Instalco AB

STO:INSTAL

Earnings Call Transcript 2021-Q3

[Operator]

Hello, and welcome to the Instalco Audiocast for Teleconference Q3 2021. [Operator Instructions]Today, I'm pleased to present CEO, Robin Boheman. Please begin your meeting.

[Robin Boheman, Chief Executive Officer]

Hello everyone, and thank you for joining us on this Q3 presentation 2021 for Instalco. With me today, I have my newly appointed CFO, Christina Kassberg; and also Fredrik Trahn, Head of IR. So just a short introduction of Instalco. I think many of you already know us. So next slide, please.We are a leading Nordic installation groups. We do heating and plumbing, electrician installation, ventilation, cooling, industry and also our technical consultants that I will come back to a little bit later in the presentation today. Roughly 100 subsidiaries with highly specialized local companies. And as you can see, we're spread out in Norway, Sweden and Finland with Sweden being our largest market. We have roughly 4,600 employees, highly decentralized structure with the support of a small central organization. We have a strong profitability with high margins over time. So that is Instalco in short.So next slide, please. And also, before we start the -- going into the numbers, and I think I just want to say that we ticked off a milestone in the history of Instalco just recently with our 100 subsidiaries coming into play here with our 100th acquisition. So for me, it feels a little bit extra special since I was with when we founded the Company in 2014. It has been an intense journey since, and we are creating synergies and continuing our acquisition agenda, and we are the best harbor for installation companies.And here, you see the little bit of the team. You have to left, Gustaf, Head of M&A. You have Jonas, who is part of our area business management team. Then we have the 3 sellers from Kompressorteknik, which was our 100th company. And then to your right there, you have Johan, Head of our business area, Nordics and Industry as well. So we are also surrounded by a great team.So if we go to the next slide, please. And we talk about a great team. We also have a newly appointed CFO. For those of you who don't know, I stepped over from the CFO role to the CEO role as 1st of September. And I'm very pleased to now announce that Christina Kassberg will take over the role or has taken over the role as of 1st of November as CFO. So Christina, maybe you can just say a few words about yourself to the audience.

[Christina Kassberg, Chief Financial Officer]

Thanks Robin, and dear audience today. My name is Christina Kassberg, and I joined Instalco, as Robin said, November 1st, as the new Group CFO. I'm both happy and proud to be on board and to get the opportunity to work closely with you Robin. Who am I, for you that are curious? I have more than 10 years' experience as CFO in stock listed company, also in company with a similar business model as Instalco. With my experience, I can contribute with solid financial, professionals, industrial experience as well as leadership skills.Actually, I have followed Instalco from the side a couple of years now and find the company truly successful, well-run and sustainable. Instalco has good profitability, and quarter-after-quarter deliver on the targets. We create value through our local subsidiaries, and they work closely with the customer relation and drive all the sales activities and have full profit responsibility. Furthermore, the local subsidiaries gets inspired in collaboration with sharing best practice and cross-selling. As Robin said, on central level, we have a small efficient skilled team that operates and serve the units with business development, acquisition support, leadership and group finance.To summarize, I joined Instalco because I personally truly believe in the business model and the value ground. Key for Instalco's success is the decentralized structure, doing business close to the customer in combination with an M&A agenda. So I really looking forward being a part of this journey with further growth and value creation.

[Robin Boheman, Chief Executive Officer]

We are very happy to have you on board and really looking forward to working together with you and the rest of the team as well.So if we go into little bit more of the quarter reports, on next slide, please. And here you have the key financials for the last 12 months. You see that we have surpassed the SEK 8 billion mark when it comes to net sales. We have an adjusted EBITDA of a little bit above SEK 700 million, coming at 8.5% EBITDA margin. We have a strong order backlog of almost SEK 6.5 billion, roughly around -- a little bit above 75% of our net sales. As I said, 4,600 employees. We have last 12 months done acquisitions for SEK 1.4 billion in turnover. So that's roughly Instalco numbers.So if we go to next slide, please. You will see here the highlights of Q3. Stable quarter overall, results and margin. We are still affected by the pandemic. I think it is -- I want to stress this once again. I've said it many times before. 2020 was not the year for us when it comes to how should -- we were not affected 2020 by the pandemic, it comes now a year later, and that's what we have been telling the market. We have been telling you guys over and over that 2021 will be somewhat tougher due to the fact that we are in the later cycle when it comes to production on the building side.With that said, I'm tremendously proud to say that we have 21% net sales growth. We are able to get an organic growth of 2.2%, which I'm very proud of. And we have an extremely strong Segment Sweden. And I stress here, I mean, Segment Sweden has been in restriction mode, so to say, all in Q3, except the last week in Q3. So very proud of Sweden.Rest of Nordics are below desired levels. I will come into that a little later in the presentation. We have been able to do 6 acquisitions during the quarter of highly skilled companies. I also wanted to add an extra here of a sustainability project that we have done, and it's a collaboration with a company called Wayout International, where we will contribute knowledge and also funding and management team. This company is a company that cleans water. If you don't know about the company, please check it out. I think it's a great company with an interesting future ahead of themselves.Looking at the numbers, we almost reached SEK 2 billion in sales. We have an EBITDA of SEK 171 million and 8.6% margin. So the quarter is a strong quarter overall and we are within our targets.So next slide, please. Net sales, as you see, net sales is coming mainly from acquisitions. And as I mentioned, we have an organic growth here of 2.2%, which in a market like this is a strong proof of our concept that synergies can be made from this. So I'm very happy with that.If we move into the next slide, please. We have the EBITDA. I mean we are above our target of 8%. So nothing to complain there. I would, of course, hoped for a little bit more, but I still think in a market like this, being above 8%, we are outperforming all our competitors in this. So I think it is still a good result in a quarter like this.So next slide, please. Looking into the order book. We have a growth in the order book compared to last year. We see a slightly decline when it comes to total numbers. But still, we have a order backlog ratio of above 75% related to the 12-month rolling net sales, which is a strong order backlog. The reason for the slight decline in numbers is due to the fact that we took some large projects in 2019, beginning 2020, and they came in in beginning 2020 in the order book. And I'm referring to these large hospital projects of almost SEK 1 billion in turnover. And of course, we're working our way through those projects. So still very strong order backlog on very healthy levels.So next slide, please. Going in then to Segment Sweden, a very solid result from Segment Sweden, still able to get an 8.7% EBITDA margin, very strong order backlog in Sweden. Sweden is standing for the organic growth of 2.9%, net sales growth of 24%. I'm very, very pleased with the results in Sweden, and we're doing a great job here.If we go into next slide, please. You'll see Segment Rest of Nordics. We were able to get a net sales growth in the Nordics. It has been a bit more lockdown here. The pandemic has taken its toll on us. And this time is actually mainly Finland that's been taken a toll. Those of you who follow the news knows that Finland is actually in a new, so to say, wave when it comes to the pandemic, which is affecting investments in Finland. If you look in the long-term for Finland, you will see a lot of positive trends with large investments.We are also seeing, those of you who follow us, we are seeing some results of action plan that we launched in Norway a few quarters back. I'm also positive both when it comes to Finland and Norway. We are now able to travel to those countries. We are able to meet people, look them in the eye and I'm true believer that we will get this back on its feet and come back to more desirable levels than what we are at today. However, with that said, we are at least giving a positive results in these, what tougher markets in these countries.So next slide, please. Acquisitions, one of my favorite topics, as you all know. And what's even nice is to see that we cannot even fit all the acquisitions that we have done in 2021 in one page. So I will actually ask you to skip to next page, Page 13, where you have acquisitions continuing in 2021. As I said, we have done 3 acquisitions in the quarter. Those of you who follow us know that we have done some more also now in Q4. It will be a very good acquisition year for us. We have a strong pipeline.Looking at the companies acquired in Q3, we have some specialization within the Group here. We have very interesting companies joining the Group. Some very exciting to see how they can collaborate with the existing companies that we have. Yes, overall, you see from the quarter, SEK 975 million in turnover so far and adding to the ones we've done already in Q4, it looks like a really good year for us.So next slide, please. The financial targets. Here, I must say, we usually tick all the boxes. As you see here, I have decided to not tick the box cash conversion. We'll come back to that. When we're talking about growth, we are well above our target margin. We are also within our target for the year-to-date. So I'm very pleased with that. And as we have said, our goal is to reach 8%, and we are year-to- date at 8.2%. And I think that is a very solid margin in this environment that we are today.You see the capital structure. It is a little bit higher ratio than you might be used to, but it has to do with -- we have done a lot of acquisitions lately. And also, of course, it affects a little bit due to the cash conversion here as well. I think it's also good to stress that the cash conversion is down. We see the same with our peers at the moment. So there is a little bit shift in the market. We are working on this. We have had -- we have a new CFO here at the moment, also sitting besides me. I think we will get this back on its feet and where it's supposed to be. Now we have some more arms and legs working on this as well. Yes, dividend policy is not much to comment about.So next slide, please so the CEO theme, this is something new for the quarter, where I will talk a little bit about what is happening in Instalco and give you guys a little bit of flavor. So I'll shortly at this time talk about the technical consultants.Next slide please, Slide 16. So Instalco subsidiary Intec plays a key role in this area of technical consultants. Intec's core business is project planning and designing. They work and offer a range of services, as you can see on the slide, Intec works with all type of customers, in all phases of the project or even in the whole life cycle of a building. So Intec's technical consultants are typically engineers, specialized in areas like electricity, heating and plumbing, ventilation, energy, industry, fire protection, that type of specialization. So mainly specialized in the same areas as we do installations.So if I can go to the next slide, please. So this is to give you guys a short summary of where we are today with this project. This was a project that we started actually, basically in the beginning of the year. And we have so far, during the third quarter, we have started 11 companies in 20 cities in Sweden. We have 230 co-workers working in these companies. We have gathered 400 clients. We have done 1,200 assignments year-to-date. And we are also seeing that the first start-up companies that started a few months ago, they are already starting to show profit. So it's a tremendous strength that we can show here with the Instalco model and the collaboration between our companies.And I think we can move on to next slide. So why do we do this? Why technical consulting? I think the main reasons is these 4 reasons. We get early involvement in the project. We get closer collaboration with the customers. We have sustainable and energy-efficient solutions. And the third part, which I like the most actually is that, we combine the theory with the practice. So we can offer a very good solution for our customers, combining these 2, and we're already seeing that in a lot of the projects. And I would be lying if I said I hadn't looked at the margins of this business area as well, and they are somewhat higher than we have in the installation market. So this combined gives us a very unique offer to the client, and I'm very happy to have the technical consultants on board, and they're doing a tremendous job.So if we go to next slide, please. I wanted to comment on a few things that have come up recently. And I think you need to look at some of these issues in a short and a long-term perspective. I mean we are a long-term company. We are looking at long-term drivers. Short-term absolutely is about fixing and turning out fires, but long-term drivers is the most important. If we look at the short-term, we have the pandemic, it is not over yet. We are seeing -- we are getting back to a normal society, but we're not there yet. We see an increase in raw material prices. I'm not too concerned long-term, but short-term, it is affecting us, of course. But once price levels are stable for everybody, we will come back to a normal level.We see some discussions about shortage of material and delivery delays. We haven't been a factor of it in a large extent, but we do see some warning signs. There is a possible shortage of cement. Those of you that live in Sweden have not missed this discussion, and there are people more that know more about this than me. But we are, of course, looking into this. We have a strong board member with a lot of knowledge in this area. So we are confident that we have all the information we need here.But going back to, I think, the most important part of this slide is the long-term drivers. They are still there. It is the same that I've been talking about before. It is the technical development, the sustainability, environment awareness, we are finally talking about the environmental impact of just living. The urbanization, house shortage, we have the investments in infrastructure. And I'm very pleased also to see that Finland is jumping aboard this train. Sweden has committed billions of SEK . Norway has committed billions of NOK. And now finally, Finland is also committing a billion euros. So I'm very pleased with that. And we have an aging building stock in all markets. So long-term drivers are looking very good at the moment.So next slide, please. To summarize the quarter very briefly for you guys. Stable quarter. We are affected by the pandemic, particularly in Sweden, a little bit in Norway as well. And we are returning to normal circumstances eventually and sooner. There are good conditions for projects and design, installation and services picking up. So long-term drivers are all good.So that was my final slide. So next slide, and I open up for questions.

[Operator]

[Operator Instructions] Our first question comes from the line of Carl Ragnerstam from Nordea.

[Carl Ragnerstam, Analyst]

It's Carl here from Nordea. A couple of questions from my side. Firstly, on the margin in Sweden, it's obviously quite good, but it dropped a bit year-over-year. So I wonder if you could help us bridge the margin and what the impact, for instance, the consultancy business push had on the margins as well as raw material prices? You also mentioned increased sick leave rates, et cetera. So yes, if you could help us with that?

[Robin Boheman, Chief Executive Officer]

Of course. Carl, I mean you have kind of pointed out the 3 main areas, which is pushing, so to say, the somewhat lower margins. However, I want to stress that we have always communicated that our long-term goal is to stay above the 8%, and that is our long-term target. And we see a tougher market at the moment, there is somewhat price pressure, there is due to the raw material, and it hasn't really stable. The market is, so to say, we are seeing a fluctuation here in price. Once it stables, we will get back to normal levels, but it hasn't stabled yet.When it comes to sick leave, we don't, so to say, disclose the exact number. What I can tell you is that we are used to having maybe 4%, and we are seeing 6%, 7% and even higher in some companies. So of course, that has affected us. And the consultancy business, as I said, it is -- the companies that we started in the beginning of the year, they are starting to show, so to say, black figures. I don't want to disclose how much it has cost us to start these companies. However, I can say that it is, from a business point of view, very efficient to start companies compared to buying them. But however, that will be costs on the result compared to if you buy a company. So at least a little bit, maybe not to the exact numbers that you wanted Carl, but like I said, we don't disclose.

[Carl Ragnerstam, Analyst]

Okay. Perfect. And I mean, when we -- how to put this, I mean, we have seen an organic slowdown the past quarters, right? And it sounds, at least in other Nordics that you are becoming more optimistic. You mentioned that the Nordic market has returned to a more normal situation following lifted restrictions. Should we interpret that to start off with that you might reach organic growth soon in the Nordics? And have you seen a better organic piece at the end of the quarter on the Group level or even early in Q4?

[Robin Boheman, Chief Executive Officer]

Yes. First of all, you know that this organic growth is something that is very hard to predict on. And I won't step in the trap of giving you an exact answer when it comes to kind of when we can expect growth in rest of Nordics. What I can give you is that, of course, the comparison numbers are maybe not the toughest in the world. However, there are still, like I said, in Finland, we are seeing, I don't know if it is the fourth, fifth or sixth wave or wherever we are in Finland. But we are seeing a new wave of the pandemic in Finland, for instance, they have a very high number compared to when they thought they had high numbers.And what I am looking for is the long-term drivers and those I see in these countries. And as I've said before and I stick to that is that, I think that we will become a more stable company once we get a certain volume in these countries. And I stick with that. And I'm a firm believer that, that is the case. We need to become a little bit larger in these countries so that we are not affected of the single companies within these countries. If you look at Finland for an extra example, there we see close downs of construction. And of course, that hits us very hard, very fast. So...

[Carl Ragnerstam, Analyst]

And on the Finland topic there, for instance, you mentioned that you want to do more M&A to get a critical mass, so to speak. Do you see a risk that you're not making sufficient or high enough margins that the companies that have low margins are starting to do M&A? Is that a problem when they cannot deliver, I mean, Group level results themselves starting to do more M&A?

[Robin Boheman, Chief Executive Officer]

I mean, we still have our -- as I think, I've shown many times, I think, as we talked, and you can see in our year reports, I mean, we have our criteria for joining Instalco, and they are the same. That doesn't matter. We haven't been -- or we will not change those. So it's not about doing any different M&A than we have done before. It is just getting back to doing M&A. If you look at kind of the acquisitions we have done this year and also last year, it was mainly in Sweden. We haven't done much in Norway or Finland. So it's getting back to a more, so to say, stable combination of not only doing in Sweden. And also, if you look at the companies that we are buying, they are good companies, we won't change that. There is also somewhat less competition in other -- in the Nordics compared to Sweden.

[Operator]

And the next question comes from the line of Robin Nyberg from Carnegie Investment Bank.

[Robin Nyberg, Financial Analyst]

It's Robin here from Carnegie. A couple of questions. First, related to profitability. Margins were a bit lower-than-expected in Norway and Finland. Could you walk us through the issues you have in Norway and the action plan there to bring up margins higher?

[Robin Boheman, Chief Executive Officer]

Absolutely. So what we have done in Norway is that 2 of our subsidiaries have gotten restrictions of what type of projects they are allowed to take. So we have kind of taking away a little bit of their -- how I should say, headroom of deciding themselves to get back to a somewhat mid-sized market and mid-sized project. They have reorganized their organization and are now building it back. And we are seeing some good effects here. And we are seeing a good work in Norway, and the trend is positive.So I think Norway is in good hands and are getting back eventually, but it takes time. This quarter, it's a little bit actually more of a Finland issue like where you are from Robin, where we are seeing that we have some stop in productions due to corona. We have some issues with not perfect overlapping in the order book. So it is a little bit of stop and go at the moment in Finland, and that is very hard to be able to be that flexible as it is demanded of us at the moment. But overall, markets in both countries looks good.

[Robin Nyberg, Financial Analyst]

Then I think you mentioned higher raw material prices as one headwind in Q3. Could you specify how meaningful was that headwind? And then also, you have this large hospital projects still ongoing. How are those proceeding?

[Robin Boheman, Chief Executive Officer]

So if we start with the raw material prices, I think the key thing here is to understand that long-term, it is not -- how should I say, it is of course always a problem if prices goes up. But long-term it is not affecting us too much. As long as everybody else gets the same increase. And since we are one of the largest companies, we are able to -- with all that withstand a lot of price, we can negotiate with our bargaining power. But of course the raw material price increases that we have seen, nobody can hold them back, so to say.So in the short-term we are affected. The number is very hard to disclose and we don't want to disclose it. But over a long-term period of time, we have this cost-plus perspective, meaning that we can push a lot of the price increase over to the customer. But for old projects in the order book that has not -- that are taken at fixed price. This is of course a little bit problematic. And we will be -- this will stick with us a few quarters. But long-term, as long as everyone gets the same increase, it's not a problem for us.When we talk about these larger projects, for instance, like the hospital project, as you mentioned, this is not a big issue because we can push all these price increase over to the customer. So it is they will pay for the raw material increases here. And that project is going along well. We are starting -- it is divided into a lot of smaller projects or smaller or small, but different, so to say, it is grouped in different ways. So it's 3 hospitals in the -- so to say, in mid part of Sweden. And it is going along very well. It's a good collaboration we have on also been able to upsell some of our other subsidiaries recently joining Instalco, for instance, companies working with more power. So we are very pleased with having that in the order book, and it is progressing very, very good.

[Robin Nyberg, Financial Analyst]

Then last question related to acquisitions. You mentioned in the report that you want to widen your base of companies in Finland and Norway. Any chance you could comment if there are specific areas that we would prefer to strengthen?

[Robin Boheman, Chief Executive Officer]

No. Absolutely. I'm definitely looking into building up some industrial knowledge in Finland, for instance. I think you have a very good industry in Finland, a solid one. And also we are looking at increasing all segments in both these companies. Like I said, we have a somewhat too small base here to be called the player in the market. And I think that we can strengthen a lot of the areas. Of course, if we look at Finland, for instance, Helsinki, we are quite -- we have a good team in Helsinki, but there are more cities in Finland and Helsinki. And also the industry, I think it's very interesting. And eventually, I would also like to strengthen our technical consultants within these countries. But maybe that will be in a start-up phase or will purchase something we'll see eventually.

[Operator]

[Operator Instructions] Our next question comes from the line of Stefan Andersson from SEB.

[Stefan E. Andersson, Analyst]

A few questions from me. If I start with organic growth, I know you don't want to talk too much about that. But just trying to understand and we talked about this before. I mean in Q1 you had around zero to negative organic growth, and then you had 12% last quarter, now it's down to 2% or so. And it's a volatility. I know we've spoken about this before, it's relating to the fact that you buy so much and you have a small base and all that, but you are big now.So just to understand that, is it -- should I -- because in my world, if you have such a volatile business, it's really very hard to handle your people. So I don't think it has to do with production. I don't think that represents your actual production rate. So that could be wrong. If I -- this is a leading question then. But if I assume this instead, is it that you could have some ups and downs in invoicing from the subsidiaries that you're running? Or is it something else? Or am I totally adjusted...

[Robin Boheman, Chief Executive Officer]

I think I will stop you there, Stefan, because I think one of the key things here is to understand our business. I will give you an example of a subsidiary. I looked into them this quarter, again, just to kind of be prepared. I think you need to understand it. We have a small company in Finland. They have 16 or 17 employees. And they last year took a project of building one of the largest shopping malls in Finland when it comes to sprinkler and fire alarm system. They then rent in 30, yes, employees, they ramped in. So they go from 17 to 45, then that project ends, and they go back to the 17 or they have now 18. So the problem here with organic growth is that their comparison numbers this year is impossible for them because they are compared to that if they had that specific once in a lifetime large project in Finland, where they build the biggest shopping mall.So basically the organic growth, I would say, is the 15 or 16 employees going to the 17 because they get a little bit service on that large project, that one or 2 person. But the problem is that we have to deliver what they have in turnover. And last year, they had a double or almost 2.5x of what they're usually at. So they will be negative for the whole year this year for us. So that's just to give you a little bit of the, so to say the problem with delivering this. I would rather look at maybe how many employees we have or some different type of comparison than this organic growth.And maybe with a new CFO, we can dig deeper into this, but this is an area which is very hard for us to give any comments about and this is very high fluctuation and it is very hard to give any guidance on. I can guide on that. We are still getting organic growth. I mean we are so far this year at 4%, I think, right? And I think even 4.2%, and that is higher than the market overall. So I mean, long-term, I'm very confident and I feel very good about that. I mean we are in a tough environment, so. We didn't answer the question there, Stefan, but at least you get some flavor.

[Stefan E. Andersson, Analyst]

The next question is on the cash flow here. My experience is that, being an auditor, I'm not concerned about one quarter being weak on cash flow. It's just cut-off effects and so on. But when I see a couple of quarters and receivables growing in a project business, I always get a little bit concerned. I guess you said what you can say there or does it concern from you as well? I mean, you said that your share management, and of course, focus has been on other things. And now you have a CFO in place. So I'm sure that's the priority #1 here, but you're not concerned in any way that there might be some air in there as well?

[Robin Boheman, Chief Executive Officer]

I'm fully with you, Stefan, and I'm not satisfied at all with the development that we have seen. I'm not satisfied that we let go this far. Like I said, it has been a tough environment for us and focus hasn't maybe been fully on this. We do see also our competitors, the large ones, listed ones, Caverion, Bravida having a little bit of the same problem at the moment. What I have been looking for is also seeing that we don't see any increase in, so to say, overdues.So as long as we get the invoice out, people are paying the invoice, which is in this way, at least some comfort. But let me assure you guys that this is a focus area for us. It has been for the last month. And I'm confident that we will be able to get this back to somewhat normal levels in the near future.But of course, it's always a little bit concerning when you see these type of numbers. But we know where we have to work and we know where we have to find them and we are working on it, that I can give you at least.

[Stefan E. Andersson, Analyst]

Then another question, which is, I mean, I kind of hear the tone. Maybe I'm wrong, but I'm kind of hearing that you expect a little bit of a challenge in Q4, at least you're not willing to be overly excited, but you're cautious, I can hear that. So this is not my question. But just remember cash, just for summer, Per was talking about some kind of explosion towards the end of the year, volume-wise. And I'm not talking about your revenue accounting here now, what -- I hear what you're saying. But if we look at tenderings instead, are you seeing that? Or should we blame the old CEO for that comment to speak? I mean, do you have any flavor to give on that?

[Robin Boheman, Chief Executive Officer]

He's probably listening in, so no. I will comment like this. I think that, as I said, 2020 was a good year for us, and we were not that affected, the business, the market overall wasn't that affected. 2021 has been somewhat tougher. I am confident about our financial targets and our goals. And I think that we will be reaching those. But I am a little bit cautious about the market at the moment, and I don't want to promise too much. So I will stick to my financial targets. And I think that that is, still like I said, those are hard to beat, just compare it to our competitors, you'll see that we are outperforming them, and we will continue to do so.

[Stefan E. Andersson, Analyst]

Then some number -- boring number questions here, but I'm just trying to get the adjusted EBITA, EBITA and EBIT together. And I could be wrong here. Let's see if I do it rightly. I mean you have adjusted EBITA at SEK 165 million, then there's a plus SEK 6 million to get to the EBITA of SEK 171 million. I'm just curious about the plus SEK 6 million, and then you have a minus SEK 8 million, which I guess is transaction oriented, maybe, I don't know, but it's a little bit high on the high end, but you've done quite a lot of acquisitions. So if there's something else in there, please, you could comment on as well. But I guess the plus SEK 6 million, there is...

[Robin Boheman, Chief Executive Officer]

Yes, the main difference here is some changes. As you know, we have roughly 30 or so earn-outs that we have to evaluate, and we have to evaluate them as close to our best of our knowledge expectation of them. And we try to do that with as precision as we can. As you know, it is not the easiest thing in the world. So that is mainly driving the difference here.

[Stefan E. Andersson, Analyst]

What you're saying is that, SEK 6 million is positive revision of earn outs?

[Robin Boheman, Chief Executive Officer]

Yes.

[Stefan E. Andersson, Analyst]

That's -- sorry, maybe I'm -- and that's on the amortization line. That's kind of same. You don't have that as a one-off?

[Robin Boheman, Chief Executive Officer]

That is the difference between what you said between adjusted and EBITA.

[Stefan E. Andersson, Analyst]

Perfect. And then the SEK 8 million in transaction cost. Those were high in the quarter. Is that correct as well? Or is there something else?

[Robin Boheman, Chief Executive Officer]

Those SEK 8 million, which SEK 8 million are you talking about? Sorry, please repeat that.

[Stefan E. Andersson, Analyst]

Sorry, terribly sorry, maybe I'm -- okay, I think we just had this on the side, because I think there's probably a combination of things in here, I'll now get that. Let's have this separately. But then if you look at the 2 divisions, and look at the earnings there, I think there's like a SEK 15 million positive in order to get to the adjusted EBITA. In Q1 you had a positive one-off of SEK 10 million or something, I remember what is the positive SEK 15 million there? If I'm not being correct here with my calculations, sorry.

[Robin Boheman, Chief Executive Officer]

Yes, let's see. So you have in -- in Sweden you have the SEK 135 million. And then in Nordics you have the SEK 15 million...

[Stefan E. Andersson, Analyst]

SEK150 million and SEK 155 million to reach the adjusted EBITA?

[Robin Boheman, Chief Executive Officer]

Yes. And so a little bit of this is due to the fact that, as I said before, we try to push out a lot of the costs to our subsidiaries, but we are an SEK 8 billion company. So it's hard to match this perfectly. That is one of the reasons. We also have a contract signed with Instalco that gives us, in some projects, some cash backs to the Group as well. So actually, the Group is doing quite well, but that's of course a cost of that gets sent, that is the Group is doing well, but that should be on the, so to say, line of the companies actually, but -- because we are not doing any projects, but at the moment, we are doing quite good due to some of these contracts being signed by Instalco.

[Stefan E. Andersson, Analyst]

Okay, good. It's just -- with what we've seen before as well, that is charging a little bit more than the cost here.

[Robin Boheman, Chief Executive Officer]

Yes.

[Stefan E. Andersson, Analyst]

I think that's perfect. And then on -- you said something there on raw material or the market. Maybe just to understand you correctly here. You said something about price pressure in the market, but at the same time, we have the raw material going up side. I'm just trying -- I guess, you're not actually seeing price pressure, but what you mean is price pressure in relation to the material going up and that you can't get that out? Or are you seeing pressure from both sides?

[Robin Boheman, Chief Executive Officer]

No, to be clarifying there. What I'm saying is that we still have maybe a price pressure in a sense that we have some competitors not fully calculating on the raw material increases. So I think there is, at the moment, when the market is very stable, everybody knows the prices of the material that we put in. At the moment, it is not 100% fixed on what the prices are going to be for all the materials that we put in. And then it's very hard to see the normal, so to say, price level of where project is supposed to be? And do you understand what I mean, Stefan?

[Stefan E. Andersson, Analyst]

Yes, that was perfect. One last thing on the material there. You talked about that you are seeing some initial signs of delays on some materials and so on. Do you have any value contract where you could be seeing fines coming through? Or they are so rare that you can direct the material that you need to those projects, and therefore there is a risk for that?

[Robin Boheman, Chief Executive Officer]

Yes, I haven't seen any of those -- Yes, I understand what you mean. I haven't seen any indications on that so far. And I'm also quite certain that, that goes out of our scope. If the material is not able to be delivered, that's not on us.

[Stefan E. Andersson, Analyst]

I think the last question then on M&A. Price wise, if you look at this total price exceeding earn-outs that you're paying, I would guess it's going up slightly because there's so many other players out there trying to copy you. They all want to have your success to speak. And there is some players who are maybe not as specialized as you, but still in your area, and some of them are exactly like your competitors. So are you seeing any changes on the price side there? Or would you like to indicate where you are currently on what you pay? I think you used to say 4% to 6% or something, but any indication on what's happening there?

[Robin Boheman, Chief Executive Officer]

We are at the same interval, as you just mentioned. However, we do see some competitors and they can all be one regional, but there are a few copycats out there. And what I can mention there is that they have to pay a higher multiple. We see that from time to time. However, the real companies that we really, really want, they tend to join Instalco anyways because they like our model, then price is not the most critical factor for them. However, of course, you have to be somewhat in line. But I think we -- as you see our acquisitions so far this year, it is very impressive, and I think we can continue doing M&A, maybe not to the -- I can't promise to the extent that we've done in 2021. But I see a positive outlook here as well. And I think we can cope with the price increase here. However, some competitors are very, very aggressive, but let's see what happens with them in the future.

[Operator]

And we have one more question from the line of Markus Almerud from Erik Penser Bank.

[Markus A. Almerud, Analyst]

So Markus from Penser Bank. I would like to start off where you ended actually, talking about acquisitions. So quite an impressive number of acquisitions this year. And just to -- is this temporary or not, how should I put it? Is there any Latin situation here when the pandemic is also affecting the pace that you have right now that there are more targets out there. Markets are a bit slow-ish and that more companies in trouble, et cetera. If any effect like that? Or is it just coincidence that you have been able to close as many as you have?

[Robin Boheman, Chief Executive Officer]

I think it's a combination of a tremendous -- a lot of work being done in this area. We have, as you saw on the picture here, increased the number of area managers a little bit, that helps out. We have also been able to do a lot of acquisitions. Just as you mentioned, due to the fact that people understand the strength of joining Instalco and especially in these types of circumstances as we are today, where it might not be as confident of being a loan small company, it is nice to be part of a group, have colleagues. So the things that we can deliver are very highly valued at the moment of delivering this network, helping the companies during these somewhat difficult times. So to say, our proposal to these companies are very attractive at the moment. So that plays into our hands, absolutely.

[Markus A. Almerud, Analyst]

Okay. But there's no effect like there is a lot of company coming like you haven't been able to meet and then all of a sudden you can, and there's just a big flood coming at one time, there is nothing like that?

[Robin Boheman, Chief Executive Officer]

I think you will see a change here if you look at the number of acquisitions and you see how many are done in Sweden. I think you will see, like I mentioned before, a little bit shift here in the rest of Nordics, we'll see a little bit more action when it comes to M&A due to the fact that I usually say this, we are a modern company, but when it comes to M&A, we are old school. We want to look them in the eye. We want to shake hands, and that has not been possible in Norway and Finland. So once that comes back into play a little bit more, you will see the number of acquisitions done outside of Sweden increase. Of course, that will be a little bit on the cost of the numbers of acquisitions done in Sweden.

[Markus A. Almerud, Analyst]

Okay. And then just a detailed question. The Blomquist Group acquisitions. Is that -- has that been closed?

[Robin Boheman, Chief Executive Officer]

Yes.

[Markus A. Almerud, Analyst]

Okay. Good. And then finally, if I can just ask you about the infrastructure. So you listed a number of long-term factors which are positive and where you're seeing -- you mentioned, for instance, there is a lot of money going into infrastructure. And we know that a lot of the stimulus is coming into that direction. But then this is slow as well. Do you -- which I know, but do you see any signs of these kind of factors picking up? I mean, we all know that the money is going in that, but if something tangible happening?

[Robin Boheman, Chief Executive Officer]

Yes. I mean I recommend you going down to Gothenburg, for instance, and seeing all the infrastructure being put into Gothenburg, for instance, just to give an example. And there are a lot of these long-term infrastructure projects that we have been talking about for many, many years in Sweden that are being in effect now. We have in Stockholm, a few of them kicking in. Even if we are not part of it, just if you're in Stockholm and pass Slussen, you'll see a lot of it being done. We are not on those main infrastructure projects, but that -- these type of projects also kind of puts different type of projects out on the market in their near surroundings that are very interesting to us. I mean just looking at the Slussen project, that also affects that you have to rebuild a lot of the offices there. You have all that type of projects, which suits us perfectly, we might not be interesting in building the bridge over Slussen, but all the projects around is very interesting to us.

[Markus A. Almerud, Analyst]

And then it's the same thing as the rest of your business, I assume that the -- I mean, your late cycle here as well, so you get in quite late in the whole -- I mean, the whole building scheme?

[Robin Boheman, Chief Executive Officer]

Especially when it comes to infrastructure, I would say, I would argue we are even later in the cycle than in the normal like housing project.

[Operator]

And as there are no further audio questions, I'll hand it back to the speakers.

[Fredrik Trahn, Head of IR & Communications]

Yes. There's no further questions from the webcast. So just hand over to you, Robin, to summarize and...

[Robin Boheman, Chief Executive Officer]

Okay. Thank you for listening in, everybody. As I said, long-term drivers are looking good. We have some short-term things, but I think we are in a good position to handling them, and the long-term drivers are there. So I'm very pleased with that. So I think, once again, thank you for listening in, and have a nice day. Bye-bye, everyone.

[Fredrik Trahn, Head of IR & Communications]

Bye.

[Operator]

This concludes the conference call. Thank you all for attending. You may now disconnect your lines.