Norbit Asa

Good morning and welcome to the presentation on Norbit's third quarter results. It's a privilege to be allowed to present the result of what our dedicated colleagues has achieved. As you will see, after the first nine months of the year, we're delivering revenues at par with what we did for the full year last year and with nearly a doubling of the results. For us, this is encouraging and helps us to go to work every day and ensure that we deliver on the expectations our customers have. So then let's dive into the numbers. As you see, Q3, as always, is somewhat weaker than the other quarters. Still, Q3 2024 is the best Q3 ever for Norbit. So we came in with revenues on 505 million NOX, which is 36% increase from last year. and with a margin of 15% giving 75 million NOX in EBIT and as I already said for the first nine months of the year we are delivering at par of what we did for the full year last year 1.7 billion Norwegian kroner up 43% its growth in all three business segments with an EBIT of 377 million, which is 92% higher than what we had for the same period last year. That represents a margin of 22%. Some other events, we've announced some new contracts in the PIR segment towards the defense and security sector. It's 120 million contract. And I think in that announcement, we also said that They've had accumulated smaller orders, which also summed up to 100 million. Yesterday, our eminent Bordeaux directors decided to resolve an extraordinary dividend of 3 Norwegian kroner per share. So looking into the different segments, oceans has some seasonality. It's some vacation season in Q3. Still nearly 200 million, so 192 million knock in revenues. That represents an increase of 22%. from last year, EBIT margin of 21 compared to 19. For the first nine months, we've delivered 665 million NOX in revenues. That's an increase of 40% and accumulated margin of 32%. which is a good increase from the 25 it had for the corresponding period the year before. And as you can see, having from Q3 2020, Two, in-orbit quarterly fluctuation is expected. Some of what we deliver in the ocean segment is high-priced, high-value products. Some units in or out over a quarter, some will affect the numbers in addition to the underlying seasonality. Diving into what's behind these numbers. So this is year-to-date figures for the first nine months, 23, first nine months, 24 and 25, showing that the winghead sales is somewhat higher this year than it was last year, 120 million, and a very good growth in other sonars. And this is very much driven by increased sales of the iVBMS X, which we launched this year. I could remind you what this is. That's a sonar, which is fully equipped with all thinkable hardware features for such a sonar. And you can buy software features to upgrade according to your need. So it looks like our clients really appreciate this offering that they could buy a sonar which enables them later to buy a software upgrade for additional functionality. So that's been good. Yeah, sub bottom profilers 66 million and still on the security side which we remain very positive for in the long run. It's lower than our ambitions, but ambition remains as high as it has been. Then the connectivity segment. So it's revenues at par with Q3 last year, 108 million compared to 111 million. The decline is due to some rescheduling of onboard units and so it's some of the revenues that we were aiming to have in Q3 that has been slipping into Q4. For the first nine months, we have accumulated 70% increase, so 423 million. And I'll show you the split afterwards. And that's a marginal 27% for the accumulated year-to-date numbers. So, and as you see on the revenue split, the onboard units, it's the toll tags for mainly passenger cars. It's somewhat lower than it was last year. but it's a good growth on the enforcement modules for tachographs and the rest also a little bit growth or stable. So some status on the product we were awarded a contract April last year for making a complete new satellite-based tolling unit for trucks, a so-called 4G-based GNSS onboard units. It's 160 million NOC contract and this contract is for supply of units to the European leader in this electronic toll collection systems or toll for Europe. So volume production started in October So it's then 18 months from being awarded this contract running through the R&D phase, industrialization, assembly of a full robotic line and scaling up that. So I think it's a good job done from our colleagues. Ambition was to do it even in a shorter period, but it's satisfying to see that finally we are running a high volume assembly line in our Røros factory. This product is very much in line with our strategy to broaden both customer base and product offering. And we are eager to see how this evolves as the existing fleet of GNSS onboard units in European trucks is very much based on 2G GSM. And as we see, European countries are planning to phase out the 2G GSM network. We see that there is a need of replacement of the existing fleet in addition to the underlying growth in the market. segment product innovation and realization and also I'd like to remind you so Norbit is a very much vertically integrated company where we've believed in for many many years that making the products doing the production also in Europe and in Norway in addition to designing the products is a good thing to do. And we've seen that some spare capacity in our factories, we've decided to offer on contract manufacturing terms to other technology companies, industrial technology companies, And for a selection of such clients, we are acting as a scaling industrial partner. And it's very satisfying to see that we have really been able to scale. Some of the investments we've done has really helped us. So we announced earlier this year that from April we installed a new line for surface mounting of electronic components in our Røros factory. This is said to be Europe's fastest S&T line. And that's good, it's been running. And we have an increase from 114 million NOC in revenues in Q3 2024 up to 224. So it's a high increase and a good margin improvement showing the scalability in this business. with operational leverage and a lot of the indirect resources needed to run this is very much shared between the different segments. So for the first nine months of 2025, we've accumulated revenues of nearly 680 million NOC, which is 72% increase from the same period last year. It's an EBIT margin of 18%, which is double of the nine we had for the first nine months in 2024. And as you can see from this split, the defense and security sector is really the reason why this is growing. And as you can see also, some of the clients in the automotive industry and some industrial, we have... sort of not fully phased out but we have not been very active getting new and also I think I've said it before also that some clients we've been helping to move to other factories to free up capacity for this new scaling partners. And capacity, I mentioned and reminded you of this investment of new SMT line in our factory We are also increasing the floor space of our server factory. Very good cooperation with the local municipality. So they are responsible for project execution and financing of this expansion, which is coupled to our existing plant. Completion year-end. And USMT line is ordered and will be installed in this facility in January. So, and this is very good. We see that it helps us even increase in capacity more. And we have an option to acquire ownership of the facility if we decide to do so. So with that, I'll leave the floor for Pakistan to give you some more details of the financial figures.

Thank you, Per-Jørgen. I will spend some minutes walking you through the highlights of the quarter. Revenues came in at 505.4 million, an increase of 36% from the corresponding quarter of 2024, with Oceans and PIR contributing to the growth. While connectivity reported a 3% decline in revenues, on a 15 million kroner postponement of onboard units to the fourth quarter. EBITDA for the quarter was 114.7 million, representing a margin of 23%. This compares to 86.6 million and the same margin in the third quarter of 2024. Operating profit was 75.4 million, translating into a margin of 15%. And this compares to 53.7 million and a margin of 14% in the third quarter of last year. Net finance expenses were negative, 6.5 million, largely explained by 8 million in net interest expenses, partly offset by foreign exchange gains. Tax expenses, 17.2 million, while net income for the period was 51.8 million, translating into an earnings per share of 0.81%. In the third quarter, oceans delivered 22% revenue growth. Sonar sales were strong, particularly in the Americas region. We continue to see strong sales of the new VBMSX sonar platform that was launched earlier this year. On the negative side, sales insecurity and for some bottom profilers were slow in the third quarter. Ocean's gross margin declined 4 percentage points year over year due to lower sales of rental, training and consultancy services, as well as obsolescence provisions. Payroll and operating expenses increased 7.2 million on new hires, wage inflation and use of external consultants. In total, the EBIT result came in at 41.3 million, up from 30.7 million in the same period of last year. Connectivity, as mentioned, delivered a 3% revenue decrease, and compared to the last year, revenues declined primarily due to lower volumes of onboard units sold. And again, mentioned that deliveries worth 15 million kroner were postponed to the fourth quarter. The decline was partly offset by an increase in volume sold of enforcement modules for satellite-based tolling units. The gross margin fell 4 percentage points on product mix and scrapping costs. Operating expenses, including payroll, increased 3 million year over year, and the EBIT result for the quarter came in at 16.6 million, down from 28.1 million in the third quarter of 2024. PIR posted a significant improvement in revenues, close to a doubling from the third quarter of last year, primarily driven by increasing demand from the defence clients in the defence and security sector. Gross margin came down one percentage point, while payroll and operating expenses increased 13.6 million on new hires, wage inflation and activity-related costs. The EBIT result for the quarter was 40.5 million in the quarter, up from 12.2 million in the same period of last year. Turning to the balance sheet, property, plant and equipment, including rights of use assets, increased 36.5 million in the quarter. This is primarily due to investments in capacity expansion on surface mounting machinery. Intangible assets rose approximately 9 million, explained by our R&D investments, while trade receivables were down 16.5 million, explained by the sequential revenue decline from the second quarter. Inventories rose 92.7 million and this is explained by sourcing of components to prepare for the significant activity increase we expect in fourth quarter. including delivery of the GNSS onboard unit and defense and security-related products within the PIR segment, hence referring to our outlook section, which we will come back to in a few minutes. Net interest-bearing debt stood at 320.5 million at the end of August, an increase from 274 million at the end of the previous quarter. Our equity ratio was 50%, which is on par of what we reported the last quarter. We continue to strengthen our liquidity position in the quarter by increasing our multi-currency overdraft facility by 150 million, subsequent to 30.09, so that the performer liquidity stood at close to 830 million. Our balance sheet continues to remain rock solid with a net interest rate in debt to EBITDA ratio of 0.7 times at the end of the third quarter. Due to our strong balance sheet, financial position and the solid outlook, the board has resolved to distribute an extraordinary cash dividend of 3 kroner per share for the financial year 2024. Considering we are currently below the long-term target range of the financial policy, the dividend distribution is also very much in line with the policy of returning excess cash to the shareholders. And the dividend will be paid out from Norbit in approximately two weeks from now. Lastly, cash flow for the quarter. Cash flow from operations was 1.9 million negative, explained by an EBITDA of 114.7 million. A net increase in working capital of 95.8 million. Taxes paid of 14.4 million and 6.5 million in net finance expenses. We invested 40.8 million a quarter, explained by approximately 30 million R&D investments and 11 million in machinery and equipment. The R&D investment level for 2025 is still expected to be between 130 to 140 million, and there is no changes to the machinery and equipment investment guidance of around 120 million for the full year. Cash inflow from financing activities was 11.9 million in the quarter. So with that, that summarizes the financial section, and I will give the floor back to Per-Jurgen for the outlook part of the presentation. Thank you, Per-Jurgen.

So starting this year, we have a target of delivering 2.2 to 2.3 billion Norwegian kroner in revenues. When we presented the first half year results, we raised that target to 2.5 to 2.6. This remains our target for the full year. So we expect revenues in that range. And with that, we expect EBIT margin between 24 and 25% for the full year. So as you see, Q4, as always, is a hectic quarter. And this is expected also for 2025. In the different segments, the three last months is typically the strongest in oceans. Some of this is related to what we would call in quotes, budget flushing. That's not very easy to predict, but it really happens, so we're preparing for that. In connectivity, revenues is expected to increase sharply, quarter over quarter, and this is driven by delivery of the GNSS OBU, which started in October. And we expect revenues in the range of 200 to 240 million for this. And in the PIR segment, we expect to generate new records. The aim is to deliver between 390 and 420 million NOC in the first quarter. fourth quarter and this is driven by the same sector as I've explained earlier which is very strong also in our outlook. So that concludes our presentation. If there is any questions we're happy to answer them.