Hanza AB (publ)

Good morning everyone and welcome to Hansa's third quarter presentation. Thank you for joining us.

This has been an important quarter for Hansa. We are seeing results of the work we have done to develop the group, both in profitability and the progress of our acquisitions. And together with Lars, I will take you through the quarter and explain the factors behind these developments. We start with a brief overview of the quarter. Then I'll describe how we are developing Hansa based on our customers needs. Lars will take you through our financial performance. And then I'll return with our conclusions outlook before we open up for questions. But let me then start with a few figures that I think are relevant to this quarter. First profitability. We see that our adjusted EBITDA margin increased from 6.9% to 8.7%. We generated 118 million SEK in operating cash flow. And if we look at the last 12 months, it means that we are above 1 billion SEK in operating cash flow. I'm sure Lars will come back to this. Net debt to our adjusted EBITDA is down to 1.4. MEC growth. sales increased by 77%, including 7% organic growth, which is quite good for a vacation quarter. So Hansa has become stronger and substantially larger this quarter. But also, and this is important, thanks to our organization and the structure we have put in place, we still move quickly, even though we have grown. And I will come back to this. This is important. And another thing also worth highlighting is that we develop our business based on our customers' needs, but it is our ability to execute that will turn this development into profitability. And I think BMK that we acquired in the beginning of this year is a very good example of this. So let me explain. So it was in the beginning when we closed the deal that we announced already last year. We acquired Hansa VMK as a final step in what we call the Hansa 2025 strategy. And the reason we have seen from other parts of Hansa that the scale of our operation is crucial to our ability to take on larger manufacturing projects. And that's why we have been scaling up Hansa in Hansa 2025. And that's why we also invested in this larger manufacturing platform in Germany. Now, Hansa BMK brought competence, capacity, very strong customer relations. But it's important that when acquisitions strengthen Hansa, Hansa must also strengthen the acquisition. How do you do that? I would rank this as the leading EMS company in Europe. How can Hansa strengthen it? Well, in two ways. Firstly, our concept. So it goes from being just a normal EMS company to being part of Hansa's concept. Secondly, let's say a bit on the commercial side, where we've been working with pricing, with purchasing, with efficiency. We have something we call the horizon, where we have been a program that has been working in Hansa Group also in Hansa BMK, and we can already see the results. So the adjusted EBITDA margin that BMK had from the beginning was 7.3%, increased to 7.5% in Q2, and then we are up to 9.2% in Q3. And this is, let's say, more in line with the margin that this great company should have. Another thing, really interesting, we have done this integration faster than planned. We had allocated a special project for this, supposed to run all 2026, but already on October 1st, we could transfer BMK from being into this integration project into our regular organization. This is then three months ahead of schedule. So a great work from colleagues, both at the BMK and across the Hansa group. And of course, this is one of the major highlights of Q3. But let's then move on and have a look at the market and our customer segments. We have a diversified customer portfolio, and if you've been following us, you know now we are sorting them into five segments. We see that the market conditions, they fluctuate a bit between the segments. We have a strong demand in electrification driven by energy systems and data centers and also we have a very strong demand in defense security and also in the mining part of the heavy equipment. But also we see software development in forestry, construction, customers in the textile industry, warehouse applications. So this is up and down, and that's why it's so important to have a diversified customer portfolio. We have one advantage. We are not just selling contract manufacturing. We are selling a better supply chain, meaning that when demand goes down a bit, it's even more important to work with Hansa and find new solutions so we can take some market shares even in the, let's say, softer segments. We had some constraints during the quarter. some temporary capacity limitation due to the fact that the volumes went up above forecast. So that was mainly in the energy systems. And we also have some shortages of electronic components. I think we are all aware of the semiconductor situation where AI and data centers eating up a lot of components. We have been able to navigate through this. We have a great central sourcing team working together with equally great local sourcing teams, close to customer suppliers, been able to manage this. We have seen delays in our defense and security segments, but it's not so much it will be visible on the group level. But something to keep the eye on. This is something that will remain uncertain, the component situation. We have also seen a strong order intake in BMK, an organic growth, but of course that is not visible in our figures because we didn't own BMK a year ago. But if we look at it, we see that we have a great order intake there as well, but not reported into our figures. So what's the conclusion? Well, although the market conditions fluctuate, we see really good opportunities for continued organic growth. And I will come back to this in a special statement at the end of this presentation. Now, if we move from customer segments to technology segments, we see something really interesting here. And I will move to the next slide. One of our key features is that we combine several manufacturing technologies into this what we call manufacturing cluster. one cluster per country with different technologies. That's how we don't just offer contact manufacturing, but also help our customers to simplify their supply chains. Now, our smallest technology area has been heavy mechanics. What is heavy mechanics? Well, larger, heavier mechanical parts and steel structures, very often combined with large complex assembly. And we see From the previous slides, across several customer segments, so in particular defense security, but also in heavy equipment, a growing customer demand then for heavy mechanics. And for, let's say, obvious reasons, customers want to have this capacity close to the market. And that's why we decided to strengthen this technology area heavy mechanics as a part of strategy Hansa 2028, which is all about looking at the different technologies, making them wider and maybe also adding technologies. So that's the background for the deal we made in July in the Q3, where we did this deal with Fortaco. And I think that this slide gives you also, let's say, practical illustration what we mean by heavy mechanics you see components such as large frames and steel structures this requires specialist manufacturing equipment and I would say considerable industrial expertise we did a carve-out deal with Fortaco we're not buying the whole company Fortaco is the contract manufacturer they will keep its vehicle cabin business and focus on that. Whereas we then buy the fabrication and the complex assembly. So it's five factories we are acquiring. Signed this contract in July, been waiting for approvals. And now all the required external approvals are received and we expect to close this transaction on November 2nd. So next Sunday I will be out traveling and start to meet the people in the new factories. Really looking forward to welcome these new colleagues to Hansa. So this is why we are doing this deal. And that's also something that I'll come back to is putting us in a really good position for the organic growth moving forward. But as we continue to grow, we also need to have an organization that can support this expansion. And that's why we decided to split Hanse into three parts, basically. We don't want to become slower. We don't want to become more bureaucratic. So we have organized housing into three regions. Each region with two manufacturing clusters. Two other regions also have something important, Gateway. This is a single factory designed to, let's say, meet the specific customer need. And also, as we have reported, we are winding down our manufacturing operations in China, but we will keep our sourcing office. And the idea behind this bit is very, very simple. We want the responsibility of all customers, operations and performance to be close to the business. We are a decentralized company. This allows the local management to make decisions quickly. And this is, I think, very important for us to preserve the entrepreneurial approach we have in AMSA. The figures you see on this slide is the plan structure following the Fortac acquisition. So it's post-Fortaco. And then from the first quarter of 27, our financial reporting will also follow these three regions and Lars will come back to that. But with that, I will hand it over to you, Lars, to take us through the financial performance.

Thank you, Erik. And as you see, Hans is growing rapidly. We are close to double the size compared to a year ago or 81% in organic growth. What we say in this report is that we significantly improved profitability both for comparable and acquired units. And I think that's really important to sort of split the profitability that Hansa are showing in Q3 between the sort of old Hansa comparable units and the acquired units. And what we can see is that a year ago, We had an operating margin of 8%, including the then quite newly acquired leden. Including leden, we were on 6.9. What we can see now is that we have increased those... parts of Hansa excluding the acquired molecular BMK up to 8.3%. So the comparable units, let's call it the old Hansa is doing increasing the margin. And then we have the acquired companies that temporarily decreased the margin in Hansa that are now showing just nine months or three quarters into the period. increased growth. We see Hansa BMK growing from 7% that we said when we acquired them that they were on that level to 7.3, 7.5 and now in Q3, 9.2. So I think that we can by this show that we are able to integrate bigger companies and turn them into the Hansa model and increase profitability. We are, as Erik said, we are entering into Fortaco hopefully a week from now. what we have said about how Fortico is that they are on this level already and shall contribute. So we shall not see this decrease in margin when we include Fortico into the Hansa. They will be on 9% or hopefully above 9% in EVTA margin. Looking into the to the Fakerstown. we see that we have an organic growth of 7% or 77% in total figures. Quarter three is normally the weakest quarter from a seasonal perspective. We do not see that in Hansa BMK. In Hansa BMK, we do not see the sort of seasonal effect in Q3. As I said, we show an adjusted margin of 8.7%. We have some one-time items. We have revalued the earnout on Melectria. That was a positive effect of 30 million SEK. And we have transaction cost for the deal with Fortaco. It was 12 million SEK in this quarter. And also the MBO that we did in Finland for two sites had an additional 8 million SEK. cost and then we had some custom cost that we treated as a one time cost of 4 million SEK. We see an increase of the EPS and this is to remind you that we have increased the number of shares quite significantly with the acquisition of BMK despite the fact that we have a lot more shares now we see an increase of 53% to 190 in the quarter and an increase of 68% accumulated in 2026 to 5181. Also see regarding the sales, as Eric mentioned, that we have a minor effect on the shortage of components. On the total level, it's not anything significant at all. But we have a little bit effect of that. Looking into the two markets and as I said, we will from Q1 in 2027, we will go over to the regional organization and report according to the new organization that we are moving into during 2026. We see an organic growth in main markets of 8%. That's also what we have accumulated for 2026. And with an EBITDA margin adjusted of 9.5%. So and that's accumulated for 2026, we have 8.7%. In other markets, we also seeing organic growth of 8%. It's a little bit stronger in the year of 18% and adjusted day margin of 7.5% and accumulated 8.6%. So a good quarter. And when we look at the quarters and when we look into the different markets, we should bear in mind that it is a little bit seasonal. It can vary between the quarters a little bit up and down. And that's what we see in mainly the other markets in 2026. Coming into the cash flow and the balance sheet, we have a strong cash flow. Erik mentioned over a billion SEK in the last 12 months, over 800 million SEK in 2026. We have net debt adjusted to EBITDA on 1.4, so well below the financial target or what you can call it of 2.5. We have a strong balance sheet, 45% in equity to asset ratio, and with the acquisition of Fortaco, it's going to be well above this 30%, that is our financial target. And we have a good cash position, over 700 million SEK in cash. And this financial position, mainly coming from the positive cash flow we have had and the stronger result, but also the fact that we did the acquisition of BMK with fully shares, makes it possible for us to do a cash deal with Fortaco. So no dilution with the acquisition of Fortaco, but still after the Fortaco deal, as I mentioned, be approximately at two times the EBTA in net debt. So that gives us the possibility if we would like to continue to do acquisition even without dilution. ESG sustainability, we have updated the DMA in order to report the sustainability report in spring next year. It's positive to see that the environmental performance. We have lower energy use and less hazard waste, partly coming from the fact that we have Hansa BMK within the group, but also on the work we do on a daily basis to work with sustainability. And we also are glad to see that the safety, we are reducing the injury frequency. And we are continuing to work with the integration of Hansa BMK into the sustainability work. And by that, I lead back to you, Erik.