEK 23 billion plus in sales, 65,000 customers, and we want to support our customers from early planning phase, do the installation in the newbuild phase, and continue the service renovation, rebuilding, etcetera, and maintain the installation systems. We give the opportunity to our customers to get the possibility to buy the full scope of installation services from Bravida. So many different places, many different customers, many different type of customers. 2/3--- close to 2/3 of our sales is service, renovation and rebuilding. So a very stable business model in times like this.

This is how the history looks like, and you can see quite impressing numbers. CAGR on the sales is 9% since '15, and actually 10% on the EBITDA during the same period, which is a fantastic track record. And remember, the 2 last years have been quite challenging due to the pandemic, and still our business model have given us the opportunity together, with a lot of skilled people in the organization to deliver an improved result every year.

We need to adjust to a new time and Bravida, we help customers develop the full potential of the buildings through service and installation, we bring buildings to life, and we are leading the way to a sustainable and resilient society. We want to be, and we are, as I say, the Nordic leader in sustainable technical solutions. Again, we want to be a partner of our customers from the early planning phase, do the newbuild installation, do the maintenance and service throughout the whole lifecycle period of the buildings, and we want to give the opportunity to the customers to use all our services.

An example of these services is, for example, that we are supporting the customers to use less energy, which is more and more important depending on the high energy prices. We are helping them to use other types of energy sources, and we are also giving the service that are valid for the new time, for example, EV chargers for the electrical cars, et cetera. So a leading provider of sustainable technical solutions for buildings and every customer has access to the entire offering, lifecycle perspective for every buildings, and we are and want to be -- stay as the leader in the sustainability area in this sector as well.

So going into the Q2 numbers and the market outlook. Still, we see a good demand for service as well as installation. We see definitely a growing demand for sustainability -- sustainable and energy-efficient solutions, that has been quite low before, but the trend is clear. The willingness from our customers to invest to reduce the energy cost is improving. We see definitely a lower risk for material shortages. We haven't seen a lot of this actually in the last quarters, and I think that is the reason because we are the market leader in 3 out of 4 markets. So we are first in line to get the material from our suppliers, and we have a really tight partnership with many other suppliers that are helping us to get the material. And that is the same partnership, who is helping us together with our suppliers, some of the suppliers, to make sure that we are doing everything we can, to not get the material increases that the rest of the market gets.

Of course, we see some uncertain times, increasing interest rates and inflation, and that will, of course, impact the market in some way. But on the other hand, we see decreasing raw material prices that will probably take down, or most likely take down the material prices going ahead as well. So overall, as now, a strong demand. We have a record high order backlog, so I think we have a really strong, good position for the coming quarters as well.

The highlights from the quarter. First, it's very great to see that the service growth is 14%. On the other hand, the installation growth actually is higher, that is 17%. And as you know, we want to change the mix over time, but we don't want to change the mix, because we are having a slower growth on installation. We need to take the advantage of the market. So as long as we can grow both installation and service, that is good. But over time, we want to change the mix a bit, so we have more service than installation.

We see organic growth at 8%, very good number. Order intake, up 9%, and we can see that it is improving in Norway, Denmark and Finland, and we have a record high order backlog, it's close to SEK 17.5 billion. The margin is stable at 5.9%, and the cash flow was SEK 62 million, and very happy to announce, that the lost time injury frequencies has improved, and it's now down to 7.4% in the Group. Our own work with sustainability is continuing, and in this quarter, 65% of all vehicles that we have been ordering, has been electrical. 65% is electrical, which is one way for us to improve our sustainable footprint. Overall, net sales is up 16%, order backlog increases with SEK 100 million in the quarter, stable margin, 5.9% and cash conversion at 80%.

If we look at the bridge on the sales, we see that close to SEK 0.5 billion is coming from organic growth. Another SEK 300 million plus is coming from our acquisitions, and then we have some currency effects around 2% as well. Organic growth in Norway and Denmark. We have a negative growth in Finland, and that is because quite tough comparable figures from last year, where we grew the Finnish business a lot. But still a very good development in Finland. Overall, a very solid development in the quarter, 16% plus.

If we look at the EBITDA, SEK 376 million compared to SEK 327 million, stable margin, and we can see that the margin is improving in Finland, and it is unchanged in Sweden and Denmark, and slightly lower in Norway, depending on -- and also I will come back to this, some change in the mix, depend -- between service and installation and some higher costs for sick leave in the quarter.

When you look at the numbers and you see the margin, 5.9%, you all know that we are not adjusting for the investments we are doing. And in the quarter, we have been spending SEK 22 million in non-recurring costs for implementing the new digital solutions and systems needed to realize the business plan in the coming years. So if we take that in consideration, we have actually improved the margin, but we are not adjusting for those things. SEK 22 million in the quarter and so far, SEK 35 million the first half year. And as you see at the last bullet on this slide, the digital initiatives, including initiatives for improving the service business will be around SEK 80 million to SEK 100 million this year.

And driving the business plan forward is, of course, important for us to make sure that we have a great company even tomorrow. But this is driving the administrative expenses for the moment. And we will probably see an improved margin due to this, in late '23. Today, we have the cost, and we have some increased recurring costs for strengthening the IT platform, digital development capabilities and increased sustainability focus, and we also have strengthened our HR focus, that is actually, of course, very important for us when we have 12,500 employees.

And we will also see some initial costs for investment in the new businesses. We are hiring new type of talents, resources, competencies, to make sure that we are gaining market share in the technical facility management, but also building automation. And those areas are expected, as I said, to add positively to the margin in the end of 2023.

But those initiatives is going -- developing in a positive way. For example, we can mention a Pan-Nordic facility, a technical facility agreement with Schneider Electric, where we are providing over 20 different type of services, technical services to the customers throughout the Nordics. Very exciting to see what we can do in this area. And the building automation, definitely binds all our different services together.

When we come to the order intake and order backlog, you can see a very stable positive development on this chart. The order backlog is growing in the quarter in Sweden and Finland. The order backlog increased by 17% year-on-year and again, on a record high level. And I have said that, I don't know how many quarters in a row I've said a record high level. So we have a really strong position going forward, and we really know what to do in the coming quarters. The order intake increased 9%, and we see growth in Norway, Denmark and Finland.

Sustainability, as I mentioned before, the LTIFR, Lost Time Injury Frequencies has improved, maybe the most important KPI for all our employees and for our customers as well, of course. There, we see a decline in engineering numbers on group level with 15%, and it's specially improving in Sweden and Denmark. Norway are already on a very good level. Finland has improved the last year as well. So our focus on our employees' safety has given some good result. Ordered electrical vehicles, 65% of total vehicles, which is improving. I think in the last quarter, it was 57%, and we will very soon see that we are only buying electrical cars.

We still see some challenges that we don't get those cars delivered, impacting the CO2 emissions from vehicles, which is up to 0.1%. But if we do this calculation in relation to sales, we can see that we have decreased the number with 4.3%. So some positive numbers, and we still have plenty of things to do, to make sure that our own CO2 emissions go down. But that will be helping us, when we get those costs delivered.

I want to tell you something about the Bravida GreenHub, which is our way of delivering fossil-free services to our customers in the city centers. It's clear that we were very early with this kind of offer to the market. But now the last quarter, we can clearly see that the customers are actually ready and changing their way to buy services from us. It's getting more and more important for the customers to actually buy services in a fossil-free way. So the growth -- the positive trend in this last quarter has been -- the change is big, I can say. We have signed some service agreements with several major companies in the city centers, mainly in Sweden.

We see that these trends are some kind of different, if we compare the different companies. But the trend is clear, the interest for this kind of services is growing. And the customer offerings include all Bravida's technical solutions. It has enabled customers to reduce energy consumption in their properties, and to improve the indoor climate at the same time.

Our transport to customers is done 100% fossil-free vehicles, which is preferably by cycles and electrical mopeds, and we have in these type of services, strong focus on recycling as well. And this is growing in the Nordic countries.

So I think it's really great to see. I'm happy to see that we are the one who is entering into new areas. We are leading the sustainable development in the industry, and we are actually a bit ahead of the customers, a way of -- procure the services from us, but now we see a clear change. So it's going to be really interesting to follow this the coming quarter as well.

So last from my side, the acquisitions 2022. We have been very active on the acquisition side. We have done 21 acquisitions so far in 2022, adding SEK 1.6 billion in sales. We still see a strong pipeline. Acquisitions are still at attractive multiples, and we also see and argue that the prices will probably come down a bit because, yes, that's how the market works. At the same time, I will say, that you can't expect the same pace of acquisitions the last period of this year, but we will definitely continue to do acquisitions in the same way as we have done for the last years. We still have a stronger balance sheet, the pipeline is strong, and we will use the opportunities that will arise in this market going ahead.

So with that, I hand over to Asa and the performance in the different countries.

[Åsa Neving, executive]

Thank you, Mattias. So I will guide you through our countries, and we will start with Sweden, where we grew the top line with 6% this quarter to SEK 3.3 billion, and the growth year-to-date was also 6%. The organic growth was flat, so the growth came from acquisitions. It is different in the different regions in Sweden. We can see in the northern part, we have a strong organic growth and then it's lower in the Stockholm area, and also in the larger cities in the south. In Stockholm, we had a large project last year that also gives us high comparable figures. The EBITA margin -- and I should also say that the growth here is coming both from service and installation.

EBITA margin was unchanged at 6.5% in the quarter and also unchanged year-to-date. The order intake was almost unchanged also at SEK 3.5 billion and the order intake came mainly from installation. The order backlog increased by SEK 221 million this quarter and ended up at SEK 9.5 billion.

Norway then had a really strong growth in sales, 36% in the quarter and 20% year-to-date. Here, we got some help from the currency. In local currency, we grew by 31% in the quarter. The growth came mainly from installation in this quarter and installation grew by more than 55%. Organic growth was also high 27%, and acquisition grew by 4%. We had a bit lower EBITA margin in this quarter, as Mattias said, at 5.7% compared to 6.4%, and this is explained mainly by this change or this shift in the sales mix towards installation. And installation projects are -- on total, they have a lower margin than service. And adding to that, we also had some lower performing projects in Norway during this quarter, so that is affecting the margin as well. And as Mattias said, the cost for sick leave was higher.

In Norway, we had the highest sick leave in the countries still. It is coming down and it's not higher than it was last quarter or last year. But last year, we got compensated for the sick leave by the government, and we don't get that this year. So that's the main reason for the lower margin.

Order intake 22% and coming both from service and installation and order backlog, a strong plus 58% increase year-on-year. Denmark also had a strong growth in sales, growing in the quarter by 29%. Also Denmark had -- we had some help from the currency, if you look in Swedish krona in local currency, the growth was 24%. And here, the growth came from both service and installation, but it's mainly installation, and insulation was growing by 28%. EBITA margin was unchanged at 5%. Order intake, 21% during the quarter and 39% year-to-date. Here, we got some help also from the currency, in local currency, the order intake was 5% in the quarter. The order intake is mostly small and midsized projects, but we've got one large order here in Denmark, at SEK 150 million, adding to the order backlog this quarter. Order backlog was plus growing 31% year-on-year. So very strong.

Moving to Finland; in Finland, we had a growth in sales by 4%. This was all due to currency, actually. So it was flat. Otherwise, the organic growth was minus 16%, and the growth from acquisitions was plus 16%. And the negative organic growth is coming from this -- that we last year had a large project with Wartsila, that was high in production, and also that we are pretty picky when we are selecting projects in Finland. We want to continue this good journey that they are on now improving the margins. So EBITA margin then improved to 5% compared to 4% last year in the quarter and also improved year-to-date to 4.3% from 3.3%. So we're very happy to see that this -- the work that they do in Finland, improving the margins and improving the business, actually shows results.

Order intake in the quarter was plus 32%, 30% year-to-date. Here, we also had some currency effects. So in the quarter in local currency, the order intake was 19%. The order backlog was plus 14% -- and as I should also say that the order intake is mostly service coming from service in Finland. The order backlog was plus 14% year-on-year, and in local currency, it was 8%. And the order backlog also increased during the quarter.

So moving on to the net -- or to the financial position. If we look at the operating cash flow, it was a bit lower this quarter compared to last year, it is due to a lower working capital, and this is mainly, I'd say, timing effect depending on when we are paying out accounts payable before or after the quarter ends. We also had some additional tax payment this year and -- or this quarter and increased inventories a little bit, where we are actually paying some material in advance, to make sure that we have components. But this is mainly a timing issue. It looks a bit better if you look at the year-to-date figures, then we are SEK 404 million compared to SEK 461 million. And this lower operating cash flow in the quarter is also then reflected in the cash conversion. So cash conversion was 80%, LTM this quarter compared to 90% last year. And the net debt-to-EBITDA is still on a low level, same level as last year on 0.9x.

And last but not least, our financial targets, we have an EBITA margin target of 7% or more than 7%. If you look at the LTM figures, we are on 6.8%. Cash conversion should be more than 100%, and as I just told you, it's on 80% right now. Net debt to EBITA ratio should be lower than 2.5x, and it's on 0.9 at the moment. And our sales growth larger than 5% is our target, and we are now year-to-date on 13%. And the dividend payout should be more than 50% of the net profit, and that's what we paid out for last year, so we are on track on that, too.

That's all for me right now, Mattias.

[Mattias Johansson, executive]

Okay. Thank you. Just to summarize this presentation and the quarter. Sales increased in all countries, and it's up 16%. Organic growth, 8%. We see organic growth in Sweden, Norway and Denmark. Growth from acquisitions is 6%, a very strong first half year. 21 acquisitions has been finalized, and we still see a very strong pipeline going forward. We have the balance sheet to support the M&A story, and we think -- I think that there will be a lot of opportunities in the coming quarters as well.

Increased order backlog, which is, of course, very good. It is actually up SEK 100 million and yet another quarter with a record high order backlog. Stable margin at 5.9%. Remember the investments we are doing in the business, adjusting for that, we are actually seeing improving margin, and that is the cost for the digital initiatives in the business plan, SEK 22 million in the quarter. We are estimating this to somewhere between SEK 80 million and SEK 100 million for the full year.

So a solid quarter, fantastic work from all our employees, and we're really looking forward to see what we can achieve in the coming quarters as well.

So saying that, we open up for some Q&As.

[Operator]

[Operator Instructions] The first question is from Carl Ragnerstam with Nordea.

[Carl Ragnerstam, analyst]

It's Carl here from Nordea. A few questions from my side. Firstly, in Norway, you, of course, reported quite strong organic growth, but with margins down a bit here. You mentioned, of course, the mix effect. When I look at the mix effect, looking at the service share, it's 50%, down from 57% last year. So I'm not sure if it's the whole explanation to the margin drop or -- could you help me bridge it year-over-year?

[Mattias Johansson, executive]

Yes. First, there is a change in the mix, definitely. The service business is growing and the margin in service business is really good. Then Asa mentioned about the sick leave, the sick leave hasn't gone up, but there is a difference in the cost for sick leave. This year, we have been taking the costs. Last year we got some support from the government. We can see slightly increase over the sick leave in the end of the quarter, but it's not explaining the thing you are asking for.

Then we also are a bit disappointed, both Asa and myself, I know the Norwegian management as well, I thought that they should have been able to have slightly higher margin on the installation side, and that hasn't happened yet. Increasing top line should mean lower administrative cost in the business, but it has been eating up of some lower margin projects that we have seen, and that is something we will work with or on -- after the vacation because there are some areas in Norway that are not performing in the way Head of Division Norway, Tore wants or we want. But overall, Norway is money wise there, doing the best quarter ever. So a lot of positive things, but not everything is perfect, of course. So I think that is the explanation.

[Carl Ragnerstam, analyst]

Very good. And then it doesn't sound like a quick fix for the margin? I guess it takes some time to get rid of the -- or to fully deliver on sort of the projects with a lower margin level. Is it right? So we'll probably not see a very quick fix to Q3 or...

[Mattias Johansson, executive]

I think that is right. And I think we have been always trying to explain the margin over volume. And the growth in Norway has been quite challenging for a couple of years due to the pandemic because they have been impacted most of the pandemic. Now it's accelerating and maybe it's accelerating too quick, which means that we don't -- are able or have the actually a possibility to do it in the way we normally can do. So I think that is an explanation as well. So I think your estimation about it takes longer than a couple of weeks, months to fix it. That's definitely true. On the other hand, a strong order backlog, good contracts in Norway, solid service business with good margins. There are a lot of positive things in Norway. But on the other hand, some things we need to work with. That's always the case.

[Carl Ragnerstam, analyst]

Super. And also on the raw material side, we have seen steel coming down quite a bit. Have you seen other raw materials or components starting to see decreasing pricing? And also, is it fair to assume, that we should expect the tailwind from sort of lower input prices in maybe second half, or I guess you don't need to revise your contract prices with your customers, right?

[Mattias Johansson, executive]

I think this is quite complex, as you understand. We -- the situation for now is that we see raw material prices come down. We still see a pressure from suppliers to increase the prices. So we are a bit late in the cycle. So still, we see pressure to increase the prices from our suppliers, at the same time as the raw material prices will go down. So a tailwind from the nearest quarters is not fair to calculate on. At the same time, we see a different way of behaving from our supply side. And I mentioned in the CEO word, that we are strengthening some of the partnerships with suppliers who are actually -- who are partners, and we are working together to keep the costs in control on the material side. There are some other suppliers who is not acting the way we want them to act, which I really don't understand.

And that will, of course, have some impact on how we work with our suppliers. And -- but we are long, we are working with the relationships, both on the supply side as well as customer side. So this is not a storm, but it is definitely something we work hard with, and that's why we have a really strong purchasing team on central level to take care of this. And I think they are doing a great job. So, so far, it is in control, but we don't expect lower material prices in the next quarter. I expect lower material prices, but it will take some time.

[Carl Ragnerstam, analyst]

Very good. And also a bit on the market outlook. You seem cautiously optimistic. I mean it's a lot of discussion around the construction market inflation impact on potentially [indiscernible] post projects. Could you give me your view on that, and if you have seen a sort of a worsening situation at the end of the quarter or entering Q3, or if it's too early to tell actually or...

[Mattias Johansson, executive]

It's too early to say or tell. We haven't seen big changes in the demand. We have some areas where we -- in Sweden, for example, the Stockholm area and the south part of Sweden. On the other hand, we see increased demand in some other areas. And I think that is, as I said in the beginning of this presentation to be in many different places with a lot of different types of customers with different types of needs that actually level out the changes in the market. And that is the same when the market goes down. We haven't seen a big change in the market yet. Do I expect a change? Yes, of course. But when we know that things might happen, it's really good to have the strongest order backlog ever and an experienced management team on all levels. But so far, no changes. And then again, close to 2/3 of our sales is service, renovation and refurbishment, which is, of course, not apple-to-apple due to the construction market.

And then we are quite late in the cycle. We have the visibility in our order backlog. We are following and measuring the order backlog on, not only branch levels, actually cost units level. So we can do measures that we need to do early and with a very direct -- we know where to do it and when to do it. So -- and flexible cost base, of course, will help us go ahead. But as now, the demand is surprisingly strong, I'd say.

Then on top of that, you can actually add new demand for new type of services. The energy price is going up, which, of course, give an incentive for the market to invest in new type of energy sources and new systems or more energy-efficient systems, which we are working with. So I think it's some positive impact, as well as some things that we will struggle with, of course, in the market. But we have a strong position for the moment.

[Operator]

The question is from KJ Bonnevier with DNB Markets.

[Karl-Johan Bonnevier, analyst]

Yes. I'd be very interesting given that we still see this, so to say, surprisingly strong market. What you have seen in the -- your ability to access a quality installer, so to say, to build your operation and continue to grow it. So obviously, you've been very good at acquiring companies of late, but also then looking at, say, the organic opportunity to find employees. And maybe your own trends in the employee turnover as well would be interesting in that kind of parameter?

[Mattias Johansson, executive]

Yes. Of course, resources is a bottleneck in the industry, and it has been like that since I started in 1998. So I think that is something we have to live with. It hasn't changed. It hasn't improved, and it hasn't worsened. So still a challenge, and we are using -- the acquisition is one way to strengthen our own company. But of course, we're using some kind -- different types of subcontractors for specialties, et cetera, is one way to do it.

Our own turnover is quite high. I actually don't know the numbers for the second quarter, but in Q1, it was high. We saw a slightly improvement maybe, we can't say that it is a trend, but it has gone up. If that is depending on the pandemic that people are changing the way how they think about the job, et cetera, we don't know. But it's higher -- it was higher in 2021 compared to the numbers before the pandemic. And of course, I expect that the questions you ask to me and also here about the market going ahead will, of course, will take down the turnover employees as well. But let's see. It is a bit challenging for the moment, but it is not more challenging today than it was a year ago or a quarter ago.

[Karl-Johan Bonnevier, analyst]

And when you look at, say, wage creepage and the potential for wage cost inflation, maybe going into next year more than for this year, what would be your best take?

[Mattias Johansson, executive]

We don't know, of course. This year, it has been stable. We had the new agreement that was supposed to be negotiated between the parties in the end of this year. And of course, you know this better than I do, probably Karl-Johan, but we expect a higher increase next year compared to the average -- the last couple of years, and that is something we take into consideration when we make our bids on new projects and service offers. But that is -- just estimates and it can be some -- I guess, everything from 3% up to 8%. We don't know, and we are planning for the worst case and hoping for -- maybe not best, and this is a good case for the society and for the industry.

[Karl-Johan Bonnevier, analyst]

But I will say like this, if you would end up at the high end of that range, it wouldn't mean a disaster for your order backlog, where you have signed orders up until today?

[Mattias Johansson, executive]

That -- if that will be on the high end, that means that we got -- we'll get the increases in April next year. And many -- the duration of an average project in our portfolio is somewhere around 10 months maybe. The rest of the projects we have put even more cost into the calculation, and very often, we have index clauses as well. So I think you are right in that guess or estimate, yes.

[Karl-Johan Bonnevier, analyst]

Excellent. And looking at the strong flow of acquisitions you have had during -- so far during this year and the outlook you are talking about still of a good flow, maybe it's not at the same level. It seems like you're finding a lot of different kind of companies in a lot of different areas. Is there any -- say, any say, basic underlying assumption of that in certain segments you want to get in to get stronger in when you're looking at the acquisitions or -- because when I look at the press release, that [ you have sent ] so far, actually, it seems to be everything everywhere, more or less?

[Mattias Johansson, executive]

I think it's everywhere, yes; everything, no. We are very, I'd say -- we are thinking very thoroughly through what kind of companies we are acquiring. But that when you mean everything, that could mean plumbing, ventilation, electrical billing automation, et cetera, and that is our core business. So we want to improve our market share on things we already are doing. We are not -- haven't been doing any adjacency so far, but we are looking at some adjacencies, but it should be very close to what we are doing today, so we can integrate, use the systems, get scale advantages, et cetera.

So everywhere, yes; everything, no. And if for some different -- specific areas we want to buy. Yes, of course, we try to accelerate our own business plan, our strategy. But I don't want to mention which areas these are, that up to for you and everyone else to read; because if I say that, everyone is going after the same things that we are doing, because that is something we can see. The things we say, the things we are doing as a market leader, the other ones try to do the same.

[Karl-Johan Bonnevier, analyst]

Excellent. I don't want to [indiscernible] so you miss out on some interesting transactions. Then just finally...

[Mattias Johansson, executive]

Problem.

[Karl-Johan Bonnevier, analyst]

A quick word on the -- on your ambitions within building automation and the FM area? How far you have come down that road?

[Mattias Johansson, executive]

Of course, when you start a new segment, new business, et cetera, it takes some time before we actually are up to speed. And we are still the starting path, if you can say. But we have signed a pan-Nordic agreement with Schneider Electric that I mentioned before. Technical facility management agreement in the Nordic countries, delivering more than 21 -- more than 20 different type of services. And I think we are one of the few who can actually deliver that type of service to a client like Schneider in this case. So we are having a lot of interesting discussions with the customers.

Building Automation is definitely seen as very positive from our customers as well as the building automation industry, because they think we are, as a due to the platform we already have in all other different technical segments, adding building automation on top of that is, of course, an enormous strength and many of the talents, employees in that industry have understood that and wants to come to us, which is very positive, of course.

[Operator]

The next question is from Stefan Andersson with SAB.

[Stefan Andersson, analyst]

A couple of questions. Start with a follow-up there on the material, just so I don't think you may be answered the last end of the question that was out there. When it comes to -- I mean, you've been pushing the cost increase over to customers rather well, and if we now see material coming down, do you really expect that you could keep some of that margin, or don't you really have to give that back as well?

[Mattias Johansson, executive]

I think, first of all, I don't think we should be too optimistic on that we get the price decreases the coming quarters or this year maybe. It will take slightly longer time, because we are late in the process cycle. So we actually have some push to increase the prices still. And as I said before, we don't think that the margin impact on increased prices will be very dramatic for Bravida. Could be impact, definitely, but not a very major one. And if I say that, of course, I don't -- I can't argue that the positive margin effect will be very dramatic either. I think there will be some positive effect on the installation side, when -- if we have priced -- the material price is higher than we actually will buy the material for. On the other hand, on the service side, there is very limited or no impact at all, no matter if it's increased cost or lower cost. So I think that is nothing you should put a lot of focus on, when you are doing your forecast.

[Stefan Andersson, analyst]

Perfect. Then on the M&A side, you're saying that you don't expect the same activity in the first half and looking at your ambitions and your balance sheet, I would guess that this is not something you yourself are holding back. It's rather finding the right targets and closing the deals. Is that correct, first question? And the second question, I'm not going to hang out any other company, but there's a competitor of yours that I talked to recently that complained a little bit about finding targets actually, in the absolute niche of what you're doing, and they started to buy things a little bit broader. So my question is how do you see -- that's the second part of the question, how do you see -- you're talking about the good pipeline, but I mean you have the means to buy more, so is it a little bit hard to find target? And then third part of that question, isn't it time to start looking at the new market outside of the Nordics, given your size and how successful you've been in the Nordics? And if so, what market would that be?

[Mattias Johansson, executive]

Let's see if I can answer all of this in one try. But otherwise, you have to come back, Stefan. If we start with the number of possible targets on the acquisition side, I would say that maybe it's more, that I think our M&A philosophy is better than someone else. We have a really strong belief in our way of doing acquisitions, to buy good companies where we see synergies. So 1 plus 1 can be more than 2. I think one reason might be, that we are not paying with shares, which is maybe why we still -- we don't have that to explain. It's easy when the share price will always go up and up, but when we have a market like this, that is a bit more unsecure maybe, I don't know. But we still see -- yes, we have a good pipeline, and we want to do acquisitions where we can strengthen the company we are acquiring, and they can help us to improve Bravida. And together, we are merging the companies. We are doing the integration and create a better group.

When it comes to that we say -- that you can't expect the same pace on acquisitions, H2 like H1, you should read it more or understand it more like the pace in H1 has been extraordinarily good. We have been able to sign a lot of deals that we think are good for us to create value. It's not that we want to adjust the pace. We just want to -- adjusting the expectations, we will continue to do acquisitions. We will continue to do acquisitions in the way we have been doing, and we have the balance sheet supporting that. So if we can do the same amount in H2, we will do it. But I think it's just a way to say that, we will continue, but it will probably be slightly lower than first half year, because the first half year, it has been a very positive outcome, I would say.

When it comes to acquisition outside Nordics, that is not due to our plan yet. We still have a very fragmented market, and we still see the possibilities to do acquisitions, 11% market share in Sweden, lower in all the other countries. So plenty of deals to do so far. Of course, we are ready. We are looking after slightly bigger acquisitions as well. But again, we always think about, is it good for our owners, our own business? Is it creating a better Bravida than before, if we think that is the case, then we can do the acquisition and hopefully, we can do slightly bigger as well, because we have a very strong balance sheet supporting that. So not any plans today to go outside Nordics, but we will continue what we have done so far. And maybe, hopefully, we can find something bigger as well.

[Stefan Andersson, analyst]

Okay. Good. And then I guess following up on the comments you had there on a very strong balance sheet. You have a mandate to repurchasing shares, what would need to happen for you to act on that mandate?

[Mattias Johansson, executive]

We see -- what you asked for, that we don't see today, that we can't do any acquisitions, then we can start to think about it. But as long as we can buy companies 5, 6, 7x EBITDA by ourselves on a higher multiple.

[Stefan Andersson, analyst]

The pace you see now, is that -- the pace you're expecting right now, is that enough for you to get closer to your leverage target?

[Mattias Johansson, executive]

Probably not. But I think we need to have space, ammunitions to do slightly bigger as well, because sometimes we get the opportunity, then it's very good to have the space of doing that due to the leverage topic as well. So we will not reach the leverage, if we continue to do acquisitions, as we are doing for now. But I think that we will try to use that for a slightly a bigger target if possible. Otherwise, we, of course, need to sit down and talk with the Board, discuss, but we are not there today.

[Stefan Andersson, analyst]

Perfect. And my final question is on the order backlog. One of the bigger projects you have there, is a couple of billion in -- probably Stockholm, if I remember correctly, when in time do you expect that one to be up? I mean I know it's [indiscernible] you're working on it right now, but at a slower pace. But when do you do take certain volumes in that, I fully understand if it's difficult to guess, given how it's been delayed and so on. But what's your best guess right now?

[Mattias Johansson, executive]

Best guess is actually, I spoke to Per Andersson, who is in charge for this morning at the coffee machine. So the best guess is that we start April next year, on a slightly more, yes, on site starting the production. That's the plan now and hopefully, we can do that. We are ready when our customer is ready.

[Operator]

The next question is from Ben Wild with Deutsche Bank.

[Ben Wild, analyst]

Just one for me left, and it's focused on how the market is reacting to softer -- some soft demand you spoke about in Stockholm and Southern Sweden. Are you seeing, at the moment, higher pricing risk, given the material price inflation that's being put through the system? And how are you managing the kind of project pricing risk, given the price volatility of materials?

[Mattias Johansson, executive]

No. I think when we say it's a lower activity in the Stockholm market than south part of Sweden, I think that's quite natural as well, because they were having a very high activity last year. So having the same high activity in all different areas at the same time, it has never happened and it will never happen. Regarding the material price increases connected to that question, I think that maybe there can be an explanation that we are taking the higher cost into our calculation, meaning that we have -- and we have been doing that since last summer. Maybe that can be an explanation why we have slightly lower activity right now. But we are working in the same way in Stockholm and South, as well as in the -- as we do in North. We are putting in higher costs in the calculations. So I don't see there is a different way of seeing those numbers in those areas. I'm really not sure if I understood your question, but not the higher risk in those areas, I would say.

[Ben Wild, analyst]

I guess my question is focused on -- are you being more selective on the projects that you're going for, given a greater competition for the projects and the price volatility of the materials underlying?

[Mattias Johansson, executive]

Yes, definitely, yes. And we not only due to those things you mentioned, we are also more selective due to what type of customers we want to work with in this type of market conditions, because the customer has to be able to pay our invoices the next summer as well. As well as the customers think it's a good idea to work with Bravida. We are very selective, what kind of projects, how we price the risk and what kind of customers we are working together with. So definitely more selective, yes.

[Operator]

[Operator Instructions] There are no more questions registered at this time. This concludes our question-and-answer session. I would like to turn the conference back over to the speakers, for any closing remarks.

[Mattias Johansson, executive]

Thank you very much for everyone. Thank you for listening and watching our presentation. Now we will take a well-deserved holiday or a vacation.

[Åsa Neving, executive]

That would be very nice.

[Mattias Johansson, executive]

Yes. So thank you very much. We have some more meetings today, but then we will go home to our families and enjoy the summer and enjoy a really good report.

[Åsa Neving, executive]

Yes, we will. And have a nice summer you too.

[Mattias Johansson, executive]

Yes, definitely. Have a nice summer and see you soon. Bye.

[Åsa Neving, executive]

Bye-bye.