Invisio AB (publ)

welcome to india's presentation of the interim report january to september 2025. for the first part of the conference call the participants will be in listen only mode during the questions and answer session participants are able to ask questions by dialing pound key 5 on their telephone keypad now i will hand the conference over to the ceo lars hoygard hansen please go ahead

Thank you and welcome everyone. So the outcome of our third quarter 2025 is to a great degree already known since we published the key figures already some weeks ago. And therefore, I will focus on some of the operational and business highlights in the quarter. It has been a very busy quarter on all parameters. We have seen high levels of activities in all geographies and all customer areas, and we saw a result in terms of strong underlying intake of small and medium sized orders. And with the delivery delays that we announced some weeks ago, this means that the order that we have at the end of the quarter has been significantly strengthened. Even though we also still see some impact from tariffs in the U.S., we still maintain healthy margins. But the fact of the matter is that this quarter, from a financial point of view, of course, is disappointing since we have lower revenues than expected. And because of our business model, we also have manufacturing, our operation margin is But back to the operational highlights, because it has been very, very busy, and three things that stand out. First of all, the 10-year frame over agreement that we had with the U.S. Coast Guard with a value of up to 99 million U.S. dollars, or 900 million U.S. dollars. After the quarter, we also entered into a five-year framework agreement with the Netherlands, MOD, which is a defense, with an option for another two years. Apart from that, the quarter saw a massive amount of product losses from an issue in connection with the trade show GCI in London. It is probably the largest number of new products we have in the world, so I'll get back to that as well. Looking a little bit at the numbers. As I said, good underlying order intake, around 500 million almost, and on the rolling per month, we are at 1.7 billion through this corner. So continue to be good spread across our different product categories and our different user types and the other fields. So good mix across the board. And it means that we leave the quarter with an OAS of 3900 million. And as usual, the majority of the OAS are expected to be delivered in the next two quarters, June 4th, 2025, and June 26th. So, as we have already said, our revenues were impacted by delivery delays, and there were several reasons for that. One of them being that sometimes our hearing protection solutions are delivered together with the communications radio or together with a certain vehicle and so on. And if that communication radio has a different delivery time from when we wish they can deliver, then we are sometimes asked to postpone our deliveries so that we can receive system including communications radio in one go. Another reason which is becoming more relevant is the fact that over the last three or four years, the issue has developed greatly. A few years ago, our core product solutions was a hearing protection headset with a control and a few cables, meaning four or five products or order lines per user. Now, one of our advanced systems, for instance, Intercom Wireless Link, can count up to almost 100 order lines. So there are so many different parts of the delivery. And this also means that if the customer is requesting a little bit of a change to one of these 100 parts, or if there is a a slight deviation from any of our suppliers in one of these 100 pieces, then there will be a slight delay. Normally, it would be spread out over the year, but just in this case, we had a little curfew storm where several things happened at the same time. So, but all in all, as we always say, you have to look at an issue on a row of 12 agents and not on individual quarters because of the usual fluctuations. Our loss margin was still solid in Q3. We did see some tariff costs still impacting our loss margin about 4 million Swedish kroner. We also see some impact from But we think, again, if we look over a longer period of time, the last four quarters, we are close to 60% gross margin in average, excluding the third-party major deliveries. And as we have said several times, we think that our product portfolio with many new products coming into the mix will continue to support a strong cross-market for the company. Our long-term OPEX trend has been steadily growing and also now in Q3. Although at a little slow pace, our headcount is up 16% this year and as I think you all know by now, this is driven heavily by investments in new products and also in our sales team. We have in the last 12, 18 months announced a wide range of new products and additions to our sales team to be able to handle the customer contacts and sales of many of these new products. And most of these new products have not really come into the market yet, so we expect the starting point to be 2026 for a lot of these new products. So on the marketing side, yes, very clearly we have a business model with outsourced manufacturing where when revenues are lower, it hits our margins, our operating margins directly. So we ended up with a minus 1% in the quarter looking for lower revenues. Still on a rolling 12, we are at 17% margin at the end of the quarter. Inventory has been a competitive advantage for a very long time and still is, albeit in this quarter we were not able to compensate with our inventory for some of the delivery delays. is going to be a significant competitive advantage and it is a decision for us to continue to do this because it is a stand-up product and there will be many situations where customers are asking for reviews with a very short notice. cash flow operating activities, 105 against 152 comparable, and that decreases primarily due to the results during the quarter, so not much to comment on that. Now, into the more fun part, our daily operations. The 10-year contract that we have secured with the U.S. Coast Guard, the largest agreement to date and a really comprehensive milestone. This is something we've been working on for almost three years throughout the company and a very, very team and focused effort to be able to achieve this. It is a contract that is related to our intercom system, combined with our new Link wireless solution and headsets, controllers and intelligent cables. And what the customers have told us is that they intend to install it on the last number of what they call models, where as public information is available, they have several thousand The agreement is worth up to $930 million over 10 years and we already have received the first small order from last year's project that they will be delivering to them in the end of 2025. being asked to equip the U.S. Coast Guards with this very, very advanced communication solutions. But it's also an entry point for us into a new type of users that we haven't been able to address much earlier. So we believe that this Coast Guard entry will open doors for us with Coast Guards globally and not only in the U.S. It will also open doors into our military and marine applications where our wide-league intercom system is going to be very relevant. So this is the starting point of a new application area that we see as extremely interesting all time for the region. Next, the framework agreement with the Dutch Ministry of Defense. Now, this is a contract that is for five years and includes the majority of our initial products, including headsets, control units, and magnetic cables. It's, according to the customer, worth up to 365 million Swedish kroner, five years, with an option for two one-year extensions. We do expect the first orders to be received already before the end of 2025. And if this follows the pattern for many other contracts that we've seen over the years, it will be a very long-term relationship with the Dutch MLE, and we look very much forward to rolling out this program and responding to the communications needs that they have. Then over to some of our product announcement launches. First of all, the T30, we have already spent quite some communication time on this in terms of press releases and all this. But until then, this is one of the most important product releases in the history of Invisio because it is our first home internally developed standalone over-ear headset. We have over-ear headsets before, like the T7, but that has more been especially the application headsets towards nighttime environments on the walls and so forth. sort of conclusion of everything we learned in the last 15 years. So this is really a standard state-of-the-art communications headset that are very versatile and can be used in many different situations, including those that are not equipped yet with their own communication. Radio. We are at the final stages of ramping up in manufacturing, so we expect that will be able to contribute to our significantly already in 2026. At the same time, the technology we acquired earlier this year from is now turned into the Invisio H series data hubs, and this is a very exciting area where we are able to connect many different devices that were not originally developed and intended for being connected. Through our data hub, we are able to do that. We are able to transport all the data and power throughout the entire system. This was one of our most busy areas at a recent BSI trade show in London. So we believe we have a real winning solution here, and we believe that the Indisio H series will act as a catalyst for development of future innovative and cutting edge products in the Indisio platform over time. So we also expect this to contribute to our business Turning to the Invisio Link Wireless addition to our intercom, as I said, this is what the Coast Guard has chosen, and this is definitely a solid product portfolio addition that will be a cornerstone for future growth, and it also attracted a lot of attention This is a product that is already ready and shipping to customers, so this is something that will contribute to already in 2025 and onwards. So, just an update on our shareholder structure where our largest shareholder, Manila Demon Foundation, have increased their shareholding just after the quarter, with 2%. But other than that, a very solid and strong base of shareholders, both in Scandinavia, Europe and the US, that has been supporting the Invisio case and group for a very long time. In summary, as we have said now many quarters in a row, We expect market activity to remain high for several years to come. There is so much going on, especially in Europe, but also in the U.S. Modernization needs to continue. We all hear every day in the news how this is urgent and how we need to speed up. The prices are getting increased, and even though we are a little later in the year, We can see that there is a high interest for all types of products and we are sure that we will be part of this ramp up shortly. From this decision, we now look forward to capitalizing on opportunities that we see in the market and do a very strong product portfolio, the best ever, with some new large frame order contracts in the back. We are very much looking forward to full quarter and into 2026. So this was the short summary of the quarter. I would just mention also, I'm sure there will be questions around the shutdown in the U.S. And yes, a short time has a little bit impact on us right now in October, but we cannot expect this to have any significant impact on us in EG4 going forward unless the situation escalates or gets really, really lengthy. But so far, no real impact at all. Thank you for now and I am open for questions please.

If you wish to ask a question please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question please dial pound key 6 on your telephone keypad The next question comes from Adrian Almland from Nordea. Please go ahead.