Volati AB

STO:VOLO

Earnings Call Transcript 2023-Q1

[Operator]

Hello, and Good morning, and welcome to today's webcast presentation with Volati. With us presenting today, we have the CEO, Andreas Stenbäck; and CFO, Martin Aronsson. We'll do a Q&A after the presentation. [Operator Instructions]

And with that said, I'll give the floor to you guys. Please go ahead.

[Andreas Stenback, executive]

Thank you. Glad to have you all listening in. Let's dig into today's presentation. So Volati, we're growing and acquisitive group of 6 well-managed platforms with strong growth, earnings and cash flows. We're now showing net sales of SEK 8 billion, close to 10% EBITA margin. As said, we have 6 platforms. 2 of those platforms are our national business areas, Salix Group and Ettiketto Group, and 4 of the platforms are within the business area, Industry.

So before digging into our most recent quarter, I would like to take a step back and look at the longer trend. On this slide, you can see our 10-year development. As our overriding goal, Volati's overriding goal is to generate long-term value growth. I think we are best evaluated on a long-term perspective. So looking at the last 10 years, we have shown an average EBITA growth, a CAGR of 23%, and that's our reported numbers.

If we look at our continued operations, meaning the operations and the businesses that we consist of today, the average growth the last 5 years are 39% in EBITA. Roughly half of that growth has been achieved organically and the other half is through add-on acquisitions or acquisitions. And I think it's important to point out that this growth has been funded with our own cash flow.

Now I will give you a sneak peek into our most recent quarterly results. So we are very proud of the EBITA growth of 55%. We managed to achieve an organic net sales growth and an even more impressive than organic EBITA growth of 12%. But again, we are best evaluated on a long-term perspective. So we are even more proud of the staples to the right on these slides, meaning that we have had an average EBITA growth again of 39% the last 5 years. We had an average organic net sales growth of 5% the last 5 years and an average organic EBITA growth of 19% the last 5 years.

So even though, we're not maybe best evaluated based on just a quarter, but we are -- I still want to dig into that -- this last quarter, which we're, then, of course, very proud of. I already mentioned that we've had a strong growth basically in all aspects, particularly proud of the EBITA growth of 55% compared to the first quarter last year. Our earnings per ordinary share grew with 63%, also very strong. And basically, we are developing well, I would say, across all our platforms and business area.

Industry delivers a strong first quarter, and we see a growth in all our platforms, both in terms of top line and EBITA. Ettiketto Group, we haven't had done any acquisitions within the last 12 months in Ettiketto Group. So the figures that you see in Ettiketto Group, those are organic. So we're growing organically. And we also see that the strategy of realizing synergies from acquisitions are successful. We're increasing the EBITA margin in the quarter quite significantly with 2 percentage points.

It's also a solid quarter for Salix Group. Salix Group are operating in a challenging market right now. We've had a sales decline of 3%. But if you look at that on a 12-month basis, we're still growing also on top line. We have also slightly lower margins in this quarter compared to the year before, but we have actions in place and we expect to see those showing effect during the course of this year.

The cash flow is developing very strong. We actually had SEK 275 million of higher cash flow in this quarter compared to last year. So that shows that -- and we've told you this previously that the efforts that we're putting into lowering our working capital is showing effect.

Also, we've done one acquisition, I will get into that a bit later, add-on acquisition in the U.K. And in early April, we signed a new banking agreement, inviting SEB along our long-term partner, Nordea. So we now have 2 banks and a new agreement in place with both of them.

So on this slide, basically, I've already gone through those numbers, what I would like to point out, though, is the net debt to adjusted EBITDA. So the strong cash flow that we've had in Q1 also leaves us with a net debt to adjusted EBITDA leaving a lot of room for acquisition.

And looking at the rolling 12 months figures, we're now at 15% EBITA growth per common share. That's our financial goal, which Martin will get into later on. We're also showing improved margin in the first quarter compared to last year. So we're now close to 10% EBITA margin. And then the operating cash flow, which can be seen on this slide, you can see that it's significantly better than the same period last year.

So with that, I leave the word to Martin.

[Martin Aronsson, executive]

Thank you, Andreas. So then let's look into our 3 financial targets. We'll start with the first financial target of our EBITA growth per ordinary common share, which is evaluated on a last 12 month basis. This quarter, we're back on track with a growth of 15% after a strong quarter, so we're now in line with our financial target of 15%.

The second financial target is our return on adjusted equity, which continues at high levels of 32%, which is then significantly exceeding the financial target of 20% that we have. And so to us, this is proving our ability to create long-term shareholder value.

And lastly, our -- last financial target is the target on our capital structure, where the target is to have a net debt to adjusted EBITDA ratio of 2x to 3x and never exceeding 3.5x. In this quarter, we are ending this ratio of 2.0% -- no, 2.0x, which is in the lower range of the target interval. So we -- that means also that we have a substantial capacity for acquisitions going forward.

So let's look at how our 3 business areas are performing, and we can start with the Salix Group. So Salix Group had a sales decline of 3% in the quarter, but looking at a little bit of longer term, they have shown a sales growth of 5% over the last 12 months. And zooming out even further, we have 16% growth on average per annum over the last 5 years.

In the quarter, we decreased the margins compared to last year, partly due to tough comparables, but also due to a difficult market. However, when you look at the decline, the decline in the quarter was lower compared to Q3 and Q4. So we're on a better trajectory now.

Regarding the demand, we have a relatively good demand in the industrial and professional segment, but we continue to see a weaker demand in the consumer segment. And also since the beginning of the year, we have Salix Group has seen a weakening market in Norway. But overall, the market situation is quite challenging for Salix Group with high inflation and unfavorable currency. But we do have some positives with, for example, the freight costs are declining and also some costs of some raw materials that -- that Salix Group's are purchasing.

But as Andreas mentioned, we have -- Salix Group has taken substantial efforts to take cost out of the organization, which is increasingly positively affecting the results, and we expect this to continue to do so over the year. And going forward, we see good opportunities for further acquisition driven growth in Salix Group.

So let's then look at Ettiketto Group, which is starting the year with a very good quarter. We have a growth of 2% in the quarter, really showing the ability to grow organically even in the current macroeconomical environment we see right now. Longer term, Ettiketto Group is a rapidly growing business area with 23% of sales growth in the last 12 months and 29% in the last 5 years. We see a good demand in the business area for the products. And as we've said in previous discussions, it's not -- the demand is not very sensitive to the general economy.

We're also happy to -- happy with the EBITA margin trajectory and the EBITA margin increased with 2 percentage units in the quarter, and to us, this really proves that the strategy of acquiring companies with a lower margin and then extracting synergies and work with operational improvement is really paying off. And the last 12 months margins are now up with plus 0% -- 0.6 percentage points and the -- and Ettiketto Group is working its way towards historical margins of 20%. Ettiketto Group is looking for further acquisitions, both in the Nordics and in the rest of Europe and that we see a significant potential for further acquired growth in Ettiketto Group.

So let's look at our last business area Industry, which is a diversified business area with 4 platforms that are less affected by the general economy in general. And they met a good demand in the quarter in general. However, the platform at S:t Eriks is experiencing some cautiousness in the retail and construction segment. But overall, they're performing very well in the quarter with 43% sales growth and also 36% last 12 month growth and 44% in the [ past ] 5 years. So a quarterly growth of 43% is not a one-off, it's a consistent growth.

EBITA increased by 300 -- staggering 350% in the quarter with significant margin increase, which means that the last 12 month margins now are at 11.9%, which is up 1 percentage point in only 1 quarter.

What is very encouraging for us to see is that -- is that all 4 platforms in the business areas showing [ growth ] -- growth in sales, but also at the same time, improving EBITA margins. And it's probably worth especially mentioned in communications, which continues to see a very good demand for MAFIs products in the platform.

I also want to mention Tornum Group, which had a difficult quarter 1 last year, which and lost a lot of volumes due to Russia's invasion war in Ukraine, but they have successfully replaced those volumes over the year. During the quarter, we have made 1 acquisition in the -- in Tornum Group through JWI, and Andreas will talk a little bit more about that later. But the Industry is also very well positioned to grow further through acquisitions going forward.

And with that, I leave the word to you, Andreas, again.

[Andreas Stenback, executive]

Thank you. So now we're going to talk about acquisitions, something that I love. So we've done 19 acquisitions since 2020. 17 of these has been value-adding add-on acquisitions. That's an important part of our acquisition strategy, but we also added a new platform through the acquisitions of Scanmast and MAFI, and they now constitute the platform communication. The last 12 months, we've done 5 acquisitions, adding SEK 750 million of annual turnover.

And if we look at that, those numbers indicate a slightly slower acquisition pace compared to what we've had the last 2 years or so. We have discussed that on previous quarterly calls that we saw a slower second half of last year. So that's part of the reason. Another reason is that we have a natural fluctuation to our acquisition work.

And I would say a third important point is that we need to remain disciplined. And we've had some cases during the second half of last year, in particular, where we had problems meeting the sellers in terms of valuation.

But now I would say that we see the M&A market freezing up. We see sales expectations coming down, and we see more activity. And we can see that through the M&A pipeline that we have in our platform, and that is bigger now compared to what we've seen the last couple of quarters. So that's a good sign for us going forward.

And as said, we did one acquisition in Q1, a very nice one. It's an add-on acquisition to our platform, Tornum. Tornum makes grain handling equipment. They are a big provider on the European market. They have worked with [ JW ] Installations or [ JWI ], as we call them, as a partner for many years. But now we have acquired that company, meaning that we have our own staff on the ground on one of the largest grain handling equipment markets in Europe, namely U.K. So it's good for us to have our own people on the ground, and we can also bring or add value to [ JWI ] by basically providing them with Tornum's broader product portfolio compared to what they have been able to provide before.

Also, I think this is a good example of a platform, where we still -- where we see potential for acquisitive growth also outside our home markets. We consider Sweden, Norway and Finland, our home markets. But as you have seen, we have started to make acquisitions also outside of these markets, and this is a very good example of that. We also have a number of other platforms looking into the same type of international growth.

But in order to make acquisitions, you need to have the financial capacity to do so. Both Martin and I have already mentioned the operating cash flow. We're very happy with how we see the trend in that, and in particular, the development in Q1. So despite the good operating cash flow, we actually increased the net debt slightly, and typically, we increase the net debt more during Q1 than we've done this year, but it increased slightly, and one of the reason is the M&A-related cash outflow. And that relates to actually 2 acquisitions, Embo that we did end of last year. We had that payment during the beginning of this year. And it's not very typical for us to have an earn-out, but we have actually had one earn-out payment during this Q1 as well. So 2 acquisitions and plus an earn-out effects the M&A-related cash outflow.

I already mentioned the new credit agreement with Nordea and SEB, so we now have a greater capacity than we had before, and we basically have SEK 1.2 billion of liquidity. And as I already told you, the net debt-to-EBITA levels are at levels, where we see that we have significant room for acquisitions.

So to summarize, very good start of the year, growth in many aspects, and we see the cash flow coming through, so very happy with that. But again, don't forget to evaluate us on a longer term and looking at the last 5 years, we have grown almost 40% in EBITA on half of that organic and half through acquisitions. And we have a very strong position to actually continue on this growth, as we have the 6 platforms in place, and we have the financial capacity and the processes and structures in place to support them, not only in their organic growth, but also in their M&A-driven growth.

So that was what we had planned to say for today, so we open up for questions.

[Operator]

[Operator Instructions] And we got the first question with a person calling in with the number ending in 27.

[Victor Hansen, analyst]

Can you hear me now?

[Andreas Stenback, executive]

Yes, we can.

[Victor Hansen, analyst]

Wonderful. It's Victor Hansen here from Nordea. And I have to say it's fun to do this in English this time. So a couple of questions for me. First off, very strong numbers in the industry. I'm wondering if you can tell us more about MAFI. Is this business as usual? Or are there any extra-large temporary orders that you have been delivering on since, yes, the company is running on a much higher EBITA than when you acquired it?

[Andreas Stenback, executive]

Yes. So a few words on MAFI. I think you have to remember 2 aspects on MAFI. One is that we acquired it in April last year. So we basically have a full year effect of that Group coming into Volati or that company coming into our Group in Q1 this year. And I -- as said, also taking that into consideration, they are performing very well. I think they are generally performing in line or better than we anticipated when doing the acquisition. So we're very happy with the development that they have showed.

They have a strong demand, and they do the [ fixtures ] for the telecom market, but also for solar panels. And both those sectors are as you're probably aware of developing in our favor, and they've just been successful taking new customers and taking orders in that segment. We don't give any kind of forward guidelines on -- not on Volati and not on individual companies, but it's -- they are basically -- it's the result of hard work from -- of the colleagues on -- in MAFI.

[Victor Hansen, analyst]

And then the next question here on Ettiketto. I'm wondering if you could tell us more about the synergies that you achieved here in the quarter and maybe also on the timing for the synergies ahead. And then also, if you would say the entire margin uplift here is synergies or any operating leverage or [indiscernible].

[Andreas Stenback, executive]

Yes. So it's -- so basically, we've done 5 acquisitions in the last now probably 2.5 years or so in Ettiketto. We typically -- when we do acquisitions, we want them to be realized within 2 years from the time of acquisition, meaning that we have a fairly high pace already from the start over [ and have ] acquired the company to realize the synergies.

And so basically, what's happened now is that we've started to really see the effect of the acquisitions that we did 1 or 2 years back. And where they come from, it differs. We have consolidated a couple of production sites. But then when you do that, you're left with rental costs for a while, you're left with excess personnel and things like that. And as they come out [ from ] the P&L, we see the effects on margins. And we have similar effects that we will see effects from also going forward.

And I think the guidelines that we've given or what we've said about Ettiketto is that we know what type of margins we have achieved in the past, and our goal is to basically bring the acquired companies up to those same levels. So the historical levels, I would say, is the best indicator. And of course, when we bring new acquisitions into that Group, they will dilute the margin. So we'll have [ effect ] on that short term as well.

[Victor Hansen, analyst]

And then for Salix, it was quite strong. It declined less than in Q4 in a very tough market. So I'm wondering here what parts of Salix are driving the good demand here and what parts are performing worse in Salix? And then also, if you've done any price hikes lately in Salix? And yes, maybe it's fair to assume 10% price hikes year-on-year, is that fair?

[Andreas Stenback, executive]

Yes. But -- yes -- so let's spend a couple of minutes on Salix. So Salix, they're doing a great work. And I think one thing important mentioning is not -- we're not surprised on the tough market that we're experiencing. The decline went down very rapidly during the course of last year. We had plans in place, but it takes time to effectuate those. So -- and now we're starting to see the effects of the plans that we took in place already during the last year.

And -- in terms of decline, I think we -- or segments that experienced a tougher market, we've actually -- we've said that now for quite some time, but it's still the more consumer-oriented parts that see a tougher market compared to the professional sites, where we still see a okay demand. So the business areas and the companies within Salix that works more -- more towards the consumer side, they have an even more challenging market.

[Victor Hansen, analyst]

And maybe some flavor on the cost savings, perhaps if you could quantify anything or at least tell us more about them and maybe give some details on what measures you are taking in Salix here?

[Andreas Stenback, executive]

We haven't given any numbers, but I would say that's typically 3 different things. One is that you -- we now for quite some time know that we're operating in a tougher market, meaning that adding or replacing people that leave. You can definitely do that at a slower pace or don't do it at all. Then we have some of our businesses within that business area, which have had really challenging markets, and then you really -- yes, then you have to let people go. And yes, let people go. So if you look at the number of employees in the Salix Group, it's lower now than compared to a year ago.

And thirdly, now I [ forgot ] about that.

[Victor Hansen, analyst]

Investment. Investment.

[Andreas Stenback, executive]

Yes. No, no, yes. But so -- no, but let's see that. But it's -- so basically, it's much on the personnel side. Yes, sorry, the third one. Yes, the third one is that we have a couple of strategic initiatives within the business area. So basically and that is synergies between the companies within that business areas, and that could be synergies within logistics, [ well ], that could be synergies within supply chain, sourcing, we have set up a sourcing office in -- for East Asia, for example. So we have those different initiatives, which, over time, will drive in cost because [ we've got ] synergies between the companies within Salix. And that is also now starting to show effect.

[Victor Hansen, analyst]

And finally here on M&A. So in my view, your M&A pace is significantly lower at least year-to-date than compared to last year, and you've only done 2 smaller deals since May. So I know you spent some time on this, Andreas and you also wrote about it in the CEO letter here. But what should we expect looking ahead here. So for instance, how much larger is the M&A pipeline that you mentioned now compared to previously? And -- or would you say that you are less inclined to pay up for deals now with the macro weakness than you were before? How should we see this?

[Andreas Stenback, executive]

Okay. Yes. So I don't have any numbers to share. But of course, we're following our M&A pipeline, and it is -- and it's 2 aspect to that. One is size, it's bigger now; and then the second might -- it's even more important, that's probability. So what's the quality of the pipeline? What's the probability of actually reaching to a transaction? And what we experienced during the fall was that there were price gap, there were a price gap between what we were willing to pay and what the sellers wanted for their businesses. And we're experiencing right now that, that price gap is getting narrower or closing. And that means that the probability for us goes up. So it's both bigger, and it's a high probability.

And then again, and you know that because you've been following us for quite some time now, Victor, it's really hard to predict the M&A pace because we -- you have 1 quarter, you -- we made 2 or 3 acquisitions, and we're successful with that. That [ effects ] us quite a lot. And then we have 1 or 2 quarters, where we have a slower pace. So I think it's best to evaluate us over time. And what we've said is that we want to acquire at least between SEK 800 million and SEK 1.2 billion of annual turnover on a rolling 12-month basis. That's kind of our guideline. But again, it will fluctuates over -- fluctuate over quarters and [ even ] half years sometimes.

[Operator]

We'll take the next question from a person calling in with a number ending in 59.

[Niklas Sävås, analyst]

Niklas Sävås here from Redeye. So I want to start with the question about sales growth. You mentioned that you are really happy about the report in general, and you posted 1% organic growth, while inflation should have been a tailwind for sales growth. So I just want to say, I mean, profit margins were up. So is this a factor of you prioritizing profit over sales growth?

[Andreas Stenback, executive]

It's -- I would say it's 2 answers to that. One is if you look at the 1% number, I agree with that. It's -- I agree with you that from an outside perspective, that might not be a very high number. But then keeping in mind that we have one of our business areas also contributing with a fairly high portion of total sales to our Group, which is working in a more challenging market, and then, it's Salix Group I'm talking about. They are actually having a decline in organic sales. While we see a strong or stable organic growth, I would say, in Ettiketto, and then in Industry, we'll see a very strong -- strong organic growth. So that mix brings us to 1% and compared to -- and that's a number then that we're very happy with.

On -- with regards to profit and margins, I think it's -- we've always been focusing on EBITA growth, growing the profit in terms of absolute numbers. And why are we that? Because that's what brings or [ we're ] mostly important by the cash flow. And I think where we are right now in the markets, we are putting quite significant efforts on securing cash flow, growing cash flow, that's what's most important now. And that means that, that we probably look more -- even more at cost than we typically do. We look even more on profitability than we typically do, but that's just to secure that we have the necessary cash flow to continue growing.

[Niklas Sävås, analyst]

That makes a lot of sense. I also want to ask a question on -- I mean, follow up on that. [ In ] Salix, you have both B2B and B2C exposure. And I mean overall, in Volati, my view is that direct-to-consumer is quite a small share, but I still want to ask you because we have seen other reports on that. And I mean what do you think is the health of the Nordic consumer today?

[Andreas Stenback, executive]

It's a tricky question. I actually don't have any very -- it's -- my guess is as good as any ones, but it's definitely a tougher market right now, and we all see that. I think what's -- and that -- and it also differs compared to what kind of sectors you have exposure to. I think our leaders out there. We have a decentralized model and our leaders out there. They are the ones -- they are closest to their customers, their respective customers, and I have a big trust in that they run their operations successfully and yes.

[Martin Aronsson, executive]

Just to add on that. Also [ you said and ] it's a fairly small portion of our business that is directed to retail customers or consumer segments. For example, out of Salix Group only 20% is consumer segment and the rest is professional or industry segment. So it's a fairly small portion of our sales that go to those segments.

[Niklas Sävås, analyst]

What I get from that then is that the sales decline within those 20% is quite significant. As you said, that professional segment is performing quite well still.

[Andreas Stenback, executive]

Yes. Professional segment is still performing okay or is performing okay. But the sales decline in the consumer segment has been -- yes, it's been hefty. You can just look at the other companies providing services and products to a [ such ] segment, it's a challenging market.

[Niklas Sävås, analyst]

And on Ettiketto Group, you described that a large share of its sales is against consumer goods, groceries and industry. I'm just curious to know what's roughly the share in each of these categories. It seems like -- I mean, my thought on this was that some customers should have built up inventories, maybe don't have the same need for these labels now. So I mean, my view from that is that the share on, for example, groceries and industry should be quite large. Is that the correct assumption?

[Andreas Stenback, executive]

So we don't have that exact distribution, but there are a couple of dynamics Ettiketto and their demand [ there ]. And one is that the amount of products going out is roughly the same also in worse times. What happens is that consumer -- consumers that are often, then users, they shift to other cheaper products. And then the value of the label on that cheaper products compared to the more exclusive products, yes, the value is slightly lower, but not to the same extent, as one would expect. So basically, in terms of number of labels going out, it's fairly stable when you get into this kind of environment. But the -- so the consumer rather shift kind of behavior of what products they buy rather than buying a lot fewer. I don't know if that answered your questions. I didn't really...

[Niklas Sävås, analyst]

No, I think so. I mean I didn't expect you to tell me the exact share. I just wanted to understand the dynamics there, and I think you're spot on. And on the credit lines that you secured, I'm just curious to know more about your thought process here on setting that up. I mean, are you building sort of a war chest in order to be able to be on the offense when others are maybe on more of a defense? Or is this actually you taking advantage of the situation that you see now and not maybe a further worsening. Maybe you can elaborate a bit on that?

[Andreas Stenback, executive]

Yes. It's -- I wouldn't say it's definitely not a defensive move. It's -- we expect to continue growing. And what we showed in the past is quite significant growth [ meaning ] that [indiscernible]. If we also do that going forward, we're going to be double the size in 4 years or 5 years or something like that if you are [indiscernible] those historical growth numbers.

And in order to prepare for that growth, we need to make sure that we also have financial capacity to support it. And then we felt it's the time to -- we've had a very close and good relation with Nordea for many, many years, but we also felt it's a good time to bring in another -- a second financial partner supporting us in that growth. And yes, it was a good timing to do that now. And that also leaves us with that, as we said, liquidity capacity that we want to have in order to execute on the acquisition growth path.

[Niklas Sävås, analyst]

Great. And final question then, I think you've been really transparent in saying that it's been an acquisition market, where buyers and sellers have had sort of a hard time meeting. And I just wanted to ask a question on the buyer side, where you stand, I mean do you think the competition has changed as of late? Or I mean -- because I've seen from others that sellers haven't maybe brought down their expectations, but also that buyers have actually moved out and become more hesitant. Is that still the case? Or have they come back? And how is the competition on the buyer side now?

[Andreas Stenback, executive]

Yes. I would say the general question is that the competition is lower. There are fewer players, and the players or many players are a bit more passive. But at the same time, with our platforms, we rather consider ourselves industrial buyers. And the main group of buyers that we meet are other industrial buyers, meaning that we -- and generally speaking, was operating in industries, which are fairly healthy, with companies that are doing well.

So when we talk about our value-adding acquisitions, yes, the financial [ players ] are the more general buyers. They're not there to the same extent. But -- and industrial buyers, I would say, to a certain extent, they are still there. But still, having said all that, I think we have a better position today than 1 year ago because it was generally speaking, more competitive a year ago.

[Operator]

We'll take -- we'll follow along with some more questions that has come in. The next question is, what were the main drivers of Volati's net sales growth in Q1? And how did you perform in different geographic regions?

[Andreas Stenback, executive]

Oh, [ whole ] question. I mean, the main drivers were, as we pointed out, business area Industry, and in particular, some of our platforms within our business area, Industry, where we highlighted the platform communication and MAFI. So generally speaking, both Ettiketto and Industry all showed -- all platforms there showed a sales growth. But I would say the main driver was that -- that we've been detailing is the communication platform.

With regards to geography, we don't actually -- we don't -- I don't think we provide that split. But generally speaking, MAFI, its most of their sales goes outside of Sweden, so they're an export company. So much of it I would just guess, it's outside of Sweden.

[Operator]

We'll take the next question here. What's your strategy for expanding your market share? And how does this align with your -- with the Company's long-term growth goals?

[Andreas Stenback, executive]

Good question. And that it's not a very easy questions answered on the Volati level because that's -- that depends on which platform you're talking to. So we're a decentralized model. We have our overall financial goal of EBITA growth of 15% per common share per year. So -- but that is then split into our platforms, and they all have their own routes on how to execute on that. So I'm -- unfortunately, I can't give you a generic answer to that.

[Operator]

We'll take the next question here. What are the main risks facing Volati and how are you managing this risk to protect shareholder value and ensure sustainable growth over the long term?

[Andreas Stenback, executive]

Another good question. I think we're leading this kind of Group, you're always thinking about the next big risks or evaluating the risks. I think we, as said, we've put a lot of time and efforts in preparing, for example, business area, Salix now for a more challenging market. The team of Salix has done that in a great way and which [ leaves ] me and I said, Volati with a lot of comfort that we're handling that in a good way. But that's one of the risks, I would say.

And the same counts for the rest of our platforms. We have to -- we have -- already last year, we initiated the task of having plans for tougher times, more challenging times. So I'm -- right now, I'm really comfortable that would we meet that in our platforms -- in our platforms that are still performing very well. We had the platforms -- and we have the plans in place to execute on. And again, it's all about long-term growth or long-term value creation. So typically, we don't focus on maximizing the individual quarter, meaning that if we feel that short-term decisions creates too much long-term damage, then we're fairly inclined to maybe not do that just to secure the long-term value creation.

[Operator]

Then next question. If we're looking at acquisitions, can you comment on anything today that's in your pipeline?

[Andreas Stenback, executive]

Oh, no. That would be bad for the dynamics in that discussion as well. So -- but no, but a good question. But yes, I wouldn't want to give any exact examples, as we are in ongoing discussions with a number of targets. But let's -- I'll be happy to present those once they are done and ready to be published.

[Operator]

We'll take the next question here. Did you faced any significant supply chain or operational challenges during Q1? And if so, how did you address them?

[Andreas Stenback, executive]

Good question. Basically, we're operating -- we've been operating now since the pandemic in an environment, where we have had challenges to our supply chain occurring very frequently. I would say it's much better now than it was 1 year or 1.5 year, really 2 years ago. So it's definitely improving. But you still have a problem of getting certain components to certain companies at exactly the right time. So on a case-by-case basics -- basis, we're, of course, experiencing that. We -- I know we had it in -- yes, so -- but generally speaking, it's much better now than it used to be.

[Operator]

We'll take one final question here. What milestones should investors look out for in the coming quarters?

[Andreas Stenback, executive]

Good milestones. No -- you know, what -- I think our financial goals, I think that's a good looking at. So we want to continue our EBITA growth that could be achieved organically and through acquisitions, and we want to grow it both ways. And then, we want to do that by doing the right type of acquisitions and right type of investments, not [ adding ] in a position, where we get a negative or too much negative trend in our return on equity, which is our second financial goal.

And then, we also always keep an eye on our net debt ratio. We don't want that to become -- we feel that we have a lot of capacity. But at the same time, you don't want to end up in a situation to having too much leverage in this type of market. Probably not a very good question -- answer to that question, but that's really where we're focusing long term, not on individual quarter, but over time.

[Operator]

Thank you very much, Andreas and Martin for presenting today and answering all of our questions, and a big thanks to all of you, who follow along Volati's webcast today. I hope you have a great rest of the day. And until next time, thank you, and goodbye.

[Andreas Stenback, executive]

Thank you very much.

[Martin Aronsson, executive]

Thank you.

[Andreas Stenback, executive]

See you next quarter.