KebNi AB (publ)

Hello and welcome to Carnegie and today's presentation with Kebni. My name is Mattias Karlsson and I am a stock analyst. With me in the studio is the CEO Torbjörn Saxmo. Welcome Torbjörn. Thank you. All good?

Absolutely.

Awesome. You have just released your Q2 report today, so I think we can get right into it. Can you start by summarizing the most important parts?

Absolutely. To start with Kebni for those who do not know us. We are a company that focuses on stabilization, navigation and satellite communication. Typically for demanding customers and in advanced solutions. The defense segment is the main thing. Examples of customers are Saab and Epiroc. Our products are made of IMU's, Inertial Measurement Units. It's a small scale that measures relative movement. And then we sell stabilized satellite communication antennas. We go straight into the figures. As for the turnover, we continue on the same line from the first quarter. We turnover 30.9 million, which means 318% up compared to the corresponding quarter last year. That results in EBITDA of 3.1 million, which corresponds to 10%. In the last row we do 1.7 million, which is 5%. What is new and exciting for this quarter is that our operating cash flow is plus 4 million. It feels really good for the fall and for the future. I also want to highlight that it feels like we have a large number of businesses going on. We have a number of offers out there that are extremely exciting. And above all, I see clearly that we notice that Sweden has joined NATO. Partly from the interest that exists from Sweden, but we also see it from international customers within the NATO sphere, so it is even more exciting. During the quarter, we have also come through with Skaffsens. We have carried out our pilot and we have recruited a CEO for the whole JV company that we have together with Solidec. And that means that Skaffsens enters a new phase. Very exciting. And then finally again I want to emphasize that What I think is the biggest improvement in the quarter is that we have an operational and positive cash flow.

Thank you very much, Torbjörn. I would like to ask you about the revenue. In Q2, the revenue was at the same level as in Q1. It will be about 60 million SEK for the half-year. If I extrapolate that to the whole year, it will be 120 million SEK. Earlier, you talked about a target of between 150 and 200 million SEK. What are your thoughts on that?

To start with, We are not leaving any forecasts, we have said that before. But we see no reason to revise the goals we have set up. We follow a plan we have laid out. We do that in the first quarter and we do that in the second quarter. So this is completely in line with what we ourselves think. Worth noting is that we have a lot of project related businesses, especially within the satellite communication side. And that can make the turnover fluctuate. It becomes quite intermittent when you get such a business and when you deliver such a business.

But you say that the activity in the second half year will increase?

It will be a reasonable conclusion, obviously.

Okay, and you are in an early stage of your commercialization of your IMU's. And despite this, you are already at a gross margin of over 50% and an EBITDA margin of 10% for the first half year of the year. What is a reasonable margin for the product portfolio that you have today and that you will commercialize in the future?

In the short term, this is a reasonable level. In the longer term, I see that As we get a more continuous production of both IMUs and satellite antennas, the margins will be better and the volumes will increase as well.

You talked in the report about a very high market activity and record many offers are out, as you mentioned earlier. What does that mean in concrete terms?

Yes, it means a fantastic job for our sales team. We suffer a lot. But we are in the defense industry and that means that businesses... They come, they come suddenly and they have a tendency to be big. It's not always easy to predict when they hit. That's probably the difficulty. But so far I don't see any business that we have lost, but it is driving a little in time and we are working with that. We have business opportunities, as I said, that are beginning to grow and become clearer, both in Europe, within the NATO sphere, but also in Asia, which is an area of investment for us. So we are working at full capacity in both directions, and it's really fun.

You talked about your new product line, Sensation, that the interest is still very high for it. What does the commercialization phase look like? When will you start manufacturing series?

The first series-produced units will be finished in October. But we are already making measures to support customers and ensure that we can provide the support that new customers need to integrate iMU in their products. and to facilitate so that customers can handle the IMUs and use them in a smart way in their solutions. So the industrialization is on several different levels on the way and it's going well, I would say.

You had also established a strategic partnership with Varisis, an Indian company. What opportunities do you see with that strategic partnership?

India is always extremely exciting. There is a risk that India is even unexpectedly exciting in the sense that the opportunities are really, really big. And it is important not to go blind because being on the Indian market also means a lot of costs and it is important to be able to absorb those costs and it is important to be able to choose the business opportunities where you have So India is like a giant lottery. You can win a lot, but it can also cost a lot on the way. We have had meetings with Varisis. We continue to work forward and it still looks exciting. But you have to be a little careful when it comes to India, I think. It is probably a mediation.

Earlier this August, you set a credit line of 15 million kronor. Could you interpret this as a preparation for commercialization of your Sensation line?

Yes, absolutely. To begin with, we have received this credit line from Danske Bank backed by VKN. So to begin with, I think you can interpret it as a good score of Both Danske Bank och EKN tror på oss och tror på den plan vi skissar för framtiden. I för ett så här litet bolag med inte en jättestor kassa så ger det här oss, tycker jag, en säkerhetsmarginal för att kunna ta kloka beslut och kunna göra då decisions that are linked to the commercialization of Sensation, for example. So this is something that we have worked with and now we have it in the country and it gives us, I think, a stability forward that I am very happy about.

Sounds good. If we then turn our eyes to Skaffsens and your joint venture with Solidec. You have completed a successful large-scale pilot project in Q2. You have hired a new CEO. How should we interpret this part when it comes to commercialization opportunities in the second half of the year?

This means that we continue our testing. We are looking for more test objects. We will refine the testing on several levels. We have frozen the first configuration steps. so that we are ready or are ready to start producing. We are also looking at the possibility of conducting tests outside of Sweden in a number of countries in our area. With the support of SolidEC and their footprint in Northern Europe. So we are on our way forward and will now enter the next phase, absolutely.

We haven't talked about Enlo and Saab, which we have to do because it's still in the background of your growth journey at least in the beginning. I know that we talked about an order stock of about 200 million kronor at the beginning of the year. How is the ordering going from Saab and how is the scaling of the production in Karlskoga going?

Uppskalningen för vår del går jättebra. Jag kan inte svara på Saabs affärsläge och jag kan inte svara på deras produktionsläge. Men för vår del så går uppskalningen bra. Vi jobbar hela tiden med åtgärder för att förfina vår produktion. and find ways to do things smarter. We have a very close collaboration with Saab. We work together with their team and I still hear nothing other than The Saab rose the market, especially obviously linked to the results in Ukraine and the use there. So I have absolutely no reason to believe anything else than that it will go well for Saab. And thus there are conditions that it can go well for Kebne as well, as a consequence of that Saab will probably sell more than Lo.

You have already received three orders from Saab regarding Enlo. My question is, with what Saab has received from Enlo on their side, does that mean that there is a possibility for further orders for Kebni that Saab has already received?

I can't answer that. You'll have to ask Saab about that. But just as I say, I believe that Enlo will continue to be a successful product. And since it continues to be a successful product, I feel confident that it will mean more orders for Kebni. That's what I'm convinced of.

That sounds good. Last but not least, Torbjörn. Pick out three key points for Kevni in the investment case. What would they be?

Cabney has a vast product portfolio. We are a relatively unknown company, so given the product portfolio we have, we are on an early growth journey. Whether it is to discuss and develop tailored IMUs, or to present our IMU Family Sensation, or to describe our competence with regard to stabilized antennas. we attract a lot of attention from large companies internationally. The main thing I would like to say is our product portfolio. I think we have also proven that we do what we say. Sätter ett kvartal Q3 i fjol där vi får en omsättning som är väsentligen större än tidigare. Vi gör nu två stycken kvartal i år där vi... We have a stable turnover and we deliver EBITDA at 10%. And in the second quarter we have an operational positive cash flow. Completely according to plan. So we are at the beginning of an growth journey. And I think that is also a contribution.

Thank you very much Torbjörn for this discussion.

Absolutely.

And thank you to all of you who have listened. Have a good day.