Scanfil Oyj Ord

Good morning. Welcome to Scanfell's Q2 2026 report webcast. My name is Pasi Hirampaa. I am the Director of Investor Relations and Communications at Scanfell. Together with me here is our CEO, Mr. Christoph Sutt, and our CFO, Iris Heiskanen. And we have the Q&A at the end of the session. So there is a chat box window for that purpose. So type in the questions and we will read those questions in here. Now handing over to Kristoff, please. Thank you, Parsi, and welcome to all of you.

Starting with our Q2 report with an info that we will not come up with every day. We celebrated during Q2 our 50 years. It was a great milestone and a fantastic milestone for the whole Scanfield opportunity. also for our teams to get together but also to look back at what we have achieved and look forward at what we can do together so as a key event we felt that one that is good to remember going back to the business we had a very strong quarter when it comes to customer interaction it materialized in many different ways we run on a regular basis customer satisfaction survey and it came out this quarter with highest NPS result that we have ever had, which shows the commitment we have to our customers and the development of the relationship with them. It also materialized in a new contract. We had the pleasure to have an agreement with Bruker Access Division, which will start to build a product in our facility, both in Poland and Estonia, which is a great milestone in the development of our medtech and life science projects. business and also a great milestone in the relationship with the broker that is a significant player in their field. We also closed the deal in the field of energy and clean tech that was very material for Scanfil. It's a 25 million euro deal on a yearly basis. And we expect manufacturing for this new product line to start during the second part of the year, probably towards the end of the third quarter, which means that it will have a positive effect to us. So a great milestone also in being recognized for our capabilities in energy clean tech, which drove this new win. And then in the same times as we had announced, we are expanding our facility in Suchu and the work started and we expect to get delivery of these new facilities in 2027. It's actually an expansion on the current facility on the same land. that will bring us additional space for supporting our customers that are in demand of our capabilities in Sucu. So many events that are driving a future growth for Scanfield and that are preparing for a future growth. When we look at the performance in the quarter, we reached €259 million in the quarter, which was an increase of 28.1%. And out of it, around 5% was coming from organic growth, which was pretty much in line with our targets and expectations. I would say it shows both the dynamic of the overall Scanfield customer portfolio but also the success of the acquired entity that performed strongly in the quarter and continue to develop nicely when in the same times we keep having a strong performance from both energy clean tech and medtech life science that is driving our organic performance. In terms of order, we also had, when we are talking about future business, we also had a very positive development since we reached 72 million in one deal in the quarter, which is a record number for Scanfil. And all in all, it delivered a profitability of 18.6%, which was increased 30.8% versus last year, with a comparable EBITDA margin at 7.2%, also an increase of 0.2% versus last year. And finally, EPS at 0.17%. So I would say a solid quarter in terms of delivery and reinforcing the performance that was expected towards 2026. One of the components was also the excellent growth in North America, but I will get back to it a little bit later. As mentioned before, revenue continues to expand. I mean, we can see a clear trend quarter after quarter of the benefit we are gaining both from acquisition and from organic development, which made this quarter a record quarter in terms of sales. Looking at the development of the margin level, 7.2%, which was an improvement against the second quarter last year, that was at 7%. And obviously, combined with the impact of the growth, bringing us an increase in value that is significant in the quarter. Looking now at our different regions, starting with America, that is right now waiting 8% of the total scan fill revenue. In America, we have a combination of organic growth and acquired growth. We had extremely strong organic growth. We had announced it the previous quarter where we were impacted by development of a new project implementation, which was a bit waiting on the profitability. But this quarter, things started to pay out. We had organic growth next to 10%, and then the margin getting up above 8%. And that was a combination of, obviously, those new projects and the organic growth contributing positively, but also a strong performance from ATCO that we acquired at the end of last year that keeps delivering. in line with our expectation and in a very robust and solid way. Looking at the APAC region now, APAC is 24% of our revenue. We had a strong quarter in sales and a solid margin level. Organic growth was more flattish. It was in the range of 1% in the quarter. We have started the expansion of our Suchu facility. I mean, it will allow us to grow and to develop the business, and we definitely need that. In the same time, we have started in the quarter to see implementation of new project in Malaysia, and that is something that is going to continue and become more material on the second part of the year. So that's probably where we can expect organic growth to come from. Looking now at Central Europe, that is now our biggest region, and obviously sizable and significant to the whole scan field. There are a lot of things happening in the quarter. We break the floor of 100 million during that quarter, solid profitability around 7.8%. was in the range of 5% in the quarter in Central Europe, which was a mix of very strong development in our Polish operation. I mean, we have both in Mislovice and in Sieradz one significant amount of new projects that started to materialize in the quarter. In the same time, we did finalize the restructuring of our German operations that we announced at the end of last year. So we are now in a shape to recover from the point we had, both in terms of business development, but also in terms of cost. So if you balance those two events, you will realize that, yes, in reality, Poland was far above this 5%, and the strategic part of Scanfield was behaving in a very nice way. And then finally, but not something to minimize, I mean, still a very strong development from MB Electronica in Italy that we acquired at the beginning of the year and that where we got the first time a quarter and MB was still accredited to the total of scan field and both developing nicely top line and also in terms of margin. So all in all, quite a lot of activities in Central Europe during the quarter and I will say all of them unfolding as we were expecting to unfold, not only the number. And then finally, Northern Europe, that is 27% of our revenue, posted a solid organic growth of 5.5%, strongly driven by our aerospace and defense customers that are developing in a nice way, but also by the energy and clean tech segment. And the margin was stable in 6.7% level, which... was in line with what we have seen the previous quarter and an improvement versus the second quarter of last year. So overall, we can see that the development in the different regions was positive in the quarter. When it comes to our customer portfolio, we continue to rebalance our portfolio for the first time in the quarter. Our biggest customer was below the 10% mark of total revenue, which brings him year-to-date to an 11%. And we can clearly see that the weight and the list of customers is growing and rebalancing our portfolio and rebalancing the opportunities we have. Then, looking at the different market segments, I mean, defense and aerospace is now year-to-date in the range of 10% of the total of Scanfield. Energy and heat continue to be a significant part of our growth and development, with 31%, and medtech and life science, roughly 20%. When we look at the development and business activity during the quarter, During the quarter, Aerospace and Defense was 11% of the total. We won deals for a value of 2.5 million. I mean, obviously, this business is a very cyclical business. We get sometimes very big deals, sometimes smaller deals. However, the level of activity is currently extremely high where we are having active discussions with customers to see how we can leverage on our presence across the Europe to support them in their deal and in their development. So I would say very pleasing development there both in activity but also in delivery where the growth in sales was significant. Energy Clean Tech was very positive since we have one order for the record amount of 41 million I mentioned earlier this 25 million deal that we closed in the quarter and that will start to materialize during the year. It shows the interest around our capability for that portfolio and that field, which is positive to the overall company. And then in industrial at the more moderate growth in the quarter, but that's here we have a bit of seasonality and also volatility between deals. So here quite standard development. Finally, medtech and life science. That is an area where we are investing strongly. And we can see that since Q3 last year, we have taken a step up in the won deals that we bring in per quarter, reaching the 15 million bar. And this quarter was not an exception to it. It was coming back also as a solid quarter in the number of deals we have won. So very positive development in medtech and life science. With that, I will hand over to Iris.

Thank you, Kristo. So let's take a look at our turnover and comparable EBITDA preaches first. So if we start with turnover, it was a growth quarter for us, the second quarter. turnover increased 28.1%. It was a strong contribution from acquisitions and supported by organic growth, which was 4.7%. And it was positive across all of our regions. We also had a small positive impact from exchange rates. Then in comparable EBITDA, it increased to 18.6 million with a margin of 7.2 while last year was at 7%. And what is pleasing to see here that all of our regions increased their comparable EBITDA compared to previous or the last year. And the improvement was driven by, of course, turnover increase, but also good execution level. Then cash flow and networking capital. Our operating cash flow was 5.9 million in the first half of the year. Working capital increased with the volume growth and organic growth. We saw increase especially in accounts receivable and that compared to last year, cash flow is at lower level. However, we improved the cash flow in the second quarter compared to the first quarter. Then networking capital increased during the first half of the year. Of course, we have acquisitions now included in the figures, but also higher business volumes in the first half of the year. And in the quarter, accounts receivable increased compared to the first quarter, but inventories decreased. So that partially was offsetting the increase in accounts receivable. Then net debt and leverage. Our net debt was at 139.6 million at the end of the quarter, which is 1.6 leverage rate. Compared to last year, acquisitions financing is explaining this increase. And then compared to the first quarter, working capital increases is tying up cash. We have a good level of available liquidity at 170 million in unused credit limits and loan facilities. Our long-term target for the leverage is 1.5 and we expect that the leverage will improve as the earnings develop in the second half of the year. Then development of key figures. Our equity ratio was 41.6, decreasing from last year due to the acquisition with larger balance sheet. Net gearing increasing due to acquisition financing. Return on equity was same level as last year at 13%, and earnings per share increased to 17 cents while being 16 last year. So with that, I would like to hand back over to you, Christoph, for the outlook.

Thank you, Iris.

So as we said, second quarter was very positive and was indeed confirming our positive view on 2026. The guidance we have given remains unchanged since we are definitely traveling within this range. But obviously all the events I mentioned before are leading towards a positive development of the year. We have good momentum in organic growth. The investment that we have made in acquisition and in organic are paying off the way we wanted with integration going nicely and bringing a lot of result but joy as well in the company which is positive. And we continue to control both our costs and our inventory to be a resilient company. So all in all, a positive outlook for Scanfield. With that, I will hand over to Pasi for the Q&A. Thank you.

Thank you, Christoph. Well, you talked about networking capital or inventory, so let's deep dive directly into that question. Markus asks about networking capital. Can you please give some more color on cash flow effects we saw this quarter, particularly changes in net working capital? Should this working capital build as a permanent change with more A&D, so aerospace and defense, or how should we look at that?

Maybe start and then if you complement. So if we look at the net working capital increase in the quarter, it is volume, it is organic growth driven, and we see the increase in accounts receivables, which is very natural. When the sales levels are higher, accounts receivable level is higher. And of course we can expect some improvements in the second half. That's natural. It's a high focus area for us to improve. But then at the same time as the business volumes continue to grow, it is likely to keep the working capital requirement also at a higher level.

And I would say on complementing on the aerospace and defense, I think that it is true that there is a slightly different profile. In the same times, we also see areas where we can make improvements. So I think that we are able to balance the situation.

Thank you. Maybe to the project wins. We have said that we have to win around 5% of net sales in order to keep the level of revenue going forward. And there's a question about aerospace and DFED. If Scanfil wins the project in aerospace and DFED, It's an average longer project than in other field of operations. That's the question. So is it longer? Is it a question or an answer?

I think the answer is yes. It is longer prospect. It's slightly maybe different profile there where it's very long-term commitment and prospect. So I think the answer to the question was yes.

Thank you. About the aerospace and defense system, there is a lot of interest around that. How do you see your overall development in aerospace and defense globally in the future, so going forward?

I mean, for us, I believe that we have three growth drivers in the company. One is energy cleantech, one is medtech, and one is aerospace and defense. And we have taken the path to be proactive in those three. So we believe that we are building focus activities to develop the three segments, aerospace and defense being one of them. But we also want to keep a balanced portfolio and exposure for the company. So we have very positive outlook and very positive both delivery of the numbers, but also discussion for future opportunities, but still in a balanced way.

Thank you. About the deals one in METEC and LIFE, I think that you already actually talked about it a bit. And there's a question around that. Deals one for METEC and LIFE sciences to have a new plateau. Is this how we should view it in going forward?

But I think that, as I mentioned, it's an area of focus. So obviously, with the effort we have produced over the last three years, we have, during the last eight months, reached a new plateau, and I would agree to that. Then up to us to think now how we take the next step. But I think definitely we have now reached a level that will bring us to a different dimension in terms of revenue for that customer group.

Yeah, thank you. Do you see any challenges with supply of components as PCB and memories?

I think that we have seen a situation that has been becoming a little bit more tense in the second quarter and also already in the beginning of the year. mainly memory or seeing price increase and price development. But in the same time, I think we have quite good coverage and relationship with suppliers, so we have managed it very well and we see the situation being under control right now. But it's a different market than it was two years ago where it was definitely far more components that people wanted to consume.

Antti has a question. Has there been any changes in demand environment in APAC region and particularly in China?

I would say for us, the EPAC region remained very strong in terms of demand. I mean, you have seen it. It's a consistently very high number. It's also including our Chinese operation. Then what I used to say is, I mean, our Chinese operation is seen as one of the state of the art factories that you can see not only within Scanfield, which drives the demand for that operation. So we definitely have a very strong demand for that market and that also explains why we are making that investment because at this point in time we are getting constrained by our facilities and we need to be prepared to take another step.

You almost already answered the next part of the questions. Would you have the capacity to deliver more from Sucho until the expansion is ready?

Yeah, I mean, we have found ways, I mean, using external building for storage to compensate for that. So we will continue, we will be able to continue to grow and develop our APAC region. Then, obviously, if we are making this investment, it's because there is a limit to that. So this investment was clearly needed. But But I mean, there is still opportunities in APAC, both in Suzhou, but also in our Malaysian side where we can see opportunity for growth. Thank you.

Parsi has a question. What are the biggest positive and negative findings regarding MBA electronic acquisitions?

I would say, I need to take a little bit of a breath here because I might talk for very long. The positive findings, there are extremely many. The first one, starting with the team. I mean, it took some time to bring this deal to the final line, but we have developed very strong relationships and I would say the work that we are doing in integration with them And the development of the partnership is definitely a very nice surprise. And probably the first one, because it's also a human story, where I see a lot of people being happy. Last night they were celebrating the summer with Canfield and the MB people on the football field. That was nice. The second very positive outcome is that definitely this company is delivering at least as dreamed of or expected. So it's an extremely strong delivery. So that's another very positive. We also see that it opened up and it brings us the table of the defense and aerospace Oyj Ord I will have to think about it and see if I found one, because at this point in time, it's probably in many ways, both from the financial performance and the human relationship, probably one of the best acquisitions I have been given. So I will have to think for that.

Okay, thank you. Mark, this is a question about industrial. Industrial's winds were down 45%. Are you walking away from deals or is it just demand softening or hesitant?

I think the challenge for our industrial segment is it's... It's a melting pot of many different segments, and some are growing significantly, so we still have wins, but some are not as dynamic. So I would say it's a little bit more difficult to read than the other, because you could say the other are segments where the overall market growth is supposed to be between 8% and 12%. What we put in industrial is a business that is supposed to grow 2 to 3% overall on a CAGR level. So I think that it's probably the level you can expect. And within that, there is a plus and minuses.

Thank you. You can type in questions this for you. One, okay, still some more time. What is the Stanford's direct and indirect revenue exposure to data centers currently and potentially also in near future?

I mean, obviously, we are not disclosing the detail of that. But when you look at our customer in energy clean tech, quite a few of them are actually delivering product or solution that are implemented in data center. And it is also obviously driving part of that growth. I mean, that is absolutely something very, very dynamic right now. So when you look at energy clean tech, you can think that, okay, part of this growth is also coming from data center deliveries.

Actually, one of those three ideas what we closed is actually related to data center cooling. Still time for questions if you have. Still a bit more time. Maybe we close if there are no further questions. You can always approach me if you have any further questions. But now handing over to Christoph for the closing words.

Thank you, Pasi. So as a closing, I mean, obviously, we delivered a strong development in the quarter with, I mean, a turnover that was way above our 10%, almost 30% increase in revenue. that was also including a strong performance in organic growth. Our margin was at a good level of 7.2%, which is in the corridor we have fixed. And then we saw many pockets of very positive development. America, we talked about 10% organic growth. Aerospace and defense, that is, at this point in time, but also energy and clean tech that showed a very strong development, both in sales, but also in project wins with this very significant 25 million projects that we won in Q2 and that we will start to manufacture during the second part of the year. So all in all, a positive development that gives us confidence in the 2026 years and how it will develop during the second part of the year. With those words, I want to thank you for your time and wish you a good summer. Thank you.