Instalco AB

STO:INSTAL

Earnings Call Transcript 2024-Q1

[Operator]

Welcome to the Instalco Q1 presentation for 2024. [Operator Instructions]Now I will hand the conference over to CEO, Robin Boheman. Please go ahead.

[Robin Boheman, executive]

Hello, everyone, and welcome to this presentation of Instalco's report for the first quarter 2024. My name is Robin Boheman, I'm the CEO at Instalco and with me today, I have our CFO, Christina Kassberg.To start off, just to give you a little bit of an insight of Instalco. Instalco is one of the leading installation groups in the market of Sweden, Norway, and Finland. Our main business areas are installation of electrical, heating and plumbing, ventilation, and also solutions for the industry and technical consulting. As you know, we operate in a truly decentralized model, but with a strict control mechanism. In total, we have over 6,200 employees working every day to help facilitate the green transformation. Demand for our services that we offer is supported by several strong underlying market drivers.One example of this is the newly adopted EU directive; Energy Performance of Building Directive. Although we still do not know exactly how this will be implemented on national level, it is absolutely clear indicator that we need the qualified installers, will continue to grow, and the underlying market long term will be good.Going into key financials for the last 12 months. Net sales have been approximately SEK 14.3 billion. Order backlog is almost SEK 9 billion. EBITA is SEK 1.083 billion, which contributes to an EBITA margin of 7.6%. Cash flow for our operations is SEK 975 million. And a new thing on this slide is that we showcased a number of companies we have in Instalco. And we have done a little bit of an update on how we calculate that. We have previously spoken about subsidiaries as well as additional companies, meaning when a company is a subsidiary of one of our subsidiaries. However, over time, many of these companies have grown into companies of their own.So as of today, we have 157 companies. In the old way of counting, we would have had been around -- we would have been 137 companies. But you could also say that these are the number of customer-facing brands that we have. Intec, for example, is still counted as one, our technical consultants, even if they have a dozen companies running.Highlights from the quarter. There is no denying that the market is much more challenging compared to a year ago. Despite this, we report a stable financial development in line with the same quarter last year. There is also some tendencies of positive signs in the market. And despite how selective we are when it comes to order take, we reported sequential improvements on the order backlog. And on operational fronts, our technical consultants at Intec have during the quarter also expanded into Finland in addition to their existing business in Norway and Finland.And the plan there is to continue the growth organically or via acquisitions just as we have done in the previous countries. I'm also pleased to see that our technical consultants reported their most profitable quarter-to-date above group margins. While it still makes up a small part of our business, it is a good proof of point and that our concept works and that the start-up model is well working.And now I would like to hand over to Christina and please take us through a little bit of those developments in more detail.

[Christina Kassberg, executive]

Thank you, Robin.On this slide, we can see the increase in net sales with comparison of Q1 present and prior year as well as the development of the order backlog. Acquired growth represented 9.9%, with the biggest percentage increase within rest of Nordics. Organically, the top line was down 8.1%. In total, net sales grew by 0.6% and amounted to close to SEK 3.3 billion. This slower growth rate than we are used to is partially the result of our previously cautious taking of orders. Also for this period, our backlog was down 0.7% compared to the same quarter last year, but somewhat up sequentially since Q4.We have, however, maintained the caution I talked about, choosing to only go after the right projects and the right customers. Our subsidiaries have adopted well and service, which, as a reminder, is not included in the order backlog, remained on a high level of 32% in the quarter. We are convinced of the long-term potential in our industry and do not want to be locked into weak projects when demand and the price picture turns upwards again. The demand from our clients continues to increase and investments are piling up. We are well-positioned for further profitable growth when the turn comes.This slide shows the quarterly trend of EBITA in both millions and margin. As you are probably familiar with by now, Q1 tends to be our seasonally weakest quarter. In Q1 this year, our EBITA amounted to SEK 231 million, essentially flat compared to the same period last year. This despite the negative organic development of net sales, showcasing the flexible cost base and also our ability to adjust to the market situation.Ever since Instalco was established 10 years ago, the focus has been on high profitability. And right now, we are facing a weaker market, and we are, together with subsidiaries, implementing cost savings and efficiency programs in some of our companies where that is necessary. The savings will give effects from, let's say, over to the coming 6 to 12 months. All in all, this corresponds to an EBITA margin of 7% in Q1 compared to 7.1% last year.Now to the slide that summarizes segment Sweden in Q1. Overall, the market for new construction, renovation, and energy efficiency measures is good for both commercial properties and also facilities in the public sector. For new production of residential property, there is a clearly noticeable dampening effect primarily due to the interest rate situation. Geographical differences in the market situation have increased even more. Southern Sweden has experienced a downturn for quite some time, but now they notice some positive signals. Demand is better in the north, however.Compared to prior periods, the market has become worse in central Sweden. Overall, the net sales were down slightly to SEK 2.25 billion, while organic growth was down by 8%. Despite this, segment Sweden reported an EBITA margin, essentially in line with the last year's Q1 at 7.9%. Overall, a good earnings development with a recovery from prior periods and positive effects from the industrial business area.And this is a summary of the rest of Nordics segment. As mentioned last quarter, the development of the market in south of Finland has been stable in recent months, though at a relatively low level. The market in Northern Finland has shown slightly positive signs. In comparison, the market in Norway remains at a relatively high level, without much change from previous quarters. There is, however, slightly more caution being exhibited when it comes to decisions about project starts.For Instalco, this translated to a net sales growth of over 10% in Q1. Organic development was down 8.4%, which was compensated for by an acquired growth of 20.8%. We are pleased to say that EBITA grew more than the top line by 13% to SEK 54 million, corresponding to a margin of 5.3% compared to 5.1% a year ago.Then onto a new slide we haven't presented before. We have, for the last year, talked a lot about our increased focus on working capital and cash flow. So now felt like a good time to give it extra attention. For the first quarter, we report a stronger EBITA and changes in working capital are at par with last year. This coupled with somewhat higher adjustments for non-cash items and higher tax paid. The tax -- the higher tax paid tied to rising interest rates reflected on tax accounts leads to an operating cash flow at SEK 198 million for the quarter. This translates to a cash conversion for rolling 12 months of 91%, a significant improvement over 82% a year ago.We have a lower outflow from our investing activities as a result of, for the moment, our lower acquisition pace. On the final line, you see the fact that we have repaid loans as opposed to taking out new ones. In conclusion, our focused efforts on working capital management have yielded tangible results as evidenced of our improved EBITA and strong operating cash flow.To then look at our performance in relation to our financial targets. For the duration of the 10 years Instalco has existed, we have constantly performed well beyond our growth target. For the quarter, the growth is not at 10%, but we are well-positioned to capture opportunities for profitable growth when the market turns. Our EBITA margin remained roughly in line with last year and came in as said, at 7%, still a strong performance given the market and the seasonality effects.After the first quarter, our leverage remained within range of our target at 2.4x. Cash conversion improved from 82% in Q1 and now at 91% due to our increased focus on working capital. And finally, the Board has proposed a dividend in line with a 30% policy to be decided at the AGM next week, on Monday. All in all, a stable growth in earnings given the current market situation, and we remain secure with our balance sheet and operational priorities.So by that, over to you again, Robin.

[Robin Boheman, executive]

Thank you very much.To take a look at some of the strategic moves we have made during the first quarter. Our pace of acquisition, as you said, Christina, has been somewhat slower compared to the big ones we did a year ago. But we made 2 acquisitions, and I would like to go a little bit deeper into one of them, Lund Elektro. It is a smaller company that was founded in 2011 and mainly works with installation of digital solutions on homes, charging stations, solar cells, et cetera. Through the acquisition, we've become fully multidisciplinary in Kristiansand region in Norway.And it was also a good opportunity for collaboration between the companies, which is in line with our Instalco model. Besides acquisitions, we talk a little bit about our start-ups because we have other ways of growing except M&A. An important one is the proven start-up concept that was founded in 2016. It is essentially where we co-found a new company instead of buying an existing one. This is all about finding the right entrepreneurs, making them join the team. And together with us, they will co-own that company for a few years. Intec is, for instance, a good example of the start-up model within Instalco. And we have several more interesting plans in the pipeline for the coming future.Recently, we announced another exciting addition to the Instalco team, which is our start-up company, ISTECH AS in Norway. ISTECH is focused on building automation, energy efficiency, and smart building technologies. Building automation plays an important role in ensuring that there is a coordinated selection of installation, but also products that are compatible with each other. We have not previously had the automation company in Instalco Norway. And therefore, ISTECH is filling a long-awaited place in the group.Going into the project of the quarter. I think this is a good highlight actually as a project. It is the Instalco company, Ohmegi, who won an exciting contract with NCC. Stockholm is adding several new stations to the metro system to make it easier and quicker to travel between various parts in the city. A new station, we will build in Hagastaden near Karolinska, the University Hospital in Stockholm, which is part of a new subway line called Arenastaden. The assignment for Ohmegi includes installation and delivery of all power and lighting as well as reserve power and system for uninterrupted power supply at the new station. And it's expected to be -- completion is towards 2026. I think why I highlight this is that this is a great example of how infrastructure investments can lead to new traditional installations assignments for us as well.Now going into the theme of the quarter. The quarter's theme is how we are able to protect our margin in this market, the foundation of Instalco as well as specific actions that we have taken during the quarter. To start off, there are 2 pillars of Instalco, our staff and our Instalco spirit. In investor meetings, I usually say that our balance sheet walks out the door at the end of the day, and we can only hope it returns in the morning. There is no doubt that the expertise and the engagement of our employees is our most important asset. Therefore, I'm very pleased to present the numbers from our quite recently published Annual Report.The result from our employee satisfaction survey within Instalco has always been very high. In 2023, we transitioned into employee net promoter score measurement. From this, we can see the result or the score that we achieved is 30. And this is much higher than the average of our sector, and we are so incredibly proud to be able to present this number. It really reflects the uniqueness of Instalco spirit and that really exists throughout the group. And it's all about the entrepreneurial spirit and also the Instalco model, where we put emphasis on the local companies. We make sure that we have cooperation between the local entities, and we support this with a small, but very efficient central organization, and this is key to the success of Instalco.As part of the entrepreneurial spirit, it is also reflected in our culture of profitability. On paper, it isn't maybe rocket science, but the magic is in the implementation, and there is a lot of nuance within each factor. These are a few of the key things that we look for in a profitable culture. It is collaboration, leadership, client and project selection, project and business control, and also focus on procurement.Within our decentralized model, IFOKUS is our internal program to continuously help our companies improve their profitability. It aims to streamline processes in production, procurement, sales, cross-selling, and cash management.Another important component of the program is sharing and spreading best practice within the group. We also implemented GoGr8 in 2023, which is a tailored program to offer additional support to companies performing below the group profitability target. And this concept is offering support to specific companies where we and the group central organization can allocate resources to these companies so that they can develop and improve their local operations. GoGr8 is also helping develop our tool of IFOKUS because everything we learn from these companies when you do these GoGr8 programs, we will implement in IFOKUS.And this really emphasizes on -- the emphasis on GoGr8 is on profitability and efficiency throughout the entire organization because sharing knowledge and getting the maximum benefit from being part of Instalco and through the Instalco spirit and through the decentralized model is key to our success factor.And I'm showing you one illustrative case here of a company, a longtime member of the Instalco family, that had an extra tough time during COVID-19. They had high volatility in results month to month and failing -- falling profitability. And I think it was a little bit of a lack of control.And here are a few examples of what we did. We standardized calculation templates and methods of updating the values and inputs to these calculations. We helped them with overhead cost control also through the data we have from different subsidiaries within Instalco, so we can generate a lot of information from other companies. Implementation of KPIs and joint development of new ways of working. We also invested a little bit in refreshing premises to boost morale in staff and we also trained specific members of the staff. And here is an example of that specific company on the right-hand side, where you can see that they recovered and are now actually performing above group level. So this is a good example of where GoGr8 really paid off.Going back to Q1, I finally would like to return and sum up the years with some key takeaways from the quarter. I'm proud to say that we reported stable numbers despite a more challenging market. We have implemented selective cost savings programs in subsidiaries where we deem it necessary. We maintain our strategic project selection as Christina has mentioned before, where we are cautious of what assignments we bring to the order backlog because we know that the demand from our clients continues to increase and investments are piling up.We have made 2 small acquisitions during the quarter and have increased our efforts on providing new start-ups through our start-up model. Our technical consultants within Intec have also started in Finland and are now reaching 400 technical consultants. So we're represented in all 3 countries. Intec performance in the first quarter was very good, exceeding the group margins, so showing that this model really works. All in all, we're well-positioned over the near future to protect our margin and act on opportunities as soon as the market situation turns to a more positive way.And then with that, I would like to thank you for joining this call, and I now open up for any questions.

[Operator]

[Operator Instructions] The next question comes from Carl Ragnerstam from Nordea.

[Unknown Analyst]

It's [ Blair ] from Nordea. A couple of questions from my side. Firstly, you mentioned that the technical consultants are delivering quite a good quarter operational performance wise. Is it possible to give a flavor on the margin development or quantify it either year-over-year, sequentially, or in absolute number for that matter? And also, what is the main driver behind the margin? I mean in the quarter, is it the billing ratio that is at the satisfactory level finally or is it also that you perhaps have positive mix effects from project deliveries or, yes?

[Robin Boheman, executive]

Yes, I think the main reason is that a few of these or a lot of these subsidiaries have now existed for quite some time. They've built up. We have done a lot of investments in technical consultants that is paying off now when it comes to billing and also when it comes to numbers of our per, so to say, technical consultants being billed. So when it comes to margin, like I said, they are above group level. So we expect this also to eventually come into projects in the installation business because they are also in the, so to say, first stages of a project. So that's also positive for our installation business going forward.

[Unknown Analyst]

And also if you look at the sort of billing ratio or the utilization rate of the consultants in the quarter [Technical Difficulty] upside or is it that you have sort of a full utilization of the intake or do you have more if the market continues to be better in Q2 or Q3 or whatever year? Do you think that you could increase the billing ratio, but also see margin upside potential from here?

[Robin Boheman, executive]

[ Carl ], you're really putting pressure on my Head of Technical Consultants, but I'll join you in putting pressure on him and say that there are still headroom to improve.

[Unknown Analyst]

And also, could you give us some flavor on what you see in terms of the number of quotations or incoming projects happening in technical consultants that really cyclical? Is it any way to quantify it or give any flavor to it?

[Robin Boheman, executive]

I think that they are struggling maybe a little bit less than what they were doing 2 quarters ago or 1 to 2 quarters ago. So there are sequentially a little bit more tenders out there. Even if a lot of them are maybe related to infrastructure projects, but still we see an uptick overall in the market. So that is also why utilization rate is a little bit higher.

[Unknown Analyst]

And also, I mean, the backlog is contracting a little bit organically here. And you also mentioned that you've taken out costs. So is it possible to quantify what you've done in terms of costs and also give more granularity around the materialization profile? I think Christina mentioned 6 to 12 months, but is it possible to give any more flavor on it? And also what -- I mean what costs are taken out as well?

[Robin Boheman, executive]

It's a combination of these cost-cutting programs that are on selected companies where we see that performance maybe has not been where we want them to be. So this all goes down to, as I mentioned, this GoGr8 product -- project that we have launched in 2023. So we can say that we have taken out roughly around maybe 400 to 500 subcontractors. We have also taken out a few of our own staff, so to say. So we have maybe lowered our staff with around 200 people. So we have done cost cutting on staff, on FTEs over the last quarters and obviously also some cost-cutting implementations overall to spend less money.

[Unknown Analyst]

When you do the cost cuttings in general, to what extent is it driven by you and central functions? And to what extent is it found and pushed by the subsidiaries itself or the Board members of those companies?

[Robin Boheman, executive]

I think it's a combination of both. In some cases, I think that the subsidiaries are may be so deep into it that they, so to say, don't see the trees for the forest. So we have to help them out a bit. But also in a lot of the cases, there is also, so to say, where the CEOs of the daughter companies wants help to get back to where they are supposed to be. And these are very competitive people that we have employed in the group. We rank our subsidiaries every month. Nobody wants to be last. So I think it's a collaboration between us at central functions and also with the local entities to, so to say, get back into good profitability.

[Unknown Analyst]

And the final one, if I may, here. I mean in the market that is clearly still a bit tough than before. Have you experienced any issues with invoicing or collecting receivables? Is it tougher now versus in Q4? Is it -- and also if you look at the receivables overdue, 60 days, are they higher than a quarter ago or quarters ago or could you give any flavor on that?

[Christina Kassberg, executive]

Yes, Carl, I would say that this is always hard work on hunting for the payments and good manner from the customer. So the better we are tied to our customer when it comes to better, the better we can perform. We don't have any big failures, if you're looking for that one. So I would say it's hard work to be close to the customer and follow the payment morale so to speak.

[Robin Boheman, executive]

But I think when it comes to…

[Unknown Analyst]

So no big changes.

[Robin Boheman, executive]

…the late payments, we haven't seen an increase here. We are roughly at the same levels as we've been for the last couple of quarters. So we've been able to -- this has not increased or become a larger issue than previous quarters. But like Christina said, it's all about being close to the customer and so to say, reminding them to pay according to the terms in the agreement.

[Operator]

The next question comes from Johan Skoglund from DNB Markets.

[Johan Skoglund, analyst]

This is Johan from DNB here. And the first one is on organic growth, which was a bit weaker than we expected. But how big of an effect did Easter have on sales and EBITA? And also I guess quite a few payments come in after quarter and also affecting the cash flow?

[Robin Boheman, executive]

Sorry. Could you repeat the first part of the question? We didn't hear the first part. Sorry, please repeat.

[Johan Skoglund, analyst]

Sorry. So Easter effect on sales and EBITA, if that's possible to quantify.

[Robin Boheman, executive]

When you talk about organic growth?

[Johan Skoglund, analyst]

Yes.

[Robin Boheman, executive]

Yes. No, you can't really compare it that way. I mean the organic growth that you're seeing very negative has been impacted also, like I said, with that. We have been very cautious on what type of projects we have been taking previous quarters. As we mentioned, we have launched this initiative of, so to say, staying away from the not so profitable projects, being very prudent on our pricing a few quarters, and we continue with this strategy. And that obviously affects the number of projects that we are running at the moment, and we have also lowered number of FTEs, both as, so to say, hired, but also own staff last couple of quarters. So that is the reason for the lower organic growth, so to say. Margin-wise, it is more around how we perform in the projects that we have. So that's more how we're able to cope with the EBITA margin.

[Johan Skoglund, analyst]

So it sounds quite neutral on the income statement. Any effects on the cash flow from the Easter, I mean, with banks being closed over the Easter weekend, et cetera?

[Christina Kassberg, executive]

No, we can't say that we have any of that. The Easter effect is a mix between March and the coming April, so.

[Robin Boheman, executive]

I think we usually at Instalco talk about we are competing against last year, when certain vacations comes in which quarter and so forth, that's up to the quarter. We fight against year-over-year. So we are not too focused on the quarter and which date is where in what quarter.

[Johan Skoglund, analyst]

And then a final question. Any thoughts on how active you'd like to be in terms of M&A this year?

[Robin Boheman, executive]

I mean, I think with the interest rate, the market that we're seeing, the performance of some of the companies out there that's up for sale, we will be a bit restricted when it comes to M&A. However, with good companies and good opportunities, we are always very interested. So we are very active when it comes to taking meetings. We're very active on looking at new ideas, new segments, and so forth. So we're quite active, but we haven't really acquired any because we haven't seen really good opportunities. But we're quite active, most likely probably not be as high a pace as it has been in the last couple of years due to market, but we're definitely active.We take a lot of meetings. We're building pipeline. And we are a M&A-driven company, so we will continue, absolutely.

[Johan Skoglund, analyst]

Well, sounds promising. Good luck with Q2.

[Operator]

The next question comes from Karl Bokvist from ABG Sundal Collier.

[Karl Bokvist, analyst]

So my first one is on the comments you made about local variations in demand in Sweden. How would you assess that the variations in demand compare against the Instalco organization in Sweden, i.e., the strong areas versus -- where you are strong and the perhaps softer markets compared to your presence in these markets?

[Robin Boheman, executive]

Yes, overall, I think our strongest market are basically in south and also in, so to say, capital area and large cities. So I think we have a quite strong position in the south. But overall, obviously, south is not as big as capital area. So it is hard maybe to give an exact replica of where we have all our companies. But I would say we have quite a strong position in Malmo. We have quite a strong position in Stockholm. We also have a quite good position in Linkoping, Norrkoping. We could increase our presence in the northern parts of Sweden; however, we are growing that business.So we have built a good position on the industry, which is performing quite well. As we've spoken about over the last couple of quarters, we've built up. So I think we released the numbers in the Annual Report, I think it's 17% in the industry, 17% to 20% in the industry, which is a market that is still doing very well.

[Karl Bokvist, analyst]

And on industry, it still seems to perform very well here. And when we think about industry for you, is there any particular and/or -- and industry that you see really has a high level of activity at the moment?

[Robin Boheman, executive]

We are part of a few of these larger construction sites when it comes to building, so to say, the green transformation. So a customer like Northvolt, for instance, we do the scaffolding and so forth for them. But otherwise, we are spread all around like [ Elkon AB, SSAB ]. So we have a broad portfolio of companies; Scania, Skanska. So we have a good spread of different types of industries. So I think the mix is quite well there.

[Karl Bokvist, analyst]

And then the final one, a bit attributable to or related to the IFOKUS and the GoGr8 actions that you have or strategic efforts. Just it's been a couple of years now or, well, a decade as -- with Instalco. But just thinking about what are the usual cost benefits post acquisition that you can implement fairly quickly and which actions are the ones that you have seen now over time where you feel like if we implement XYZ, these benefits will start becoming visible in a year or 2 or 3 years?

[Robin Boheman, executive]

I think our main focus is that companies that come to Instalco are very well-performing companies from the beginning, and we tend to acquire the best-in-class companies because those are the ones that like our model and also like the way we work and want to continue their business. So when it comes to acquisitions, we tend to not disturb our companies in the beginning. These GoGr8 is more an initiative of where they maybe have lost the focus a little bit, something has happened. A lot of the examples was basically the ones I showed on the slide there earlier is that maybe they've lost a little bit of the edge or something has happened in the market where they maybe need some help to kind of reestablish themselves.They may be forgotten a little bit about the cost -- overhead costs. A lot of overhead costs has gone up very high when it comes to premises, energy supply, cars, et cetera. So we tend to help them with the spend analysis and so forth. And also throughout this decade, we have also gathered a lot of data, especially, I would say, over the last 3 to 5 years. We've really started to build up quite a good database when it comes to kind of comparison with other companies as well. So that's something I started when I was CFO and Christina Kassberg has really kicked off on this as well, and we're now building a good platform.So we don't really do any big changes when companies come into Instalco. It's more around getting the companies that are not performing accordingly up to speed. But there are obviously things we could do and so forth. But that's potential for the future. That's not our focus at the moment.

[Operator]

[Operator Instructions] The next question comes from Johan Lonnqvist Sunden from Carnegie.

[Johan Sundén, analyst]

There's been already quite a few good questions. But just one follow-up on the technical consultancy business. Is it possible to give a little bit more color on how the profitability profile has been over, let's say, last 4 quarters? And maybe in the comparison, were there breakeven even in the Q1 last year or has it been loss-making or when did it turn breakeven?

[Robin Boheman, executive]

I mean, it has been a little bit ups and downs quarter-to-quarter in the last year. I think the focus now is also for technical consultants, as we have said before, is to start turning profitable, maybe to not grow as fast. I mean, if you recall from the previous quarters, we have always increased percentage-wise quite a lot from quarter-to-quarter numbers of technical consultants. However, now we have a more stable growth and percentage-wise, it is not as fast even if the, so to say, number of consultants are still growing.We have also cleaned out a few underperforming entities or staff as well in technical consultants. So I think there is a mix of reasons why we turn profitable.

[Johan Sundén, analyst]

And was this the first quarter with significant profitability, basically?

[Robin Boheman, executive]

Yes, this is the first quarter with significant profitability. Yes, that's correct.

[Operator]

The next question comes from Karl Noren from SEB.

[Karl Norén, analyst]

One question from my side just on the order backlog here. I mean it improved sequentially quite nicely here and the organic decline was a bit lower here than in Q4. Do you expect that we've seen kind of the, let's say, trough here in the order backlog and in terms of like the organic decline we're seeing on net sales here of around 8% during Q1, i.e., do you expect organic growth to improve here in the coming quarters given the order backlog is improving a little bit as it looks like?

[Robin Boheman, executive]

No, I think that, once again, it's always hard when it comes quarter-to-quarter regarding -- and it's almost impossible to say when, so to say, you hit the bottom or whether you are at the bottom or not. What we can say is it is at least positive that we are able to continue with the order backlog at this level. I think the most important thing is still to be very prudent on which contracts and for which clients we take those contracts. I think the most positive sign is this with the technical consultants seeing that maybe a number of projects are increasing on their side because that means that coming quarters might look more positive, but it's hard to say.When it comes to organic growth, I think that, I mean, we have cut a lot of subcontractors. We have also let some staff -- unfortunately, some of our own staff go, roughly around 100, and we have around 100 more layoffs underway. So I would not expect too much organic growth going forward either since staff obviously contributes to growth. And since we're lowering staff, I should not expect organic growth. However, we can quickly, if we see that the market turns, we can fairly quickly ramp up this again, we believe.

[Unknown Executive]

We have 2 written questions as well. The first one is, what's your current appetite for further M&A?

[Robin Boheman, executive]

Yes, a little bit. As I mentioned before, I think appetite is still there. I mean you obviously have to be cautious. Christina always reminds me about the balance sheet. So -- but with good opportunities, we are definitely -- we still have good appetite. We are a M&A-driven company in that sense. So we will continue to look at opportunities. And with good companies, we have a firm belief in the installation business and growth going forward. So the appetite is still there, absolutely. But we are very prudent on which companies we let into the group.

[Unknown Executive]

And the final question. Have you seen any orders related to the Swedish NATO membership or when do you think this will come, if any?

[Robin Boheman, executive]

I think it's very positive from our perspective of Sweden and Finland joining NATO. This will most likely lead to projects going forward. We see also, especially in Sweden, I can't remember the number now, but the amount of billions that we're going to spend on defense will definitely lead to projects. Like I've mentioned before, we haven't really seen the start yet. I mean also the defense, both in Sweden and Norway -- sorry, Sweden and Finland have maybe not been around growth. They've more been about, so to say, closing regiments down and so forth.So I think they need to build up their organization to be able to also ramp up their projects. We are seeing some discussions, I know, around defense in northern parts of Finland. We're also seeing a lot of regiments in Sweden. And so I think there are good opportunities going forward.Okay. So I think that wraps up all the questions. So from our side, we would like to thank you for listening in, and thank you for all the questions, and have a nice Friday. At least the sun is shining in Stockholm. So enjoy the weekend as well, when it's time. Take care, and thanks for listening.