MilDef Group AB (publ)

A warm welcome this beautiful morning to the presentation about Mildöfs fourth quarter 24 and full year of 24. So now please take it away Daniel Ljunggren and Vivike Jonsson and remember to help our audience understand where we are in the presentation by stating the number on the

slide. Thank you very much for that Olof and I also would take the opportunity to say warm welcome to all of you to this conf call of the fourth quarter for Mildöf. I will jump directly into the highlights for the fourth quarter. We are very proud to announce that this is the strongest quarter in Mildöf history. There is a lot of all times high in this report components like order intake for example exceeds 700 million for the first time in this company's history and sets the tone for the 2025 also all time high when it comes to the net sales order backlog is record high as well above 2 billion Swedish krona at the moment when we close 2024 and we also can see that we have a book to bill rate you on a rolling 12 month basis that is 1.5 so that also indicates that there will be some future growing potential for this company. So it's a quarter that is strong and that is of course also very much up to the strong demand across our product portfolio that we see on our main geographic market mainly the European markets is really really strong right now so that is one really important puzzle piece is when it comes to what we see here in the order intake for example in the fourth quarter. Also a big highlight for the Q4 was when we announced this acquisition of the German company Rhoda that really opened up the central europe for future growth. I would talk a little bit more about Rhoda in the end so let us save that for the end so to say. Also announced from our side in December is that we with this background with this strong demand in the defense sector we have now taking a strategic decision to fully focus on defense. We think that that will serve middle of best over time so that is something that we have addressed here in the fourth quarter and we think that the defense ramp up is here to stay for many many years out so full focus on defense we think that will serve middle of best. Also in here in the fourth quarter we can see that is a continued stable development of the OPEX we're adding on five percent more OPEX than comparable quarter for quarter in 2023 but I think that is a low number compared to the growth and the order intake growth. All in all I think that Millef is very well positioned for taking advantage of the opportunities that we now see that is offered by the Nordic and European defense ramp up. If we just deep a little bit deeper into the real numbers we can see that net sales is 418 in the fourth quarter increase of 18 percent compared to Q4 last year and it's purely organic and I said it's a record high number and for the first time in this company's history we exceed 400 million in net sales for one quarter. I think that the net sales growth and also the order intakes really confirms that we have a relevant offering and a high level of customer confidence. What really stands out here I think in the fourth quarter is the record high order intake increased by nearly 90 percent so we have also announced a lot of important strategic contracts in the fourth quarter and it's all around in the middle of both from hardware integration projects and we also now in the fourth quarter see a breakthrough of the software order in Sweden. And continue here on slide two is that we look down to the adjusted EBITDA we see an increase we have n fourth quarter 17 percent in EBITDA margin and as I said an OPEC of plus 5 percent compared to Q4 2023. This is something that we have worked really hard with within the company to increase the operational efficiency but it's also showing that scalability of the company when a top line grows like we have in the fourth quarter a quite high top line it's really scale on the profit as well. Last bullets around the fourth quarter is the free cash flow it's now the fifth quarter in row where we increase positive free cash flow and that it's very happy about and also demonstrating the initiative that we have done around the operational efficiency and that this kind of initiative really are paying off. Final summary of the Q4 recap so to say we have been a very busy Q4 on slide three for example we see a couple of things that we have announced in the fourth quarter we started with a dismounted soldier launch in October the big trade show in US called USA USA and then after that it continued with announcing a lot of important strategic orders from different customers. The system was a really great customer in the fourth quarter and we also have this one SIS to the Swedish Navy that is I think it has great potential for the future and as we said we announced this transformative acquisition of Broda computer and we'll come back to that later before we close this presentation. We also with really high successful rate did a direct share ratio and we raised 500 million swedish krona to be able to finance the acquisition of Rota and in December the final one here we made a strategic announcement around really putting all the effort we can into the defense sector and that is of course due to the strong demand we see in the defense sector. With that said I will leave the world over to Vivike for some more long-term trends financial wise and also deep a little bit into deeper into the financial numbers so please Vivike.

Thank you Daniel and good morning everybody on the call. My favorite slide is as always to zoom out a little bit and have a look on our long-term growth in terms of sales. We're starting on 2015 and working our way up to 2024 which is why we're here today to talk about the 2024 results. 23% growth per year with an acceleration from our IPO in 2021 with 37% growth per year here on slide five. 2024 a little bit slower growth than we have seen in the years beforehand but this is sales we'll come back to orders which is our future sales number but turning from slide five to six we will be talking about the full year of 2024. As I said it was a bit slow in 24 on the sales side it was primarily the first half of the year where we saw a dampened sales compared to 2023. Looking at the second half of the year this was much stronger and second half compared to half 23 we are looking at 15% growth which is more in line with what we will be looking forward to in 25. Order intake 1.8 billion swedish we finished the year with the streak of large order in the nordic countries which Daniel went through just recently and had I done the previous slide on growth order intake we would be looking at 45% growth instead of 37 since the IPO on order intake and almost 50% in the year. Profitability EBIT A we continue to build for the future of course we are adding resources competencies employees but we have managed to secure our profitability while building for the future our EBIT A margin has developed from 12.2 to 12.5 on a whole year basis and absolute development is about 7%. Finally on this slide I would like to highlight the importance of our free cash flow which is almost 120 millions higher than we saw in the full year 2023. This is of course both with underlying activities in our operational business from a -to-day activity or constant struggles if you will and as well as a consequence of our restructuring program where we have also handled some inventory positions in that. Turning to slide seven we are looking at the order intake and this is really a thrill to look at we are on almost 50% growth on a rolling 12-month basis 1.8 billion swedish with a number of interesting and strategic orders in especially the second half of the year and also finalizing the year very strong. This strong order position in 2024 gives us a strong backlog positions when we will turn to slide eight to see that on 55% growth. So here we are now exceeding 2 billion swedish in what we have to deliver for the future. As I said order intake is very important for us to continue the momentum here and as Daniel mentioned we have a look to bill ratio of around 1.5 which is clearly indicating a strong future in the mid-life universe. The future is divided in a number of years on slide nine 2025 we are looking at some 1.1 billion already and that position is around 37% higher than the same position last year for 2024 but we see also that we have longer contracts already now with deliveries for 2028 and going forward from that which is indicating long strategic contract and our customers strong belief and confidence in the ability. We will move further on to slide 10 and net sales we spoke about this weaker development of the first half of the year is landing us on a mere 4% growth which is of course below our long-term targets but we are comforted well by the strong order intake and that ability to deliver sales for the coming years. Cross margin wise we are developing according to plan we are moving from a full year of 48.3 to 49 in 2024 and the fourth quarter was a lighter margin due to the mix we lot of delivery on framework contracts that we have a little bit lower margin on and sometimes the deliveries of those lump together in one quarter and then we see a little bit lighter margin and I've said that every time we spoke about this that there will be ups and downs in the margin but we are continuing around 50% as our target on our margin and speaking of margins we turn to slide 11 or EBITDA we have a pick up of around 7% as I said 12.2 to .5% it's not a massive development in terms of profitability normally we see a high net sales development we see a high EBITDA development so the weaker development in sales on the full year is indicating a somewhat slower EBITDA development however EBITDA has picked up more than the sales so we have 7% here four on the net sales it's also interesting to think about the operating expenses in relation to order intake given that we are growing as quickly as we are we need to build our capabilities for the future to be able to deliver and to secure our promise to our customers and just for those doing the fun math of operational expenses in relation to sales you should do it on relation to order intake as well and then you will see that that number would have developed from 2023 of around 37% to 2024 with around 26% so things are happening and we're gearing for the future but the scalable business model is here to stay I will finalize the finance on slide 12 with working capital and net debt working capital has in the fourth quarter and the full year of 2024 developed very well and it's primarily the inventory position that we are seeing movements within

this

is as I've spoken about during the year the consequence of our initiatives in our daily business with modularization of different project product groups but it's also a consequence of the restructuring program where we are picking up our responsibility for some inventory in the handheld group and handling that within the framework of the restructuring program we will be focusing on defense and security sector going forward and we are streamlining also our inventory position to suit that ambition and net debt a dramatic development in the quarter if you will and you should be expecting a similar dramatic development in the other direction for the next quarter we did a rights issue of shares in the fourth quarter and the pursuits of that are primarily due to be used in the closing of the acquisition of RODA which we're expecting here in Q1 but currently they are held on our accounts which is of course nice to see every morning on the bank but will be even more nice to welcome the RODA acquisition into the Mille Group. Daniel I hand it back to you.

Thank you very much Vivica for taking us through the numbers I promised all of you in the beginning that I will come back to the acquisition of RODA and give you an update on the process of the acquisition of RODA. I would like to start on your right hand side so just to give you the recap of the acquisition rationalities as we said when we announced the acquisition that Mille will become a leading pan European player within tactical and rugged IT so we are going from being this strong Nordic player to be a strong European leading player in our small niche. Also of course unlocking market access that to the DAF region and other central European countries that is really interesting markets really attractive markets markets where they have announced an increased defense spending so that is the markets you want to be on. We also synergy potential in cross-selling and purchasing and finally we think that there is a strong culture fit between the companies and we're also getting hold of a very experienced and senior management team and whole organization within RODA. Short around the process we are as you know between signing and closing and we have done this regulatory filing for getting approvals in three different countries Germany France and UK and that process is running according to plan. Happy news so that we can already announce now that two out of three is already approved so UK and France have we already received an approval from. Also we think it's very positive here that is that the authorities has really announced Mille from RODA together being a very important player in building a stronger European defense so that is why they're really looking in to see what kind of commitments Mille from RODA can give to the end customer so that are where we are right now in that phase and we are estimating that this will be closed here in Q1. Best guess is somewhere around beginning of March or mid-March something like that but we will come back of course and tell you exactly when the closing process is over. Future outlook before we open up the floor for some questions I will just start with this slide on page number 16 and this is not we're going to go deep into it's just give you a flavor of what of trends we see on the market and this is hopefully no news for anyone but has been announced really increased defense spending in Mille's core markets European and Nordic market and also in our home market Sweden so there is a very positive trend and we can see that there has been under investing in the defense for many many years and now they're trying to catch up and pick up and there will be a lot of business opportunities going forward so this is just to set the scene for the final slide on page 17 which of course this sentiment of the markets give us a positive future outlook and why is that number one is that we see this market activities and we see that they will expect to remain strong for many years to come we think that this will be a five ten maybe fifteen years up ramping in defense spending also a broader market trend is in miller's favor and that is that there is a great and significant need for modernization of the current tackle IT solutions so it's more and more defense spending but it's also that they will spend it on things that are in miller's sweet spot and that is main main driver behind future positive outlook and on top of that we also expect and anticipate that this increased defense spending will further boost demand because there will be increased defense spending going from 25 and forward and just complementing the underlying trend and the final piece here is the acquisition of RODA that really transform middle from a Nordic leading Europe to a European leading player within tactical and rugged IT so that is hopefully something we can see that one plus one when it comes to middle from road that will become corresponding to more than two so hopefully we can see a very strong and successful acquisition going forward and that's all for us I think it's time for open up the floor for the questions absolutely

thank you Donniella thank you Vivica 20 minutes past the hour we open up the Q&A session please state your questions in the chat or raise your hand I think that Tom from Pareto is the first gentleman to fire off welcome Tom

thanks guys just a question on the order intake or the sort of unannounced order intake can give us any more details on that is it from existing customers and the profitability level of of the order intake here in Q4

mainly from the existing customers and thank you for the question Tom mainly from existing customers quite much spread around in different customer and different geographic areas mainly if there is something is the Nordics that would say it has had a very strong fourth quarter when it comes to the order intake the profitability I will not announce that in the order intake as we normally do that so but it was a strong underlying trend we had some really big announced orders but the underlying trend on some small orders was also really good in the fourth quarter

and can we expect that to continue on similar levels maybe not as strong as Q4 but the sort of similar bump that we saw at the beginning of the year can we expect an additional bump here in 25

good question it's always tricky when it comes to quarterly numbers and quarterly order intake there is a lumpiness in this kind of business so it's it's hard to say exactly if ups and downs but the underlying trend I would say is here and I think that we are now entering into some kind of new phase in the defense ramp up we're really starting to impact in the more minor players in the defense industry the big players have seen this already for one two years ago but we know think that we are in this what we have called before the third wave where we can see small defense industries is starting to getting impacted by the defense ramp up so that could be something that can shift the landscape going forward in underlying small orders order intake so to say but I'm not really sure there will probably be some lumpiness going forward as well regarding order intake on a quarterly basis

perfect thanks just a final one on delivery capacity are you expecting any further capex investments to meet the demand here in 25

we are but nothing big we are totally we are all the time adding on some kind of capabilities and resources but there is no no big planned capex in 2025 we have already announced this new facility up in Stockholm and that is ongoing and should be ready to move in in autumn in 2025 but besides that nothing that is really stands out all right perfect thanks

thank you tom from pareto so we turn page and move to eric gall rang with scb take it away eric

thank you i i have five questions you stopped me if that's too many yeah first one then on the gross margin you say you had big deliveries within framework agreements that had a negative mix impact probably my memory is all fair but i frameworks were good from a profitability perspective so so what exactly is it in the product mix that's that's negative

most frameworks are are with a very good margin and you know it depends on which framework we're talking about and what products are to be delivered on and to what country what customer and so on this was a little bit older framework agreements that we have had in our books for some time and it was the end of some one of them and this was with a little slight lower margin due to the high volumes of them but you are correct that normally framework agreements are are with the good margin so it's it's an unfortunate mix that two of them went out with a large bulk in q4

okay thank you then if you can appreciate the update on rodan the timeline there but can you say anything about their operational development towards the end of last year particularly when it comes to demand and order intake

thank you eric for the question i will not go deep into exact numbers but what i hear and expect from the rodar is that they will continue to are seeing a high demand on the markets still continue to grow the business so that is the update we have when around 2024 for rodar they are a little bit slower than we are to really getting the numbers and the year end process done so to say but we have a slightly ballpark figure where they're ending up and we see that they continue to be on a strong demand a strong journey okay

then in terms of the backlog the duration of that and how that plays into the timing of sales growth in in 25 25 is it should we think of the year as sort of evenly distributed in terms of year of year growth progression or or is it more of a back-end loaded year if you have to guess a bit

if i had to guess and if i had to to give that information since we normally don't but there is nothing that is deviating materially from previous years in the timing of course we are hoping to the larger we are still yet having a more even stream over the year and not have these very large deliveries towards the end of the year also to protect our organization from operational overload so that's an ambition that we are working with but we don't see any major deviations from from previous years patterns okay

then on costs you highlighted quite a bit lower up-based growth compared to what we've seen do we need to recalibrate this a bit this is 10 percent underlying up-based growth too high of a figure now or what should we expect

i think you should be thinking about it in terms of absolute numbers is probably a decent and probably a slight increase but in relation to sales it will scale quite nicely during 25

very good and then the final question which i guess is a follow-up to the previous one on investment needs you said no big investments i think total capex to sales was about 1.7 percent last year is that a fair figure for 25 as well or will it come down because of a bigger top line

the top line development will of course drive it down but as daniel mentioned we are adding this new facility in in the stockholm area which will come into play in towards the end of the year so that is coming in in absolute numbers

very good thank you

thank

you thank you so

much eric golrang with scb i see no raised hand at present time and i see no questions in the chat but if i just had long for a little while i can just say that it's not only an all-time high in many of the numbers that vivica and daniel presents it's also an all-time high in numbers of participants in this meeting so thank you very much ladies and gentlemen for for joining the mildef journey and for being in many cases co-owners of the mildef troop so damien kemp raised his hand your warm welcome to state your question

good morning and thank you for the invite to the meeting the rotor acquisition gives an indication of where mildef sees itself heading are there more acquisitions in the pipeline is there more of an effort to if not acquisitions then are you looking at strategic tie-ups how do you expect to develop what you've seen as your company's future thank you for your time

thank you very much damien for that question and i think that the m&a activities is always on miller's radar and sometimes it's closer and sometimes it's more far away to close anything we are always looking for finding one to two maybe strategic really good fits when it comes to the acquisition and when we think that rodana will be a really good fit here in 2025 but we will continue to look after potential targets that can benefit to the mid-life journey so we need to come back and say when we really have something crispy on the table but the radar is always out there and we're looking for fine acquisitions that we think can be a strange in middle of offering or or new geographic markets

Thank you damien that

any more questions damien or you're happy with their

okay i'm sorry sorry thank you that was a great answer thank you thank you

thank you damien thank you everyone for participating in this call and i do the same thing again so maybe there is another question or daniel will say something about the soon summarize and say goodbye you know as always you can follow the mildew journey in many channels linkedin today you can see a long interview with daniel jungren our CEO and president on dagens industri you see a long interview seven minutes with many cool comments and you will also be able to follow the an even longer interview with carnegie on video today published by carnegie today so there are ample opportunities to follow the mildew journey and if no more questions are being stated we thank you for your participation we hope that you keep in touch don't be a stranger stay in touch follow us on the man in channels and have a beautiful day wherever you are in stockholm the sun is shining it's a fantastic day so we hope your day shines on you take it away daniel

thank you very much juli and finally closing is just thank you all for being part of the miller journey and have an interest in the miller journey and stay tuned we will talk about mayliff again when we come up with a q1 here in april take care everyone have a great day thank you very much