Ependion AB

Welcome to Appendion Q3 Report 2026 presentation. During the Q&A session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to the speakers, President and CEO Jenny Shaddal and EVP and CFO Joachim Laurien. Please go ahead.

Thank you very much and welcome everyone to this quarter three call. So, as mentioned, we are at the call. I have myself, Jenny Sjödahl and Joakim Loren, CFO. We are both in Malmö today. The agenda is as follows. I will start by giving a general business update from the quarter. Then Joakim will dive deeper into our financials. And finally, I will give some concluding notes and also our outlook. And after that, we will open up for Q&A. So let's get into the report then. So the heading of this quarter's report is strong organic growth and significantly improved profitability. And I'm actually quite pleased overall with the quarter and especially the sales increase, which is now completely organic because the acquisition that we made of Velotech last year they were added in June. So this is a completely organic growth now from this quarter and onwards. Sales increased by 22% to 664 million Swedish kronor. And the shipments were broad based across both our focus segments, but also across geographies. And of course, it is the strong order intake from the last six months or nine months that now is being converted into sales. Order intake up 12% organically as we have seen now for three years in a row. We did see a drop in our train bookings in the quarter and that is due to the seasonal pattern that we have seen now for quite some time. A lot of our train customers are based in Europe and they are selling of course to the whole world but the orders are coming primarily from Europe and we see a vacation effect on the order bookings in the quarter. Booked a bill of 0.85 in third quarter. thanks to the good sales numbers our EBITDA increased significantly by 43% to 95 million Swedish kronor and that is actually a record high EBITDA level with a margin then of 14.3% so two percentage points up from same quarter last year And this really confirms the operating leverage that we have in the business from higher volumes. When it comes to free cash flow, it actually doubled to 60 million SEK in this quarter, despite, of course, the elevated inventory levels that we are seeing due to the electronic component situation. Of course, also with the high sales, we have high accounts receivables levels. And as you might have seen, we also did an investment in our production capacity in Investimo. So saying a few words about the component market situation, it is actually increasingly strained. We are seeing longer lead times, increased prices, some allocation situations and so on. And we continue to have a lot of focus in our business entities on securing supply. and of course also to the extent possible offset the cost increases through price adjustments. Due to the nature of the products the Vestamo business entity is a little bit more complex when it comes to component supply than Bayer Electronics but we are working very focused on this in both business entities. Looking at the external environment, the geopolitical uncertainty, of course, persists, but I feel that the organization is focused on what we can affect, so to say, our own profitable growth, building on the significant investments that we have done in recent years. All right, so let's deep dive a little bit into the two business entities, then starting with Vestromo, where we saw a sales increase of 30% again organically. Orders up 12%. We saw a very strong demand in the energy sector and that demand is broad across both geographies and customers and applications. And I also already mentioned the train orders following the same pattern that we have seen now for quite some time. Book to bill of 0.79 in the quarter. EBITDA increased to a record level of 81 million Swedish kronor with a margin of 18.7% and that is of course thanks to the high volumes but also our stable gross margins and the balanced cost spending throughout the business entity. And Velotech that was acquired last year as of June continues to develop very well. And we feel that we are strengthening our position in the energy sector with Velotech and the former Vestamo organization, so to say, working very closely together towards customers. As part of our operational excellence program in Vestamo, we have during the quarter relocated our production from Mainz. That production came with the acquisition of Eltec back in 2021, and now we are closing down the production part of that site and moving the production to Dublin to optimize our production footprint in Europe. And also as part of both our efficiency work, but also to secure capacity for future growth, we have invested in a new circuit board assembly line in the Swedish Stora Sundby facility, increasing efficiency and capacity with that investment of 13.1 million Swedish kronor. Okay, and looking at Bayer Electronics, I'm pleased to see that the improved performance that we have seen now for some time is actually continuing. We saw a sales increase of 10% in the quarter. and an order intake increase of 11%, driven primarily by the marine and manufacturing segments, and a book to bill of 0.97. And if we look at the year-to-date order intake, we are at plus 18%. EBITDA increased as well to 31 million Swedish kronor with a margin increase also of up to 13.3 percent and if we look at the consecutive quarters this is the third quarter in a row where we do see a margin improvement in this business Good to see that the data center market showed strong growth. That's a key growth area within the energy segment for Bayer Electronics, where we are exposed through several customers supplying into this application. And when it comes to the new X3 platform, the transition from X2 to X3 is going according to plan. And of course, migration of existing customers is extremely important to us. But what is also encouraging is to see that we also create new business opportunities and new customers with this new platform. So that's also very positive. So with that, I'll hand over to you Joakim.

Thank you very much. And I will start with volumes, orders and sales quarter by quarter since early 2025. And as Jenny pointed out, the orders were up 12% and the FX effects in the quarter is relatively small, adding about 1% in the quarter. And if we go to the sales, Good development, 22% in total and also here the FX effect is about 1 percentage point. Looking at the sequential development, clearly the orders are somewhat down, but as Jenny pointed out, we do have some seasonals effect and especially within the train segment. Looking at the sales, just below what we accomplished in sales volumes in Q3, despite the fact that it's vacation period, so that is then a positive development and I do want to point out the year-to-date numbers so after nine months this year we do have an order situation of plus 26 percent of which then 19 is organic and the sales part is plus 18 and 11 organic growth so good numbers when it comes to volumes Looking at profitability, I mean, the development of the profitability, we see a favorable development, I would say, the last two years. The graph is pointing in the right direction. And if we look this quarter compared to last year, we are up 2.1 percentage points. And we are now in this quarter showing a profitability above the 14% mark. which is very encouraging. And then looking at the EBITDA generation in money, you could say also a good development. The graphs is what we finance people really would like to see a growing trend. And if we compare year over year, plus 43% big numbers. In terms of then the total income statement, the 95 million on EBITDA is worth pointing out, which is a record level. Then EBIT is on the 86 million or the 13%. And we have a good flow down to net profit where we see an increase compared to last year of 41%. Year to date, we are at 143 million, very close to what we did the full year last year. So this year is a good year compared to where we were last year. The earnings per share, 4 kronor and 44 över compared to 3.35 last year. So good development there also. And we do want to point out that in the result of the quarter three this year, we have about three million positive currency impact on the beta line. Cash flow, as Jenny pointed out, we do see a quite good cash flow in the quarter, 60 million compared to 30 last year. and if we look at where we are year to date we are at 91 million by end of September compared to last year that was 80 million plus so positive development so far when it comes to cash flow and finally the net debt EBITDA ratio here we continue to improve we do see reductions of our debt due to our cash flow and we have increased earnings. So now we're just below one in the ratio. So in conclusion, we do have a strong balance sheet. That concludes the financials, over to you Jenny.