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Edited Transcript of ALIG.ST earnings conference call or presentation 23-Oct-19 8:00am GMT

Q3 2019 Alimak Group AB (publ) Earnings Call

STOCKHOLM Oct 25, 2019 (Thomson StreetEvents) -- Edited Transcript of Alimak Group AB (publ) earnings conference call or presentation Wednesday, October 23, 2019 at 8:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Tobias Lindquist

Alimak Group AB (publ) - CFO

* Tormod Gunleiksrud

Alimak Group AB (publ) - President & CEO

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Conference Call Participants

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* Johan Dahl

Danske Bank Markets Equity Research - Analyst

* Kenneth Toll Johansson

Carnegie Investment Bank AB, Research Division - Financial Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to the Alimak Group interim report for July-September 2019. (Operator Instructions) Today, I'm pleased to present Tormod Gunleiksrud, CEO; and Tobias Lindquist, CFO. Speakers, please begin.

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [2]

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Thank you for that, and welcome to Alimak Group Q3 2019 presentation. And I think we dive straight into the presentation. And if you move to next page, Page #2. Just sort of group summary of the quarter. And I'm pleased to see that we could deliver a quarter where we increased both the earnings and the margins. Like to start at the bottom line this time. We ended up on an EBITA adjusted of SEK 152 million for the quarter versus last year Q3 at SEK 136 million. And that took us to an EBITA adjusted margin of 14% versus last year 12.4%, which is an improvement of 1.6%, which is quite in line with where I would have expect it to be. And I think it's also showing that the measures and synergies that we have expected to harvest and the ones that were put in place in terms of measures is also biting, so I'm quite pleased with the result development on the group.

Moving down to the top line of it. We saw the orders coming down 6% reported, 9% organically. That is, of course, not so nice to see meaning that we ended up on the orders received at SEK 1.039 billion for the quarter versus last year, slightly above SEK 1.1 billion.

And where is this coming from? Well, it's mainly coming from the Wind side. And again, power in terms that we have been addressing a couple of quarters earlier as well. Adding to that, oil and gas saw a weaker quarter on the order intake side as well. So mainly, it's coming out of the industrial side on the quarter.

Revenue-wise, we ended up being relatively flat year-over-year and organic led to a 5% drop and here the decrease came in Construction. While it was another strong quarter for After Sales. So all in all, a group here, it is a bit mixed also on the quarter or on Q3. Still, happy to see that positive development continues on part of the Industrial side and also on the After Sales side. And we will get more into details in that further out in the presentation.

Moving down to next page, Page #3, takes us into the business areas, and we are starting with Construction Equipment. Construction Equipment had an order intake decrease of 10% reported, leading to 13% organically, ending up at SEK 128 million versus last year Q3 at SEK 148 million.

And where are these drops coming from? Well, demand side has been weak in Northern Europe, in particular, I should say, U.K. and the Nordics. I think we are all aware of what is happening on the British Islands. And I think uncertainty coming out of that. It's also taking a bite on the demand side on at least some of the sectors that we are serving. Because looking into other regions, they were pretty much in line with what we have seen previous year and also then previous quarters. So all in all, it is, of course, not so nice to see that orders are dropping to such an extent, but I still feel that we are taking a lion share of the market that is available right now.

And I think we have a pretty forward yield sales force. So it is -- as I see it right now, it is a market issue. Revenue-wise, we had a decrease of 26%, which is leading up to 28% down organically, ending the quarter at SEK 131 million versus last year, SEK 176 million. Where is that coming from? Well, some large deliveries that we had at the end over quarter 2, probably stirred up that a little bit, but revenue is revenue.

And we're quite happy to take them as early as we can get them anyway. So it's just part of the business, but it probably had some effect on the Q3 and the drop that we have seen on the order side, coming, as I described on the order side also from U.K. and the Nordic markets that's certainly taking a toll also on the revenue side. So it has been sort of a challenging market on the Construction side.

And how do we see this moving forward? Well, first of all, I think it would be an advantage if there could be a conclusion around the Brexit. I think that is causing, first of all, quite some uncertainty in U.K. But I think it is also having a spread outside of the islands, actually. EBITA was -- we ended up at an EBITA adjusted of SEK 19 million versus last year Q3 at SEK 27 million. And that left us with a margin of 14.6% versus last year Q3 of 15.1%.

Now down on the margin, that's a direct effect of the drop that we saw on the volume side. I would even say that one could have expected a bigger drop, given the shortfall in revenues. And what is stopping that is the fact that we had good factory utilization. Well it has stopped a bit on the Construction side, the Industrial side, general industry, even oil and gas, on the revenue side is continuing to improve on their side. And that, of course, leaves us with a good utilization on the capacity side. So it has less impact also on the Construction side.

And I think it's fair to say that we also had fairly large portion of the deliveries coming out with a favorable mix, leaving us with relatively high margins on the scope that went out of the factories. So all in all, I'm quite pleased with -- still quite pleased with the margin that we saw being delivered on Construction for the quarter. And, of course, it goes without saying that we would have liked to see orders being stronger and opportunities in the market materializing to a faster pace than what we have seen also in Q3 because I do believe that there are certainly good opportunities out there. And I expect that also to materialize going forward. And we will also get back a little bit to that when we are coming into rental later in the presentation.

Moving on to next page, Page #4, takes us into Industrial Equipment. Here, we saw an order intake decrease of 11%, leaving us with 14% down organically, ending up at SEK 523 million versus last year SEK 585 million. And where is this coming from? Well, a large portion of this is coming from a reduction on tower internals for Wind in China. Adding to that a bit weaker on oil and gas also in the quarter. Then, I'm happy to see that we had a good performance on the BMU side. And among them was, of course, the increased scope that we managed to be awarded with on the Sydney Harbor Bridge that was, of course, a significant impact on the -- on the numbers for the quarters.

Equally happy to see strong numbers coming out of general industry, which is the legacy portal Alimak on the Industrial side. So good development on those areas.

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Revenue-wise, we ended up being more or less flat year-over-year meaning that we ended up 4% down organically going from last year, SEK 537 million to this year, SEK 535 million. And again, here, we had a strong performance by general industry. And as I already touched upon in Construction. This also meant that we had good utilization in the factory coming out with the rack-and-pinion product.

So all in all, I'm quite happy with what came through on the revenue side, on the Industrial side. Result wise, we ended up on an EBITA adjusted at SEK 32 million versus last year SEK 18 million and that leaves us with a margin improvement to 6% versus last year, 3.4% EBITA margin.

So all in all, I see that we are on a positive trajectory when it comes to the margin side on the Industrial side. But of course, we never indicated that 6% would be sort of an end stop for the ambition on the margin for the Industrial. So we expect to move that from further.

Moving down to next page, Page #5, takes us into After Sales. Here, we had an order intake decrease of 4%, down 7% organically, leading us to SEK 302 million versus last year Q3 at SEK 314 million. We have a fairly large business on the After Sales side in Hong Kong. Recent events in Hong Kong has made access difficult during the quarter. There has been slightly fewer refurbishment contracts awarded. Can also be quite seasonal condition because 2 out of the 3 months in the quarter is typically holiday months. Still, we've been seeing Europe performing well, and we also see that Wind is picking up pace. And in particular, on the parts side.

So all in all, bearing in mind that the sales of accessories to the Construction industry has gone down also with the softening of that market in general. I'm quite pleased to see the development on After Sales. Also with the fact that we are doing better and better on the BMU side. I think that is certainly a market with a lot of opportunities for Alimak.

So all in all, I'm quite pleased to see. On the revenue side, we had a 10% growth on reported revenues, meaning 6% organically, taking it up to SEK 319 million versus last year Q3 of SEK 290 million. So on the revenue side, I'm certainly quite happy to see the development. That also translated into an EBITA adjusted at SEK 85 million versus last year Q3 at SEK 76 million, leaving us with a EBITA adjusted margin of 26.7% versus last year, at 26.2%. And again, pleased to see the higher revenues.

I'm also pleased to see the increased share of revenue coming out of the Wind and BMU, even if that is affecting the sort of margin that we're ending up with. It is still certainly contributing to the EBITA adjusted in its numbers. So all in all, I'm quite pleased to see the development and the pace at After Sales is developing with.

Moving down to next page, Page #6, takes us into Rental. Nice to see an order intake increased by 39% and 37% organically, taking us up to a quarter of SEK 85 million on orders received versus last year, SEK 61 million. And what I can say is that we see a continued strong construction activity across those markets that we are serving. And for new listeners here that would be Australia, it would be Germany, it would be France, and it would be the Benelux. So we see that activities are going on.

It might also be an indication of the fact that when we are saying that the -- the CapEx is sort of softer on the Construction side, and uncertainty that we have seen in the markets also drives or drive part of the customers towards the rental markets rather than on investments. So it is also partly as a consequence of that. And what we are seeing is that we've said for some time that we are nearly sold out. And what we see is that there is a certain shortage when it comes to machines in the fleet, and that is also stopping us from growth.

Having said that, we are also cautious given the current market conditions. But of course, this is something that we are evaluating all the time. We want to make sure that we are taking our full scope or full portfolio of fleets to the market that includes also new products that, again, is bringing the productivity and safety and reliability to the customers as they request. And it's a continuous evaluation of our own investment level in the fleet. If we believe that they are good strong projects to serve with a certain duration going forward. So it's certainly something that we are looking into as well.

Revenue-wise, we had a growth of 5%, leaving us with 3% organically. Again, quite happy to see relatively high level of utilization, and we also had some small expansion of the fleet already, and that is mainly coming from new products that we have brought to the market. EBITA adjusted ended up for the quarter at SEK 15 million, which is in line with Q3 last year leaving us with a margin of 15.5% versus last year of 15.8%, and this is still within the bandwidth of variations that I would see as variations that we will see every now and then between the quarter.

So all in all, I think it was another strong quarter delivered by the Rental organization in the group. With that, I think we have arrived at next page, which is Page #7, and Tobias Lindquist will take you through an earnings summary. So Tobias, I hand it over to you.

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Tobias Lindquist, Alimak Group AB (publ) - CFO [3]

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Thank you, Tormod, and good morning, everyone. So our group EBITA adjusted result for Q3 was SEK 152 million, an improvement with SEK 16 million versus last year. SEK 14 million of that came from Industrial Equipment, mainly due to their margin improvements, SEK 9 million from After Sales, driven by higher revenues, whilst Construction decreased their result with SEK 8 million.

We have no material nonrecurring cost in the quarter versus minus SEK 19 million last year. Our amortizations of SEK 11 million was SEK 1 million lower than last year, and also our financial net improved by SEK 1 million compared to last year, ending at negative 12.

The financial net was impacted by IFRS 16 of SEK 3 million [for this term]. Our taxes of SEK 29 million was SEK 6 million higher than last year due to the increased profit, and we thereby ended up on a result for the period of SEK 100 million, an improvement of SEK 32 million versus 2018 [as Tormod said], mainly derived from the improved EBIT adjusted result and lower nonrecurring expenses.

So overall, we have a good development on result wise with EBITA adjust increase of 12%, and result for the period up 45%.

Moving to next page, Page 8, tax expenses. So with earnings before taxes of SEK 129 million and tax cost of SEK 29 million in Q3 we had a tax rate of 23% compared to 25% in Q3 last year. In Q4, 2018, we had the impact of deferred tax assets of SEK 47 million. We haven't had any material changes in deferred tax assets during the year and don't foresee any such for the remainder of the year as well. On a year-to-date basis, we are at a tax rate of 24%, which is in line with the 23% to 25% that we are expecting on a full year basis.

Moving to next page result for the period, earnings per share, that's Page 9. So had a result for the period of SEK 100 million, which meaning an earnings per share of SEK 1.83 compared to SEK 1.26 last year, so an improvement by 45%. On a year-to-date basis, we are at 5.65%, so up 53% compared to last -- first 3 quarters. So good development in the quarter as well as for the first 3 quarters as a whole.

Moving to next page, Page 10, cash flow and net debt. We continue to have a good operating cash flow in Q3. We had a positive SEK 134 million, where the main bulk comes from the improved result. Our working capital increased SEK 9 million during the quarter, mainly due to higher activity and more projects for the BMU side where we then ended up with higher contract assets.

Our investments in the quarter was at SEK 11 million versus SEK 8 million last year. And the increase is mainly related to IT projects as well as more investments, slightly more investment in the ramp-up fleets.

Our net debt by end of September was SEK 1.262 billion compared to SEK 867 million by end of December. The increase of following the IFRS 16 is SEK 332 million. And also impacting the net debt for the full year or for the year so far is the dividend paid out in Q2 of SEK 149 million as well as the share repurchase that we made in Q3 of SEK 25 million.

Looking at leverage, we are at 1.68 by end of September, which should be compared to 1.55 by December. Excluding the IFRS, we would be on 1.24. So a positive development throughout the year in terms of net debt-to-EBITA leverage ratio. And that is mainly driven by the improved EBITA result. So in general, we have a good financial situation, positive -- continue remaining positive cash flow and balanced investments and improved leverage.

Also in July, we extended the credit facility with Handelsbanken for one additional year.

Moving to next page, Page 11, our midterm financial targets, which were set in 2017 after the acquisitions of Avanti, Facade Access.

In terms of revenue growth, our target is having an average annual organic growth of at least 6%. In 2017, we achieved 9%; and in 2018, we were flat for the year as a whole, while we had a positive development in the latter part of the year. This year, we had a strong development in the beginning of the year, plus 13% in Q1, plus 3 in Q2 and then minus 5% on -- in Q3. On a year-to-date basis, we are plus 4%, with all business areas having a positive organic growth. Construction Equipment and Rental are up 8% on a year-to-date basis organically and Industrial Equipment and After Sales are up 2.5% each.

So positive development in that -- for all business areas. In terms of our EBITA margin target, we are targeting an EBITA margin adjusted of 15%. In 2017 and '18, we were both at 12.8% for both years. And during 2019, we had a positive development during the first 3 quarters. On a year-to-date basis, we are on 13.9%, so -- which can be compared with 12.5% with the same period last year. Our leverage target is 2x, and that was set before not taking into account IFRS 16 impact.

We are then, as said earlier, excluding the IFRS impact, we are currently on 1.24, whilst our reported leverage is 1.68. So here, we are on a good traction or exceeding the targets. So overall, we're moving in the right directions in -- towards our midterm financial targets. And with that, I hand over again to Tormod.

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [4]

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Thank you for that Tobias. And if we move to next page, Page #12, I will try to sum up some of the events or how we view the quarter, Q3 2019. And also a little bit on the trends and the developments that we both have seen and maybe also a little bit what we do see going forward. It's nice to see that margins are improving on the Industrial Equipment side, we certainly had a setback on that margin level in Q2. And it's -- as I said, good to see that we are, again, moving in the right directions when it comes to the margin. I'm also very happy to see that we are developing with a fairly good pace on how to develop further the After Sales market.

And maybe, in particular, on the BMU and the Wind side because that was also one of the major rationales when we made the acquisitions back in 2016 and when we started to implement those in the businesses in early 2017. So it is good to see that this is moving forward. And of course, you would always like that things are moving with a faster pace but all in all, I think it is good to see the development that takes place within that business. And I think it should also be seen in the light of the fact that, as I also said in the After Sales presentation that the sales of accessories to the Construction sector has also softened with the sort of activity level that we see on the Machine side within the business.

So delivering the numbers that can still in my view quite decent levels. We have continued to see a challenging market for tower internals on the Wind side. I think we reported on that first time after Q1. We said that we'd put measures in place accordingly. We certainly took a hit from it in Q2, result wise.

We have -- we made adoptions on the footprint size, quite early i.e., in terms of full-time employees and that part. So we've been working on adapting the organization and the workforce to what the opportunities are representing. And that is something that we will continue to work on. We will make sure that we optimize our footprint for whatever is the opportunities that we see going forward. So this is an activity that is going on a sort of a constant basis. Having said that, I'm pleased to see how we are doing it on the service lift side. PPE side of the Wind business because they are doing quite nicely. So it is really tower internals that we have seen, is being a tough market to compete in and deliver the sort of margins that we would expect coming out of the business as a whole.

Construction customers, cautious on new CapEx, but it's certainly something that we have seen. Having said that, one should not forget that year-to-date Construction is well ahead of previous year revenue. So all in all, we have been growing the business over last year. We continue to do so.

And I would expect that -- I would expect nothing else than that we see a growth on revenues for Construction, also on the full year 2019. And as I said, we've also seen in some areas that the cautiousness of the customer on the CapEx side is also leading in quite a few instances those customers to seek for rental alternatives. So it has been good to be in a position where we can actually offer both. We already said that we also have to take a view on the size of the fleet because it also needs to be adapted to whatever are the current market opportunities.

And all in all, we know that there are projects out there. We know that there are projects being on hold. We do believe that resolving the uncertainties that fits in certain part of Europe would be good for business as a whole, not only the Construction sector, for sure. So all in all, I still believe that the market going forward is eventually offering good opportunities for the scope and services portfolio that Alimak can bring to the market.

Strong improvement in group earnings. We had a growth on EBITA adjusted of 12%. And a margin improvement coming from 12.4% last year to this quarter 14%, leading to a good improvement also on the EPS side. So all in all, I think the quarter delivered quite well on the execution of backlog and converting that into a result on the bottom line as well.

And of course, like most of you, we should or would also have like to see higher order numbers. But again, I think the most important thing for me is to make sure that we are fighting for whatever opportunities the market is representing. And that we are at least maintaining our market share in all the different sectors that we are operating.

So again, all in all, I think it was a decent quarter. We have a financial target, saying that we should deliver a run rate on the EBITA adjusted margin of 15% in Q4. Do I still believe in that? I think it will be a challenge. I think we still need some good book and bill order intake. But I would still say that it is actually doable to deliver on that target.

So we will -- team will do whatever we can on our side, and it remains to see where we would end up. And by that, I think Alimak Group is concluding its Q3 2019 presentation. And I think we hand over to those who would have questions to Alimak Group.

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Questions and Answers

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Operator [1]

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(Operator Instructions)Our first question comes from the line of Johan Dahl from Danske Bank.

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Johan Dahl, Danske Bank Markets Equity Research - Analyst [2]

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Just sorry to be too specific here but in terms of Q4 guidance, Tormod, I mean, how should we read this? Are you -- do you expect 15% margins? Or do you do not expect it? Have you sort of a down number to previously said, should we just view this as an aspiration, please clarify?

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [3]

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No, I -- I have not abandoned what I've said earlier. But I'm also saying that it is -- it will be a challenge. Now it has -- always -- I never saw it as anything else, but a challenge. But the challenge is not getting smaller or less with the Q3. But it is still -- it is still doable. It will, however, also depends a little bit on the mix and where that revenue is coming from. And as I said, we also need to have some tailwind on the book and bill side.

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Johan Dahl, Danske Bank Markets Equity Research - Analyst [4]

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Okay. So still your expectation to have a 15% margin run rate in Q4?

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [5]

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It is still my ambition.

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Johan Dahl, Danske Bank Markets Equity Research - Analyst [6]

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Okay. Can you just explain to me, just looking at the sort of order trends right now, how do you sort of plan group-wide cost employees, et cetera?

I mean, is your current stance sort of stepping costs to achieve top line growth next year or more flattish or even down? What's your view there?

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [7]

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No. I mean, we -- I mean, we prioritize profitability over growth. I mean, we've been doing that for quite some time since we introduced the measures, in particular, on the BMU side. I mean, if we come up -- if we cannot execute and run with a decent profitability level then we are not that interested in that volume to put it that way because our -- the business that we are in is not risk-free. And we also want to make sure that we were actually getting awarded also for that.

So we have certain requirements to where we should be on the margin side of the different businesses that we are in. So there is, of course, a balancing act in all this. But our main focus over the last year has really been to make margin improvements.

Still being competitive. We actually believe that customers also like to deal with the suppliers that do have a sound financial position and can stand up for its commitment. So we also see more and more customers here. We appreciate that. So again, profitability over volume. What we are looking into, what we are currently looking into in terms of these areas where we see that margin may be shrinking, and that also leads to lower volumes. Then for us, it is all about making adoptions to footprint, being able to maybe combine portfolios where that would be natural. So we have quite a few initiatives going on in that space.

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Johan Dahl, Danske Bank Markets Equity Research - Analyst [8]

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Can you just talk about those initiatives? How much is that -- we're seeing headcount in the group being up in the quarter compared to last year, but sort of how much is launched as of today in terms of cost-outs that could impact next year?

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [9]

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No, we have not been specific on that, and we won't be specific on it until -- if there should be anything larger than we would, of course, report that to the market.

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Johan Dahl, Danske Bank Markets Equity Research - Analyst [10]

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Got you. Just finally, on the Industrial side, the very clear margin improvements there. Could you just talk about what's -- what are sort of synergies, improvements in processes and what are sort of easy comps, mainly on the BMU side?

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [11]

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No, I think -- I think one has to go back to maybe Q1 this year when we were at 5.9%. And then we had, as I said, we had a setback in Q2, leading down to 3.5%. And at that time, we were saying that the vast majority of that drop really came out of the lower volume on the tower internal side. And as we said at that time, we are, of course, making adoptions when orders are not coming, we are making adoptions to footprint, to FTEs and all of that. So I think the 6% is more representing a sort of being back on that trajectory on the 5%, but still being a little bit hampered on the volumes on the Wind side.

And so I think you should see it more as stretching up the line from the 5.9% in Q1.

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Operator [12]

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Our next question comes from the line of Kenneth Toll from Carnegie.

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Kenneth Toll Johansson, Carnegie Investment Bank AB, Research Division - Financial Analyst [13]

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And so we've talked quite a bit on the Construction side and the weakness in order intake there. And when we look into next year, it might be fair to assume that sales volumes are going to be lower than in 2019. So are you doing anything to prepare for lower sales on the Construction side? Or do you have a flexibility internally to move people around the factories and so on to mitigate that downturn, please?

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [14]

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Yes, I mean, we are certainly not sitting and waiting for this to happen. So we are doing preparation. The good thing is, though, that as I also said, I mean, as we said on Construction, we -- on a relatively, I should say, lower volume in Q3 we still ended up at 14.6%. Lot of that also came out of the fact that large portion of the workforce could also be moved from, let's say, the production line for Construction over to the construction line on the -- in particular, I should say the general industry. Many of you have been in (inaudible), you see that people are standing next to each other, there's a line for industrial, there's a line for construction. When pace picks up on the industry side, as you have seen, of course, that puts us in a position where we are able to utilize that and by that also sort of dampening the effect of a softer order intake on the Construction side.

And we are, of course, looking into this also in a broader perspective throughout the whole footprint to see what can be done more in that respect because having that flexibility and with the different market dynamics, it puts us into a fairly strong position.

So that is something that we, of course, are looking at and working on.

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Kenneth Toll Johansson, Carnegie Investment Bank AB, Research Division - Financial Analyst [15]

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Great. And then also on the BMU side, where you last year had some operational problems and you changed the contract. Yes, the way you sign contracts and so on. Have you seen a pickup in order on the BMU side this year? Or are customers still hesitant to your new ways of signing contracts? And yes, then we need to exclude this, maybe the Sydney Harbor Bridge order that you got this quarter.

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [16]

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I don't think it would be fair to exclude it because it's just among some of the portfolio that we're going after. And it's not variations to projects in terms of expansions can happen. So I probably wouldn't say that is fair. I think we have seen an increasing understanding among quite a few of our customers.

And in quite a few instances, the buying organization of BMU is quite often also the construction company that is purchasing on behalf of the real estate owner, and we have tried to convey the sort of liabilities or contract terms in general that we are used to be faced within -- on the rental side, on the construction side. What we're trying is to also translate those into the business of the BMU.

And there is an increased understanding among the customers because there are not that many large players with the same sort of both organizational strength as well as financial strength in that business in comparison to what we actually are coming across at Alimak Groups. And quite a few customers also like the idea of dealing with the supplier who they know will be around also for the next 100 years to come. So we see more and more customers also buying into the discussions that we do have. And then we also appreciate that this is something that is not completely digital, i.e., it does not go from one state to another within days.

But we have walked away also from contracts where we have said that the risk and liabilities that you try to put on Alimak for this project is not something that we can enter into. And as such, we are leaving it. But those discussions are getting fewer and fewer. And I think that is a good sign.

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Kenneth Toll Johansson, Carnegie Investment Bank AB, Research Division - Financial Analyst [17]

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Okay. And then finally, your cash flow is good and your balance sheet would allow for acquisitions. So are you actively looking for acquisitions? Or have you seen multiples maybe come down when the business climate in general is a bit softer? Or anything to say on that front?

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [18]

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Yes, there are 2 things to say. It's yes and no. We are certainly looking. We are certainly working on that team. Are the targets more shy when it comes to expectations on multiples? No. So there is sort of -- I think quite a few also maybe need to have a little bit of a recalibration in terms of what expectations should be, given where we are, but it's certainly something that is high on our list.

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Operator [19]

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(Operator Instructions)We appear to have no further question at this time. So I hand back to the speakers for any final comments.

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Tormod Gunleiksrud, Alimak Group AB (publ) - President & CEO [20]

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Thank you for that. And with that I think Tobias and I will just say thank you to all of you that dialed in to listen to Alimak Group's quarter 3 2019 result conference, and I can only wish you a good day. And see you soon. Thank you and bye for now.