Hexatronic Group AB (publ)

Thank you very much and welcome to this presentation of the Q4 2024 results. So you will be listening to myself, our CFO, Pernilla Lindén, and also our Deputy CEO, Martin Auerberg. And the agenda for the presentation. First, we will have a look at Sextatronic at a glance, some highlights from Q4, a financial overview, business overview, and then we have a summary and market outlook, and we end with a Q&A session. So first, Hexatronic at a glance. So when we look at the markets we operate in, they are driven by a low number of homes connected with the fiber optic networks, and that's in several of our growth markets. They have a low penetration. We also see that 5G deployments drive the need for more fiber optic networks. 5G is totally dependent on fiber networks. We also see that there is an increasing use of data intensive technologies, and that creates more need for fiber connectivity in companies and enterprises and large scale data centers. We also see a shift in the industry from copper-based solutions to fiber, and that's in harsh environments such as oil and gas, sensing, defense, oceanographic and subsea applications. And on top, when it comes to fiber solutions, we see also some significant government initiative to support fiber expansion that's primarily in rural areas. Sustainability, it's high on our agenda and we have listed three of our priority targets. We want to have climate neutral loan operations by 2030, 100% equal pay and minimum 40% gender equality among all employees. And we have gathered our sustainability activities in three areas, planet, people and ethics. And as most companies now, we work hard with the CSRD reporting that puts a lot of requirements on the company. Looking into fiber to the home, which is one part of our business, this is a graph we usually show. Not a lot has happened with this graph since our Q3 report. The U.S. figure is updated. There we have a new figure. So in the U.S., roughly 27% of all homes are connected with fiber. I think it was previously last year, 24%, so a small increase. And as you can see, our strategic growth market when it comes to fiber solutions, Germany, UK and US are still on a low level when it comes to connecting homes with fiber. On the right, you see some of the big subsidy programs, government initiatives, the biggest one being the US BEAD program, which is 42.5 billion, but you have them also in the UK and in Germany. So still a lot to do when it comes to fiber to the home. This is a new slide and it's based, we've got this CRU that is a firm doing a lot of analysis and reporting on the cable and fiber industry. They have looked into the US fiber demand in the US market and it's up to 2030 and we see that they expect the market to have an annual growth of roughly 10%. You also see the split, how they see it. The blue part is private funding. And on top of that, the gray one is the governmental funding. So what's interesting to see is the absolute majority is really private funding. That's what is the big driver for fiber demand in the US market. My own conclusion looking at it, I think when you look at the government funding, which for instance in 2025 and 2026 is 17% and 26% of the total demand, I think that will most probably be smoothed out over more years. But I think the takeaway is big private investments in fiber networks and on top of that governmental funding, but that's the lesser part. In total, then 2024, when we look at Hexatronic revenues of 7.6 billion, we had yearly growth over the last five years of 33%. And we ended last year with an EBITDA margin of 10.6%. And EBITDA level, we have had a 43% annual growth over the last five years. And we are roughly 2000 employees in the group. Then looking into some highlights of Q4. So when we look at Q4, we see it's a stable quarter. We had a strong cash flow. Net sales decreased by 2%, so a little bit more than 1.8 billion SEK. And we saw the decline primarily in harsh environment that had a record quartering Q4 last year. Fiber solution, back on growth, we had a 2% increase in sales revenue, and that's primarily due to higher sales in Europe, but also in the Pacific area. Harsh environment and data center, they were in line with Q3 revenue-wise. And sequentially, sales and earnings decreased compared to Q3. And that's partly due to the return of seasonality in fiber solutions. You might remember that we mentioned that in Q3 that we are back to seasonality effects in fiber solutions, meaning Q4 and Q1 market demand is a bit softer. EBITDA amounted to 182 million and a margin of 10% compared to same quarter last year, 9.1. But we had an adjusted EBITDA in Q4 last year of 10.7. You might recall that we took some restructuring costs in Q4 last year. Cash flow from operating activity is 286 million, and that corresponds to a cash conversion of 150%, a strong figure. The interest-bearing net debt excluding IFRS 16 reduced by roughly 14 million during the quarter, and our interest-bearing net debt amounted to close to 1.9 billion. The leverage ratio decreased from two to 1.9 during the quarter. And we have an order book that corresponds to roughly 2.5 months of sales. And we see that as a normalized level is normally between two and three months. And the board proposed no dividend to be distributed. events during the quarter. On 1st of October we completed the acquisition of parts of the Icelandic company Endor and this acquisition that it broadens our offering in the data center market and we add new expertise to that team and it strengthens our customer base and presence in Iceland, Sweden and Germany. And then on October 15, we opened up our new duct plant in Ogden, Utah. They will manufacture HDP pipes for both telecom and power cables. And they are primarily serving customers in western part of the US. And it's our fourth duct plant in the US. And we start our production small scale and plan to build it out in line with it when the demand increases. And then on January 22nd, we announced that Rickard Fröberg will be the new president and CEO of Hexatronic, and he will succeed myself. And I announced my departure in September last year. Rickard will join 1st of March, so I leave today. So Martin Orberg, our deputy CEO, will be acting CEO until Rickard joins. We also announced recently on February the 4th that we will introduce new segment reporting and some small changes to the executive management team. And this is very much due to increased focus on the three business areas we have. And we also give more transparency than for the investor market. And a few words about the new segment reporting that it will start in Q1 2025, so this year. So our current focus areas will become three business areas, fiber solutions, harsh environment and data center. And we focus our growth strategy for the coming years on these areas. And as I said before, it will also contribute to more clarity and transparency. Changes to the executive management team, not a lot, and we have announced that what happened there. When we look at the three business areas in the executive management team, Fibre Solutions will be headed by Richard Fröberg, the incoming CEO, Harsh Environment by Jakob Skog, and Data Center by Martin Oberg. We will have a digital investor presentation on March 28 to present the business areas in more detail. And that will start at 1pm Central European time. So please, if you're interested, join that meeting. And then looking at our three growth areas, focus areas, when we look at Q4, 72% of revenues came out of fiber solutions, 15% from harsh environment and 13% from data center. coming back to the figures and looking over the last five years you can see the development of net sales so i mentioned already the 33 average growth and the ebitda development of 43 growth over the last five years yearly and then the earnings per share and as you have seen i mean we have had a decline an organic decline in 24 compared to 23 where The first half in 23 was very, very strong. It was record quarters. Now, I will hand over the voice and slides to our CFO, Pernilla Lindén.

Thank you, Henrik. So, we took the next sales of 1.8 billion SEK in Q4. That is an overall decline of 2%. Organically, we had a decline of 4%, which is primarily due to our focus area harsh environment having a record quarter last year. In Q4 2023, we delivered a large order to the defense industry. We had 1% acquisition driven growth from mConnect and our recent acquisition Endor within our data center business. Rest of Europe had a growth of 6%. Even if the market continues to be weak and under price pressure, we secured new business in Germany, UK and in Austria. Sales in North America decreased with 13%, primarily due to lower sales in Rochester Cable or harsh environment. APAC increased with 19%, mainly due to Australia and large order to Micronesia. Sweden decreased with 12% due to last year delivered a large submarine cable. Fiber Solutions overall had a growth of 2%, and that is mainly related to growth in rest of Europe and in APAC. Horsham Environment overall had a decrease of 20%, which is explained by the Rochester Record Quarter last year. And Data Center was growing with 1%, and that is related to the acquisitions. And we had 1% positive effect on exchange rates this quarter, mainly attributed to the US dollar. Our gross margin were at 41.4%, one percentage point above last year. And that is mainly related to higher manufacturing efficiency. If we are looking at our operating expenses, that is 28.2% of sales. It is increasing in percent compared to Q3, mainly due to increased freight cost and startup costs related to the Utah factory. In line with last year in absolute numbers overall. Depreciation has increased compared to last year due to the capacity investments that we have done over the last years. In percent of sales, it has increased with 0.4%. compared to last year. We had overall an EBITDA of 182 million SEK or 10%. And that is compared to 9.1% or as Henrik said, the adjusted EBITDA of 10.7%. And the difference from 9.1 to 10.7 last year is related to the one time cost linked to initiating or launch cost saving program. We had another quarter of solar operating cash flow. Cash flow from our operating activities before changes in working capital of 190 million. A positive effect from working capital of 95 million SEK. Our accounts receivable has been reduced during the quarter, but we have also reduced our inventory, which has been partly offset by increase of accounts payable. The total cash flow from operating activities amounted to 286 million SEK corresponding to a cash conversion of 150% in the quarter. Total CAPEX investment in Q4 of 85 million SEK or 4.7% of sales. Year to date to 308 million SEK or the full year of 2024, which corresponds to 4.3% of sales. The investments in the quarter are mainly driven by capacity investments in US and the investments in new manufacturing facility in Utah for duct manufacturing. And we've said it before, but after two investment heavy years in 2022 and 2023, and after completing the investment program in the duct factory in Utah, We believe that we will be able to grow for several years without extensive investments in fiber solutions. And as earlier communicated, we estimate our investments on what will amount to approximately 3-4% of sales yearly, of which approximately 1-2% are expected to be maintenance investments. 35 million SEK is related to business acquisitions. Group financing activities amounted to 220, mainly amortization of loans and RCF utilization. Overall, we continue to have a solid cash conversion. Interest bearing net debt, which corresponds to net debt excluding lease liabilities amounted to approximately 1.9 billion SEK at the end of the quarter, which is reduced with 42 million SEK compared to last quarter. And interest-bearing net debt in relation to perform IBTA over a rolling 12-month basis, a key ratio that reflects our existing bank covenant, has decreased from 2 to 1.9 during the quarter. Including IFRS 16, it corresponds to a decrease from 2.3 to 2.2. At the end of Q4, we had 633 million SEK of cash and an unutilized backup facility of approximately 1.3 billion SEK, which gives a liquidity of approximately 1.9 billion SEK. We continue to have a solid financial position.

Thank you very much, Pernilla. So now we will move into a more business overview. and we'll start with an overall picture showing the development in our focus areas so we'll start with five the solutions as we have already said we are we return to growth and that was mainly due to higher sales in europe and apac and pacific more specifically You have the 2% growth in the quarter, but you also see the development year over year. So it's a sharp decline of 17% 2024 versus 2023. In the US, sales were in line with the Q4 last year. And as we mentioned before, we started up the production small scale in the Utah plot. And now we cover all of the US when it comes to duct supply, which was in line with our strategy. When we look at the market development, it's clear that digitalization is driving demand for more stable and secure fiber optic infrastructure. And that's all over the world, I would say. We also see that the lower interest rates and now normalized inventory levels and lower cost of capital, they are expected to improve market conditions gradually and demand should increase. But we also mentioned that we are back to seasonality in fiber solutions, meaning Q4 and Q1 market demand is softer. And we have these governmental initiatives that will have a positive impact on the market over the coming years. When we look at harsh environments, there we are capitalizing on the trends, especially in defense and energy. Quarter over quarter, we had a decline of 20%. That's, as Pernilla mentioned, primarily due to a large defense order we delivered in the U.S. lost in Q4 2023. We have a 51% growth full year 2024 versus full year 2023, a lot driven by acquisitions. We had continued stable development regarding sales in line with previous quarters, Q3, Q4, very similar. If we look at the market, we continue to see a strong demand in defense and also energy markets, and we expect that to remain for several years to come. What we deliver in this market is highly specialized products. We have long-term customer relations, very experienced team, and the market is growing. We also expect more expansion of the existing sea-based infrastructure, and especially when it comes to renewable offshore energy production. When it comes to data center, it's very much AI that is driving the expansion of the data center market. If you look at the figures, we had a 1% increase Q4 versus Q4 last year, and year over year, a 19% growth of revenues. The 1% growth in the quarter was driven by the small acquisitions we did in October in the UK. And that's part of Endor that we acquired. And we have successfully implemented that into our ideas business in the UK. When it comes to the market, AI, as we mentioned before, is the big driver, Internet of Things and cloud computing. This requires a lot of bandwidth and a lot of investments in data centers. And we should say also that we see that the expansion of data center that also links into fiber solutions where it drives more investment in fiber optic links, middle mile and long, long distant network networks. Q4 is seasonal, a little bit weaker quarter for data center, and that's due to the holiday period. Then if we look into the geographies, and here we talk about the total business of Exatonic. So Europe, excluding Sweden, that was last year 45% of our total revenues. We see that we returned to growth in fiber solutions. Sales increased in total 6% in the fourth quarter, and that was driven by higher sales in fiber solutions, but also in harsh environment. During the quarter, we successfully secured new businesses in Germany, Austria, and the UK. And we have a continued solid performance within harsh environment, and that's mainly fiber on cables. Data center was slightly behind last year, but that's due to timing of project deliveries. The market development for Europe, excluding Sweden, we saw in the quarters stabilization of the markets when it comes to fiber solution. We still see a weak demand and the price pressure that we started to see last year is still there. But both new focus areas, harsh environment and data center, they show strong demand, and that's very much due to defense and energy markets. and also the implementation of AI. If we look at North America, representing 37% of our total revenues, we had lower sales in Q4, and that was due to strong comparable figures in especially harsh environments. Sales decreased 13%. And as we mentioned before, it's primarily due to Rochester in 2023, Q4 delivering a large defense order. FTTH sales in the US or North America, slightly behind last year, and it's primarily due to Canada. We had a timing of deliveries and it was related to a large customer working on inventory reduction in the end of the year. Our duct sales for Blue Diamond Industries in line with last year, we saw higher volumes, but lower pricing. And then, as we mentioned before, the new Ogden plant opened and we had the last capex investment regarding that in Q4 and production started small scales. Looking at the market development, we see signs of improved market conditions for fiber solutions in the US. And we expect the BEAD program to come into effect for us in the second half of this year, of 2025. Sweden, 8% of our total revenue. We saw a 12% decrease in Q4 compared to Q4 last year. But Q4 in 2023, there we had the delivery of a large submarine cable project. If we exclude that, we had a good growth of our fiber solutions business in Sweden. And here we see the market is now driven a lot by investments in fiber optic backbone networks and also investments for 5G upgrading towers for 5G. And we also see several government initiatives to subsidize the build out and improvement of fiber optic infrastructure in Sweden. And that includes also submarine cables in the Baltic Sea. finally then apec we had a strong performance it's nine percent of our total revenue sales increased 19 and that was driven by a large order we had in micronesia but also higher sales in australia in general when it comes to market development we saw this saw a stabilization and here the same driver digitalization is driving the demand for fiber optic infrastructure Then finally, a summary and market outlook. So a summary, I will just repeat what we have said a couple of times. We had a stable ending of 2024. Net sales decreased by 2% in Q4, and that was primarily due to this large order in harsh environment in Q4 last year. The EBITDA margin of 10% that was up from 9.1% in Q4 2023. But then when we look at the adjusted EBITDA margin in 2023, it was 10.7%. Internal efficiency improvements and good cost control. I have offset higher freight costs and the startup costs related to the new facility in Ogden. cash flow from operating activities of 286 million, and that corresponds to the cash conversion of 150%, strong financial position with a leverage of 1.9 at the end of December, and order book at approximately 2.5 months of sales, which is a normalized level for us. We have an interesting pipeline of potential acquisition, and that's then primarily in data center and in harsh environment. And finally, Rickard Fröberg is appointed the new CEO, succeeding me, who leave Hexatronic after 10 years. Market outlook then. And we say we are cautiously optimistic about the 2025 Fiber Solutions market. We see signs of increased activity in several markets. We see that the price pressure that we saw in 2024, it will likely remain until really market demand picks up bigger. There is some uncertainty due to geopolitical factors. If the US administration decide to implement tariffs against Europe, for instance, our exposure is very limited. And the very big majority of what we sell in the US is actually produced in the US. So we see very limited risk here. We see the return to seasonal variations in fiber solution. And that means that we expect a softer market demand in for instance now Q1 2025. And the BEAD program in the US, we expect to see that reaching the market in the second half of this year. In the long term, we see underlying structural trends that support the continued expansion of fiber optic infrastructure globally. And we see a strong market for our new focus areas, harsh environment and data center. And we expect that to remain for many years to come. And that's mainly driven by investments in defense, energy and AI. So that was the end of the presentation, and we will very soon head over into Q&A.

If you wish to ask a question, please dial five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. Please limit your questions to a maximum of two. If you have additional questions, feel free to rejoin the queue. The next question comes from Max Bako from SEB. Please go ahead.

Good morning and thank you for taking my questions and well two questions from my side then. Perhaps starting with looking at your US peer care field that reported yesterday, they stated that they expect some market growth in the US of 12.5%, excluding any potential bid impact. From your point of view, does that seem like a fairly reasonable assessment of market growth in 2025 in the US market? I mean, I guess by looking at your graph here with the expected for the US market expected growth going ahead. It looks quite similar. Yeah, anything to add on that?

No, I agree that what they said is very much in line with the graph we showed from CRU. And I mean, we see signs of more activity in the US market. It's probably the market where we see most signs of market growth. And you can also see that, for instance, AT&T, their CEO was out stating a huge build out of fiber to the home. Verizon is in the process of acquiring Frontier and also Expander fiber. network and fiber to the home. So yeah, we start to see signs that the market demand in the U.S. is increasing. Then I don't want to comment on percentages, but we start to see signs.

Okay, understood. And the second question also relating to fiber solution sales in the U.S. I mean, as you stated here during the presentation, for you, year over year, which seems to be a bit of underperformance versus peers. I think Corning plus 25% within their broadband exposure, Clearfield yesterday plus 4% and so on. Any thoughts on that underperformance in your view? Is it product mix and customer mix or is it something else that explains it?

Yeah, first a comment on Corning that had a very strong report in their optical segment, but they also stated it was very much linked to the data center and enterprise business.

So we are in the data... But for the broadband... Yeah, for the broadband business, explicitly, it was plus 25. So excluding the data center business, I think.

Yeah, I think they also include, you know, middle mile projects for the data center expansion. And we see that that market is increasing. We are there, but not to a large extent. And I would say what we saw last year, we saw a growth of our HEX US business, 2024 versus 2023. So that was growing. Our duct business declined, BDI business.

Okay.

Yeah.

Yeah. Understood. That's perfect. That was all from me. Thank you very much. We're well done here during the last decade, Henrik, and good luck with your future endeavors.

Thank you very much, Max.

The next question comes from Adrian Galani from ABG Sundell Collier. Please go ahead.

Yes, hello. I'd just like to start off with One question on the outlook statement. You decide to not give any concrete outlook for Q1 sales in relation to Q4, as you sort of did in the last quarter. But the fact that you've mentioned seasonal weakness both in Q4 and Q1, should we take that as you're expecting roughly sort of similar sales levels in Q1 to Q4?

I would say, I mean, that... they are softer these two quarters and I think the Q4 you know it's a really short month where in December and many many customers close early they try to reduce inventories and so on so maybe a little bit better in Q1 but I wouldn't say a lot hmm

Okay, that's very clear. And a more general question on tariffs. I mean, you say that the exposure for you is fairly limited, but I'm more interested in just how it impacts the competitive landscape in the US. Are your competitors importing significant volumes from Canada or Mexico? So, I mean, the market leader on ducts, Duraline, they're listed in Mexico, but what's their production set up like?

You know, if you take Duraline for conduit and pipe, they have a lot of plants in the US and I don't think they have any imports really from Canada and Mexico. They are probably self-sufficient, just like we produce for Blue Diamond everything in the US. I think when it comes to connectivity products in fiber solutions, and also data center and to some extent harsh environment. We know that Mexico is a big country for for that kind of production. And I believe some of our competitors are probably moving production to the U.S. to avoid tariffs. And also you have that it has to be built in the U.S., produced in the U.S. for if you want to participate to beat. I think... It's a protection of the U.S. market, so it's good for the players who are producing in the U.S. market. And most products that we sell in the U.S. market, we produce in the U.S. market. It's fiber optic cables when it comes to fiber solutions that we produce in Sweden, but we will produce at least part of it in the U.S. in the future.

Okay, understood. And if I can get away with a follow-up, then if the tariffs on Mexico that are right now passed, if they materialize, would that impact your view on price pressure continuing in 2025, at least for the connectivity solutions part?

No, I don't think it will be a major thing.

Okay, understood. In that case, that's all from me, so thank you.

Thank you.

The next question comes from Jacob Edler from Dansk Bank. Please go ahead.

Hi, Henrik, Martin and Pernilla. Thanks for taking my questions. I missed a few of the questions earlier. So if I repeat myself here, then please correct me. But just a question then on price pressure. I mean, this has been a theme for a long time. Even at, I think, the last conference call, you said that, you know, we should expect price pressure to persist until maybe, you know, bid funding or the new interest rate curve, you know, is seen in demand, right? But what are you essentially saying here? I mean, should we expect price pressure to kind of persist for H1, and could it improve by H2, or is it a longer play? That's the first one.

I think we will see that this price pressure remains until we see a more robust increase in demand. Then we will start to see prices going up. It's difficult to predict when that comes. I mean, we said we are cautiously optimistic about 2025. And in that sense, we don't say robust. So I think it will remain for some time.

Okay, okay. Great. And then my second question, then, I mean, just looking on on Rochester, I mean, the harsh environments business area, you always had a very large order last year, right, that you've talked about, is it fair to say that that order was somewhere in the magnitude of, you know, 100 million or something like that? Or what can you say there?

It was below that, but it was significant. And I would also say, yeah, in a harsh environment, we will see that kind of business. You know, it can be a big project that comes one quarter and not the other. So it's that kind of business.

Yeah, maybe just to follow up there. I mean, how often can we expect those, do you think, going forward, if you can add any color on that? Is it like once a year or how is the cycle?

Very difficult to predict, actually. But I'm sure you will hear about things like this in the future in the harsh environment area also.

Great. Thank you so much for your answers, Henrik. And thank you for the last years here and your work. And good luck ahead.

Thank you very much, Jakob.

The next question comes from Fredrik Nilsson from Redye. Please go ahead.

Hi, thank you. I want to start with the fiber cable production in the US. You've been discussing that opportunity for a while, but what led you to proceed with the move?

I think there are several reasons. both that we see that we can increase the service level we can decrease the working capital because now we are shipping and we have to have quite a lot of stock to be able to serve our customers our model in the us is to a large extent also we being a distributor we sell directly to our customers but we need to keep a big stock so there you have one element You have also, if there are tariffs, it's a protection. We also see that when we want to expand our fiber solutions business, we might come into customers who wants to go for bead funding. And then you have to be what they call BABA compliant producing it there. And we have some unique products also that we have in our offering and that we see an advantage of producing locally. And also security. Then we have production in two sites for these cables. And we know that some larger customers, they are hesitant when you only have one site producing fiber optic cables. So several reasons that made the decision that we will start up production of fiber optic cables in the US.

Okay, that's clear. So regarding the Utah plant, should we expect any more starting costs? And have you started to see any positive impact when competing for Pan American deals or deals in the Western US?

No, I think, and I've said this before, we have several BDI customers that are nationwide who have wanted us to be present also in the western part of the US. And I think now they will view us more positively that we can support them all over the US and that I hope to see in future deals. So that's a positive thing. I think you had another question in your question, and that was if there was more startup costs in, yeah. I mean, the CapEx is done, and then I think we will have some, you know, in a startup phase, especially with low production, it will affect negatively a little bit more before we start to see a profitable business in that plant.

Okay, great. Thank you very much and good luck going forward, Henrik.

Thank you very much, Fredrik.

The next question comes from Max Bako from SEB. Please go ahead.

Welcome back.

Yes, I'm back. If that's all right, two quite short questions. One perhaps to Martin, I mean, you highlighted here in the report once again that you have a quite interesting M&A pipeline within Horsch environment and data center, and it seems like you consider your balance sheet to be in pretty good conditions. So do you aim to do something here in 2025 already, or do you expect it to be more of a 2026 thing, returning to M&A?

Yes, I mean, as you mentioned, we believe we have a strong pipeline, and that is for both data center and the harsh environment. And that has been strengthened throughout 24. And we have good activities early 25 as well. So our ambition is to make acquisitions is already this year, absolutely.

Okay, understood. And then the second one, looking into 2025, on the topic of bigger order deliveries and so on, like the one that you had in Q4 last year for Rochester Cable. Is it something we should be aware of when looking at 2025 numbers and of the quarters during 2024 that contain something similar that one should be aware of?

Not really what we can see now. I think we talk about larger projects in harsh environments, so Rochester, Freiburg, we could see it. Additionally, as we have stated before, in some quarters there could be large submarine cable projects delivered up, but we cannot say when and if at this stage.

But nothing major in the comparable period. I mean, during 2024, something that will skew the picture when looking at the year over year development in 2025, if you understand.

I don't think there will be any major things, if you mean that, you know, like the one we had in Rochester in Q4 2023. There might be some large submarine cable delivered in one quarter last year, but not that big as the Rochester thing.

Okay, understood. Thank you again.

Thank you very much. We'll just see if we have any written questions.

There are no more questions at this time. So I hand the conference back to the speakers for written questions and any closing comments.

Yeah. So we are just checking.

Yes.

So what are your competitive advantages product wise and market wise? Yeah, for your customers?

And it didn't specify what kind of product. But if I comment on fiber solutions and our solutions, they are primarily fiber to the home. I think we know we have a very strong offering. We have the complete system. We have designed our solutions and the system together. We know that it's fast, easy, problem free to install. And Here I think we have a competitive advantage and we also link them to a close customer and see where we have field support, engineers, technical people that are out helping our customers to make sure that it's a successful implementation when needed and also training ability. So this I don't see any competitors having like we have. And why is it important? It's because if you build the fiber to the home network, typically 85% of the cost is related to the installation itself. You know, deploying network roughly 15% is the cost for the material where we are. So Our motto is really to make sure to have a solution that is quick, fast and problem-free to install in order to reduce the time of install. That I would say is our main competitive advantage in fiber solutions. Another question?

Yes. Who are your major competitors in the US and Europe?

I guess you mean in fiber solutions also. And you have some big players if you talk about the US market. I mean, in fiber solutions, the market leaders are the big ones like Corning, Comscope, OFS, AFL. Very strong position, especially Corning, Comscope in that market. And then there are a number of smaller players, we being one of them. If you look at Europe, it varies quite a lot country by country. And you have the big ones that I mentioned before. Also, Prismian is a big one, globally big. But Europe, I would say in each country, you have several small local or regional competitors of us. And they could be, you know, specialized in connectivity products, in fiber optic cables and micro ducts. So much more competitors in Europe, and it varies from market to market.

Okay, thank you. Do you have any plans on expanding the business to South and Central America or are you already present in those markets?

We are not present and in our strategy we look three years ahead. They are not on the radar. I would say It could happen, but then probably if we see an interesting acquisition to enter those markets, but like Greenfield or organically, they are not in the plan currently.

Do you see Starlink as a competitor?

I see it more as a complement. Starlink cannot provide the speeds and the low latency of fiber optic networks. But I think in rural areas where it becomes much too expensive to build fiber optic networks, there Starlink really has a place. So I see it much more as a compliment.

Let me see if I should translate this one. What risk do you see if Trump withdraws the Biden? The bid? Yes.

I mean, first you can elaborate, is it a risk? And I mean, we see that there are new things coming out every day, so it's difficult to predict. But I think with the experts we are talking to, they all state that the BEAD program is extremely well seen by the governors in these states. And you have a lot of red states, Republican-dominated states, with a large rural community with no or low connectivity. So it's very popular among the governors. So I think actually the risk is limited of stopping it. We also understand from our contacts that The Republicans want to speed up BID actually and take out quite a lot of red tape that they feel is slowing down the project. If it doesn't happen, I think we and others have built up capacity to also service BID. So there will probably be an excess capacity in the US market. And you have several players who have moved production to the US due to this. So we might end up with an excess capacity. Actually, what we are living with right now. So, yeah.

When do you expect to move the fiber cable production to the US and how much will it cost approximately?

It's actually not a big investment with the plan we have. I would say a small investment. We have some of the lines already. And then it will probably take a bit more than a year before we are up and running. I think that was the last question. So, we will end this CONF call and I just want to say thank you very much for your participation and interest and also goodbye or farewell from myself after 10 years. So, this is my last day. So, next time you will be listening to Richard Fröberg who joins 1st of March. So, please listen in then. Thank you very much.