NOTE AB (publ)

We welcome viewers to this live broadcast when Note has published their report for the first quarter of 2026. Standing beside me is the company's management, CEO Johannes Lindh Widerstam and CFO Frida Frykstrand. Welcome. Thank you. You have a presentation that you will show us, so I'll simply hand over the word and return later to ask some questions.

Thank you very much, Mike. Welcome everyone online. We have changed the format for this presentation and we're now working with Investor Studios. Normally I give you some flavor of how I think the quarter has developed. I think what is important is to know that we came in in this quarter with some issues in the output. Our Q4 came in slightly weaker. We had some issues in the supply chain to get the material out. Those problems were remaining into the first part of Q1. We expected the quarter to develop quite weak in the beginning and grow stronger, and that was supported by the order backlog that we talked about in the Q4 report. What we saw was that January came in a bit weaker than anticipated, February on track, and March came in quite strong. The pace we are entering into Q2 is rather strong and that is something that we talk about when we talk about the gradual improvement for the company throughout the year. January was a bit weaker, that was why we did not reach the full numbers that we were anticipating and we went out and made an update for the quarter on March 20 and we came in line with that or slightly above. We will talk about the earnings later on, but we also know that volume drives profitability, and that's something that we know has an issue. Frida will come back to that. When we go into the second quarter and the year ahead, we go in there with confidence. We have a good order backlog. We have a good momentum in the business. We have the newly acquired STI, which I will come back to later on, that are performing in line with expectations. We have several ongoing positive customer dialogues that we are expecting and hoping that will give some momentum. We are also investing a little bit into our sales and marketing and that is, yeah. is putting some limitation on the profitability on that part. We think that we are doing those investments to facilitate the growth that we are seeing ahead of us. So I would say quarter came in fairly in line with expectations. Current pace is giving us confidence to stand here and say that we support the expectation for growth to come throughout the year. We are also supported with a strong underlying trend of the growth in the security and the defense segment and we will come back to more numbers around that when we go into the customer segments later on in the presentation. So all in all a fairly weak start of the quarter gradually getting better and with confidence we're looking into the quarters to come for the year and also for the years to come. I will hand over to Frida to go through some numbers later on. Some highlights for the quarter. Of course, acquisition of STI. We call this a transformational acquisition on one of the markets that we are expecting to have the highest growth. There is a lot of underlying trends in the defense sector where the outlooks are really great. We are taking a bigger and bigger part of this sector. We will see that the security and defense segment is constantly growing in size. CSDI was the leading or is the leading provider of EMS equipment for the UK defence industry. Roughly 90 plus percent of the customers are in the defence sector that they serve. They have a strong customer base with several of Europe's leading defense companies. What we mean with that is that it's not only the local UK brands that we are representing. We have customers that are present on the UK market that are American, that are coming from other parts of Europe. And we also see some of the Swedish companies in this segment that are customers to SDI. So the customer base is really broad. That was one of the things that we really liked with SDI and how they run the operations. So that acquisition is something that we will build on when it comes to how we address this market. We have also strengthened our sales team on the head office with a new director that will be monitoring this segment and work with all the customers and the politics and so on to ensure that we take the position that we think we have earned. Uh, Also, what we see is that with the order backlog that we see, we are expecting to come back into growth and profitability. But to do that, we are strengthening our sales organization. We have a new head of sales and marketing, Bahareh Makinovsky. She joined us in early January. She comes from our board of directors, so she stepped down from the board and took a management position in the group. She has strengthened the organization with a few feet on the ground and we expect that increase to continue. We are also expecting to drive synergies between our existing node factories and SDI in the coming year. There is a lot of dependencies, if you call it that, between customers in the security and the defense segment and we think that this The existing Note portfolio combined with the SDI portfolio is going to give us a good platform for increased dialogues and business with the customers there. Order backlog is up 11% for the year. We also see that if we would add on the order backlog for more than the year, it's even higher. So we see that also that the customers are placing orders on the longer horizon compared to last year. This is also giving us comfort in that we will not only see that the growth will progressively come in this year, it will also remain when we come into 2027. We also see that despite these two acquisitions that we have done in the recent quarters, first Kaston and now STI, we still see an equity ratio of roughly 35%. We think that that is something that we are pleased in and that this also supports our strategy that we reinvest our earnings into future growth, not only with equipment and expanded footprint, we also see it in acquisitions. So this supports our long-term strategy in a very good way that we are investing in our future growth and our future earnings. We will see the effects of that in the coming quarters and years when we see the full effect of the latest acquisition. I'm also very pleased to say that our delivery performance that we were struggling with after after the component crisis shortage, it remains strong. We still deliver in excess of 96% on time delivery in full, and that is a very strong message to our customers that this is an area that we still focus on, we still invest in, and we never lose momentum in this. Our quality has remained strong throughout this component crisis and are continuing to be in top class measured in PPMs. So we are very pleased to see that our investments and our efforts in our operational performance is still paying off. Now I hand over to you, Frida.

Thank you. So as Johannes mentioned, we had expectations of a slow start to the year and then a gradual improvement through the rest of the year. We gave an outlook to the market of sales between 930 to 960 million SEK. We came in slightly above that on 962 million SEK, which corresponds to organic growth of negative 6%. With this, we have achieved an operating margin of reported 8.7%. We gave an outlook of an interval between 8.5% and 9%. But that was underlying and if we look at the underlying operating margin, we came in at 9.1%, so slightly above that. We know that growth brings profitability and when market uncertainty restricts our growth, we see that that also puts pressure on our operating margin. So when we expect when the gradual improvement throughout the year continues, we will see an increase in the operating margin. As Johannes mentioned, we still see a strong financial situation. We have a good equity to assets ratio and we see operational cash flow of plus 46 million also a bit lower than we have seen in the previous quarters this is due to a slightly lower profitability and also connected to that also a slight build-up in working capital but we expect a continued positive strong operational cash flow in the coming quarters If we look into our operating segments, we can see that Western Europe had a negative growth of minus 2%. Our biggest home market, Sweden, had a negative growth of 6%. In the UK we saw a negative growth of 21%. This is excluding acquisitions. We had expectations of a slow start to our so to say, old UK factories. But we see that our newly acquired businesses, Kastan and STI, are coming in in line with our expectations. If we look at the rest of the world, we see also a negative growth of minus 12%, with more differences between the countries where we saw growth in our Estonia plant, whilst in China we saw a negative growth of minus 35%. We still see high profitability in both segments and we are plus 10% in Western Europe and we are managing to increase the operating profit in our rest of the world factories and coming in at 8.3%. The group as a total is coming in at 9.1% underlying and this is, as Johannes mentioned, we have more central costs primarily driven by more focused sales efforts.