KebNi AB (publ)

Hello and welcome to the Carnegie studio. I'm here with Torbjörn Saxmo, CEO of Kebny. Welcome.

Thank you.

You've released a fresh Q3 report today, so I'll pass over the word and picture to you. And then I'll come up with some Q&A afterwards.

We start by briefly describing Kebni. We are a company that develops products and tailored solutions for stabilization, navigation and satellite communication. We have two product areas, inertial sensing, where we produce IMUs. IMUs measure relative movement. And we have the area of satellite communication, which builds satellite communication antennas for use during movement. Vi levererar till kunder inom försvar, government och commercial, framförallt med höga krav på prestanda och robusthet. Exempel på kunder är Saab och Epiroc. It is with pleasure that I present our third quarter 2024. We reach 28.3 million for the quarter, with that in the light of the fact that the quarter contains in principle only two full working months. This means 187 percent up from the corresponding period last year. Under kvartalet så beslutade vi att lägga ner vår verksamhet i Kalix. Det innebär att vi tar en engångskostnad på 4,4 miljoner. Justerar vi vårt ebitda för engångskostnaderna så landar vi på 2,6 miljoner, vilket är 9 %. Looking at the last row, we end up at minus 3.3 million, but again in light of the one-time costs at 4.4, I think it is still good. Den riktigt positiva rapporten kommer ju från att vi för andra kvartalet i rad redovisar ett operativt kassaflöde som är positivt. If I sum up the first nine months of the year, we ended up with 90.2 million. This means that we no longer fully believe that we can reach our strategic goals of 150 to 200 million in revenue this year. On the other hand, if I look at EBITDA, adjusted, we are at 8.9 million, which corresponds to 10%. The net result for the entire year is 0.4 and we are still on a negative operating cash flow when the first quarter loads us big. It is worth mentioning that our sales pipeline continues to grow, both on the Inertial Sensing side and on the Satcom side. And that gives me strength in my back and strength for the future. Målsättningen att sätta Sensation, vår egenutvecklade IMU-produktfamilj i produktionen i oktober är vi väl på väg att uppfylla. And lastly, I can state that the decline of the business in Kalix is burdening us with 4.4 million, but we can also state that it means a savings of 1.8 million per quarter from and with Q4. And that also strengthens my perception that we will achieve our strategic goals based on EBITDA, whether we measure on adjusted EBITDA or actually EBITDA.

Thank you so much Torbjörn. I would like to focus on the goal of 150-200 million for the whole year. You have delivered 90, you will not reach that goal. What are the factors behind not reaching that goal?

Yes, I have said it earlier and I continue to say it. The industry of defense is especially difficult to predict. When will customers place orders? We are talking about authorities with rigorous processes that take a long time. In our case, we are a subcontractor and in some cases even a subcontractor in that process. and then it becomes even more difficult to predict that outcome. I can state that the fact that we did not reach our goals is not in any way a result of a lost business, but simply that we could not predict when it would happen in the right scope.

And this is then, considering that the deliveries to Saab go according to a plan, then this is on the Satcom side as it is shipments in the order stack?

Yes, absolutely. And at the same time, we have not fully started with the production of Sensation.

If we look at the other goal, the EBITDA goal between 5 and 10, you will probably be in the higher interval, around 10% for the whole year. What is it that makes you succeed with that margin goal, but we fall so much on the turnover?

We have worked consistently with our efficiency, with cost control, with our flows. And I think that's what we show, actually seen over the whole year and especially the last two quarters. Given that we reach this far with a turnover that is still not at the level of what we want to be, it will be much more fun and easier when we can apply this control to a larger turnover.

Sounds good. And we can't just stand here and talk without talking about your background in your business for the time being, which is Saab and the deliveries of the most dangerous EMUs to Saab's NLO system. You have received 214 million in total order value so far. As far as I understand, the deliveries go according to plan. But when will you be finished delivering these IMUs for Saab and the order value you have received so far? And do you expect more orders? The last order we heard from Saab was at the end of last year.

Yes, seen in the long run, I hope that we will continue to deliver IMU's to Enlo in God's many years to come. It's not something I can control, but this is my determined opinion that Enlo is a success story. Saab is a vending machine so I expect and I fully believe that you will continue to sell Enlo and thus we will get more order entry on EMU's to Enlo. That is the logical consequence.

Just to clarify a little bit, Saab can not just suddenly start to order IMUs from another supplier?

It is even more difficult. I mean, the IMUs are scrapped, and it has taken a number of years to produce a scrapped IMU. So it's not just about changing one IMU to another. It's not that simple. No, not directly.

You talked about a growing pipeline and that you have a record number of inquiries out there. I think you mentioned ten different evaluations of the Sensation immunes that you are now ready to mass produce. Can you tell us a little bit more about how the process goes and when you can expect orders from these customers?

Yes, but to start with, I can state that the tests that we are involved in are different types of applications. It is about landing vehicles, it is about flying fare, it is about on or under the water. So the applications are spread over all imaginable areas. Then The evaluations are ongoing and so far I continue to note that we get positive results and positive feedback on that the IMU works as expected and that we It keeps what we promise in our product pages and in our specifications. Then it will come in varying scope does not mean that when we now start serial production of Sensation that it is from one day to another becomes a high volume product that makes Saab would be a marginal business. It won't go that fast. Several customers work within the defense segment, but it means that it is about introducing our IEMU when the timing is right for their product. It is not easy to know, but that we will start to deliver and gradually speed up our production is obvious.

Okay. If we turn our eyes to the Satcom segment. You have delivered Satcom Antennas at the beginning of the year. The second half of the year, with launches in the order stack, it seems that there may not be anything this year. But what does the order book look like on the antenna side?

Well, I think it is very strong and the trips we have and the dialogue we have with potential customers give me confidence in that this is definitely on the way to the right direction. This is the fruit of a systematic work that we actually started four years ago and now we start to see the consequences of what we have done. We become known We get inquiries, we do not have to look up business opportunities in the end, but business opportunities come to us and that means that we have become known. We are in dialogue with potential customers both in our absolute close area and further away, for example in Asia, as we have talked about earlier.

In closing, we talked a little bit about the finances. You have a cash register of 10 million, you have a credit facility of 15 million. Is that enough for the orders to start to flow in to Sensation and other segments? Do you have enough liquidity to meet the demand?

That is my determined opinion.

That was decided. Finally, if you were to mention three main factors in Kebni's long-term investment case, what would you highlight?

I want to highlight what I normally refer to as our stories. The first story is how we have worked out our maritime antenna and that it is now marketed in a different way than what it has done before. We have Storrin that refers to what we have done for an IMU to Enlo. We have Sensation that is now coming into production. And we have ScafSense, our monitoring system for settings. I think that in total we have four product lines that are close to becoming a real success story. And I think that is a strength. Then I think there is a strength in, again, going back to the fact that we still provide positive results. So provided that the turnover goes up and this machine works as we have shown so far, this will be very enlightening.

That sounds exciting. Torbjörn, a big thank you for today. Thank you. And thank you to everyone who listened.