NCAB Group AB (publ)

Good morning and welcome to our Q3 presentation. My name is Peter Kruk and I'm very happy today to have Timothy Benjamin join us as our new CFO. Happy to be here. Thank you. Starting off with a little bit of background about NCAB. NCAB is a company focused on printed circuit boards and it's the product you see to the far left. The basics and the foundation for all electronic products. We are focused on serving high mix low volume industrial segments and our customers will then mount semiconductor products, microprocessors to create the intelligence in these products. Important to remember is that all of our products are bespoke, so unique to the end product they go into and no standard components. As a company, we are focused on serving printed circuit boards for demanding customers, delivering on time to them with zero defects, produced sustainably at the lowest overall total cost for our customers, even if we may not be the lowest in the price for the product. Our vision is to be the number one PCB producer wherever we are. We are already the globally leading supplier of printed circuit boards with outsourced production. We are working with partner factories with some main 30 out factories. We deliver more than 90% of our spend to our customers. We also believe in being local. We are present in 19 countries with local sales companies serving our customers in those markets. And as a company overall, we are a little bit more than 600 specialists of which more than around 120 are working only with developing the factory pipeline and securing quality and on-time delivery for our customers. We are a company focused on what we call integrated PCB production. So quite different from a traditional trading company. The strength of being local to our customers in our local companies enables us to work with our customers, help them optimize their design, give advice on how to best plan their production setup, and then match their needs with the best manufacturing location globally to supply the products they need in the quantities they need at the time they need. We are also in our model local in the other end of the value chain. So we have a very strong presence with the factories, even if we don't own any factories ourselves. That enables us both to secure leading quality on-time delivery performance, but we're also working to continuously develop these factories, both in terms of their technical and quality capabilities, but as well as sustainability. And we also have a qualified sourcing team to continuously look and qualify new factories, supporting new technologies in new regions, meeting the needs of our customers. Moving into the third quarter, clearly we have seen that demand in Europe has continued to be very soft, especially weak demand in Germany, and we can see that the weak German economy has had spread on effects over to other countries in the European region. also seeing effects of a weaker economy but with mixed performance we are seeing growth in areas like defense but we also see lower activity in areas like green energy with ev charging and heat pumps however we can see growth in the positive positive way in the segments of north america and east where we continue to grow winning of new projects and these markets even if they're not positive they are more stable and enables us to show year-on-year growth We are maintaining good gross margins, even if our EBITDA is lower as a consequence of lower sales. Gross profit is maintained at a good level. Factory pricing still remains at a low level. EBITDA and EBITDA margins, as mentioned, are affected by the lower top line. Cash flow still remains strong and is close, is around 100 million SEC. We also have had a good activity in M&A in the quarter, and I'll report on that shortly. So we have had four new acquisitions announced in the latest quarter. So we had first two acquisitions in Switzerland and Austria, which were announced in early part of July. We also had a smaller acquisition in Denmark in September. And in October, we closed the acquisition of DVS, which we announced around the 20th of July. We now close this on 10th of October, which brings in another 230 million SEC of annualized sales and 13 new employees who joins NCAB. If we look upon Q3, a little bit detailed in numbers, we can see that our order intake is down 4% to 887 million SEC versus 924. If we look upon order intake in US dollars, however, we will see that we are flat versus last year. Book-to-bill is 0.99. Net sales is down 11% versus prior year to 808 million SEC versus 1.5 billion SEC. Organic growth on comparable units is down 8% in US dollars. One needs to remember, however, that in Q3 of 2023, we still had a legacy order book that we were shipping from, and that sort of boosted or supported the overall invoicing and sales in Q3 2023. Our EBITDA amounted to 118.5 million SEC, slightly better than the guidance we announced here recently on the upper end of our guidance at the profit warning, and an EBITDA margin of 13.2%. Gross margin remains at a good level of 36.4% versus 36.2% prior year. We've had a strong operational cash flow of 190 million SEK, even if last year's number were even stronger, partly based on the fact that we were still working down and higher working capital. Our working capital is stable at 7.5%. So over to you, Tim, to continue.

Thank you, Peter. And I think I'd also like to take this moment to say thank you to my predecessor, Anders Forsen, for a good handover during the third quarter. But diving into the numbers, if we look at the sales, we ended up with 898 million SEC, which is down 11 million SEC versus the third quarter of 2023. Bearing in mind, there was some FX impact here, which was about four percentage points. You see around minus 7% in US dollars. You heard from Peter also that our EBITDA ended up around 118 million SEC, which is down 33%. That's primarily linked to the volume decrease that you heard about on the revenue side. But bear in mind, there's also a one-off last year with regards to an earn-out, which resulted in around two percentage points impact to the EBITDA margin. So you see 4.3 percentage points down versus prior year, of which two were related to the earn-out. As you can see, we've had a very nice revenue trend over the past years. We had some decreases in the past couple of years as the markets itself slowed down a bit, but we've been able to maintain gross profits at a very nice level over the past year or two. When we look at the total top line, order intake, as mentioned, decreased about 4% to 887. from the comparable units, decreased by 1%, so fairly stable. What we did note was that we had some positive developments in Nordics, North America, and East, so all three regions there moving upwards, but some weak demand that you heard about from Peter in Europe, very much linked to the overall economy there. Net sales decreased by 11% to 898 in the quarter, so I think what's important to remember here is that quarter three of 2023 was very much impacted by a strong order book at that time. Whereas now we don't have that same benefit in place, but we do have a book to bill now of 0.99, which is stabilized and in line with quarter two. And we also see a good continued trend with regards to new part numbers and customers one. which is a good thing, especially for our customers as NCAB offers stability for customers, especially in weak market conditions. When we look at EBITDA, we see a decrease to 118.5 million SEC versus 176 million SEC last year. I think, again, what's important to remember here is that we did have a one-off item with regards to the additional purchase consideration of 21 million SEC, which, again, was around two percentage points of EBIT. That resulted in a full quarter impact of around 13.2%, which was quite close to the guidance that we gave, and gross margins were also stable year over year with only 20 basis points in difference there. from negative transactional efforts. So that was part of the impact there when we compare versus prior quarters. And then we also had earnings per share at 0.27 sec, most of which was again related to volume and then a small amount also related to the earn out prior year when we look at the difference.

over to you peter thank you so if we look into the specific segments a little bit more in detail we can see that also just first a comment that we are in since 2024 including poland as part of nordics and that is also restated in the q3 number of q3 and q4 numbers of 23 in this graph Our order intake was up some 9%. I'd say overall, the market in Nordics is still somewhat muted, but we have been able to be successful in some of the aerospace and defense projects. Some of these projects have longer lead time, so the majority of the revenue from those orders will fall into 2025. Other sectors like green energy and construction sectors are weak. We can see both EV charging and heat pump business is still on a low level. due to primarily inventory situations with final products at the dealerships. Net sales amounted to 202 million SEK down from 223 last year, so decreased by 9%. We also seen in the quarter a bit of a customer product mix and also some negative effects that has impacted the gross margin specifically in the quarter. EBITDA amounted 26.3 million SEC versus 42 last year, and EBITDA margin decreased then to 13% versus the prior year, 18.9. Looking at Europe, we can see the segment which is most heavily impacted by a weak economy. Order intake was down by 14% to 421 million SEC versus 490 last year, net sales Down by 20% to 435 versus 545. And we can see it's primarily the German market, which is the biggest in Europe, which remains very weak and impacted. And we can also see that this weak economy has also spread to neighboring markets like Italy, Benelux, partly UK as well. However, we see positive development in our sales to truck and bus industry, as well as to aerospace. We've also noted that there has been a number of European PCB factories closing down here in 2024, and this may create future opportunities for NCAB to capture further market share. Arabita decreased to 57.6 million SEC versus 82.1, and that corresponds to a margin of 13.2% versus 15.1 in prior year. uh moving to north america here we can see we continue the positive trend of order intake growth we grew by five percent to 185 million sec versus 176 last year our net sales was up 10 to 205 million sec versus 186. i think we are investing here to continue to strengthen our own organization our way of working as well as our external sales network we'll also be able to leveraging our technical support capabilities which is giving us good success with high-tech applications And we also have another benefit of being able to supply PCBs from Taiwan meeting requirements of the US aerospace and defense industry. And this is a positive. And we can also see some positive effects from our phase three acquisition in 2023, where we can see spin-off effects that we are generating further sales growth with this entity. So our EBITDA increased to 31.7 million SEC from up from 25.6, and our margin increased to 15.4 up from 13.7 last year. Moving to East, we can see also here good growth. Order intake was up 10% to 52 million sec versus 48 last year. I'd say that overall the market conditions in China remain challenging, but I think we are, as NCAB, very much focused on high-tech niches where we can add a lot of value and technical support, and that helps us to outperform the market at this stage. I think we can also report some positive signs in consumer confidence. As we can see, some of the recent stimulus by the Chinese government is starting to maybe have some minor impact. Net sales was up 7% to 56 million sex versus 52 last year. And EBITDA down at 8.2 versus 10.9 with an EBITDA margin of 14.6% versus 21.1 last year. Over to you, Tim.