NCAB Group AB (publ)

the ncab q3 presentation for 2025 during the questions and answers session participants are able to ask questions by dialing star 5 on their telephone keypad now i will hand the conference over to the ceo peter crook cfo timothy benjamin and head of investor relations gunala oman please go ahead

Good morning, everyone, and welcome to today's Q3 report. So presenting will be primarily myself and my colleague, Timothy Benjamin, and also Gunilla will be supporting us. NCAB, for those who are new, we are focused on printed circuit boards, the bear boards that you see to the left in this picture. And that basically is the foundation in any electronic intelligent product. And what is a little bit particular about our industry is that while semiconductor components our standard components the printed circuit boards are unique designs for every single product so it's a highly engineered product where we work closely with our customers in defining the designs we are a company we're believing in strong local presence we are presented through 19 companies across the world serving some 50 markets and we are around 650 colleagues within the group We don't have any in-house production. We are only working with outside manufacturing partners, but we're heavily invested in the production process and securing quality and sustainability in our supplies. So out of our 650 colleagues, we have around 120 people working worldwide with our factory management and technology areas. We strive to be number one wherever we are, and we are the globally leading supplier for deserted ports today. The company, beyond focusing on demanding customers where we can help them solve potential problems, we are also directing our focus on high mix low volume segments of the market. So we are not in the high volume consumer electronic products, but typically more in industrial applications. and these might still be very large global companies but again for them the printed circuit board is a small part of the overall bill of material they have very high quality demands typically but given the fact that it's a high mix low volume business and for them even though there may be large companies their total spend in printed circuit boards is still quite minor and that gives creates a lot of problems they will struggle to have enough internal competence to to work with research boards as well as getting the right attention from the leading factories and that is where we can help them both by providing competence and guidance in the design phase but also matching their needs in factories where we by combining all the spend of our customers are in a very effective position with the leading factories We have had a couple of years. We have a company 30 years long with a strong growth history. It was an extreme growth period from the year 2000 up until 2022. And then we've seen a global decline in the market. And we're happy to see that that market is now starting to resume growth again, as we can see in our rolling 12-month revenue chart here as well. As a company, we have quite a diversified portfolio of customer segments we're serving. So the biggest part is in industrial, which of course is covering a lot of different applications. But we also have strong positions in medical, automotive, power and green tech, as well as defense and telecom. And over the years, we've seen sort of these segments counter cyclical to some extent, which has helped us to be resilient in challenging times. Manufacturing of printed circuit boards globally is dominated by Asia and China, and we have been, as a company, also working to broaden our supply portfolio to be able to offer our customers good alternatives in terms of not only technology but also in terms of geopolitical exposure. At the time of our listing in 2018, we at that time had 95% of our sourcing coming from China, And in the last year, we are around 75%. So there's been a migration and the portfolio we have in predominantly other parts of Asia could offer a significant portion to cover the Chinese current spend. Here, it's always a dialogue with our customers, whether or not they want to make a change or not. And still, China is a very strong supplier of printed circuit boards. And therefore, for many of our customers, they are happy to stay with China. So moving in then to our third quarter. So we are positive to see a gradual improvement in our order intake and revenue. And if we look year on year, we can see that our order intake continues to strengthen with very strong numbers versus what was a very quite weak second half of last year. So our overall growth in order intake is 21% in US dollars, which is our main trading currency. And excluding M&A effects, we are at 14% organic growth in order intake. And as before, it's North America and East that is leading the charge. Europe is following, and Nordics is actually quite okay. This year, it will have a comparable where Q3, we booked some larger defense orders, which distorted the trend a little bit. But also in Nordics, the development is favorable underneath. We can see positive development across several sectors, and we see it continuing in areas like aerospace and defense, but also medical and energy are areas where we see growth. Net sales are kind of following on the coattails of the order intake. We see in our numbers in the reported Swedish number, of course, the strong FX headwind from the softer dollar. But we're seeing growth in all of our regions in US dollars now. And we also see overall organic growth in US dollars. So this is a quite nice trend that we're seeing. Strongest growth here as well is in North America. Here we get some support additionally from the tariffs. We don't book tariffs into order intake as we don't know what the tariff level will be as we book the order, but we only see that when we do the deliveries. But even beyond that, we see good growth in the other regions. And the impact of the US dollar decline versus last year has an impact on an excess of 75 million SEC. EBITDA improves sequentially from Q2, and our cash flow is strong. We are up slightly in gross margin versus Q2, and with a better margin volume, we also see the EBITDA rise versus last quarter. Again, here, the FX effect on the EBITDA is around 15 million SEC that we would have seen as a high number in comparison with prior year. And again, good cash conversion on the EBITDA, but also there has been improvements in working capital during the quarter, which has helped generate a strong cash flow. So if you look upon the numbers in more specifics, we can see that the ordering take in Swedish kronor is up 11% to 9.85 versus 8.87 last year. So 21% in dollars and 14% organic growth in dollars. And the book-to-bill is still positive with 104%. Net sales are up 6% to 949 versus 898 last year. Overall, 15% growth in dollars and we hear also organically 8% growth. EBITDA is down from 118 last year to 110, providing then with a margin of 11.6%. So the gross margin is down versus last year, but it's improving sequentially with previous quarters. And again, the net impact of FX here is 50 million SEC. And operating cash flow, as I mentioned, quite strong at 180 million SEC on par with last year. And working capital has come down from 9.2 in 42 to 7.9, slightly above last year, but that's predominantly associated with the acquisitions that have been done during the year. And net profit at 60.9 versus 50 last year and EPS of 0.33 versus 0.27. Tim, over to you.

Thanks, Peter. So I think you heard a little bit from Peter that we have a good top line this quarter with net sales at 949, an increase of 6% versus this time last year. When we look at it in US dollars, 99 million US, up 15 versus this time last year. And then we also have EBITDA coming in at 110 million SEC, while down 7%, I would say, important to remember that there's a large FX impact there of minus 15 million SEC. So that's one of the contributors that you see there with the EBITDA margin at 11.6, which is 1.6 percentage points down versus last year. When we look at the gross margin, this is the second quarter in a row where we are increasing the gross profit margin, now up to 35.2% on a last 12-month basis and starting to come back in line with where we've been. When we look at the total top line, though, water intake up 11%, but as you heard from Peter, up 14% in US dollars when we start to exclude the currency impact. I think the thing that was nice to see is that we had positive developments in pretty much all segments. North America was up double digits, as was Eastern Europe. Nordics was stable in US dollars, but you'll hear a little bit more from us that that has to do more with timing of large orders in the prior year than anything else. Net sales up to 949 million sec, which is 8% up in US dollars in comparable units. And we still have a positive book to bill of 1.04. And we see a lot of good progress with customers in the energy and medical sectors globally. You heard a little bit from Peter that the EBITDA decreased versus prior year. But again, all of that was due to FX impacting us with 15 million SEC. Gross margins, as said, quite stable versus prior quarters. And when we really start to look into last year versus this quarter, a lot of that has to do with product mix in the different countries where we operate anyways. I think also interesting to note that the acquired companies dilute the gross margin a little bit compared to this time last year. And that's something that we work on in the medium term with them to improve. I think when we dive into the details of the FX impact, I think it's interesting to remember where the U.S. dollar was at this time last year. It was all the way up at 10.42, and it continued to climb, actually, when you start to look at quarter four and quarter one. But right now we're down to 952 on average for this quarter. I think as of right now, closer to 9.4. And what that leads to, then, as you can see on the right, is that we have a revenue impact of around minus 75 million SEC coming from the US dollar, translating to less crowns. That leads, of course, to a gross profit impact as well, which is generally margin neutral. The only thing that does impact the margin a small amount is that revaluation line that you see there when we revalue our balance sheet, specifically accounts payables and accounts receivables, otherwise generally margin neutral. We also have SG&A or operating costs in currencies such as the US dollar, but we also have it very much in SEC, Euro, GBP, among others. And there we get a little bit of an offset against the FX impact. So the total net impact from currency is about 15 million SEC. Over to you, Peter.