W5 Solutions AB (publ)

Hi and welcome and thank you for joining our presentation of the Interim Report Q1 2025. My name is Hanna and I'm happy to moderate this session with you. Joining me today I have our President and CEO Evelina Hedskog who will take us through the key highlights and the financial development during the quarter. Throughout the presentation, you're more than welcome to ask your questions via the chat function as we will conclude with a Q&A at the end. Okay, I think that's it. I'll hand over to you, Evelina.

Thank you, Hanna. Welcome, everyone, and especially welcome to all our new shareholders listening into this session. We have actually doubled the number of shareholders in W5 since New Year's. So again, an extra warm welcome to you. I will start this presentation by giving a brief introduction to the company and what we do. And after that, I will move into the quarterly report. So W5, our vision is to become the leading global provider of sustainable defense technology. And our mission, what we do every day is that we deliver cutting edge solutions to empower own and allied forces. We do this through our three business areas, integration, training and power. And I will get back to them a little bit later and tell you more about the products that we offer within these business areas. Our headquarters is based in Stockholm, but W5, we have locations all over Sweden, from Elmhult in the south to PTO in the north, and also in Kongsberg in Norway and Murmjärvi in Finland. So we are really a Nordic defense company, and right now with about 175 employees. Looking at the customer base, we have a mix of defense authorities like armed forces or defense procurement agencies, but also other defense industry and primarily OEMs like Saab and Thales that we sell to in that segment. Our financial targets, they are that we are aiming at a revenue turnover of 1 billion SEK and a profitability of 10% when we close 2027. So in three years time, these are the targets that we aim for. Going back to the business areas, if we start with business area training, we have two product areas within that business area, and that's live fire training, defense and security, and live fire training, sports and hunting. And the products that we offer here is basically any type of equipment that you would need on your shooting range or for more tactical training out in the field. And it's both hardware such as pop-up targets, but it's also software where you get feedback to the shooter or the instructor with the results. And you can also evaluate then the training that you're doing. Moving on to integration, also two product areas within that segment, starting with shelters. And shelters, that is basically very sophisticated container modules with ballistic protection that you can use for different military applications, such as field hospitals, command posts, or repair workshops. So shelters is really a modular and mobile solution for armed forces. Systems integration. In that product area we do systems integration, but we also have products such as tailorized harnesses and intercom solutions, etc. And the third. business area power. Here we have batteries and chargers. We come from an expertise within battery chargers for the military context and have now moved into battery manufacturing during last year. We have our gen sets and also simulation where we really have the expertise within high fidelity hardware simulators. So this is a very brief introduction to our broad product portfolio that we have within the group. So with that, I'm moving into the first quarter of the year to discuss a little bit what has happened here. And you can't really talk about the first quarter of 2025 without addressing the geopolitical turbulence that we find ourselves in and what that means to us as a company. And for W5, there are a few facts connected to the U.S. And firstly, I want to state the fact that we have very limited customer base in the U.S. and also a low dependency on U.S. sub-suppliers. So, of course, this is positive for us given the developments during this quarter. On the contrary, we have quite the local supply chain. The majority of our supply chain is close to us and primarily in Europe. And as described earlier, our production is done in the Nordic countries. And this is now a competitive advantage for us when European customers are looking more for European suppliers and moving away from US and Asian suppliers. So we have a competitive advantage when it comes to our supply chain and also where we develop and manufacture our products. At the same time, as you know, EU is putting more and more funding into defence development within Europe and this is also something that we as a company can tap into and benefit from. And last but not least, like I said in the beginning, there is a huge interest now for investing in defense. And of course, that helps us in, for example, our M&A agenda, the fact that we have a big interest in our shares. Okay, moving on to a little bit of a deep dive into our strength and cash position and what that has helped us with during the quarter. End of last year, we had record high invoicing, which of course helped our cash position. And also in January, we had a directed share issue of 36 million SEK. And this has given us the opportunity to mitigate risks from capital tie up in a number of customer finance development projects that we now have ongoing in the group. It has also helped us to enable self-funded product development. And last but not least, also made it possible to pre-start production and ordering of long lead items for future orders. So this is something that we really benefit from the fact that we can work proactively in this way now with the strengthened cash position. And some examples then of what we've done, we have broadened or are right now working with broadening the Genset product range. We are developing batteries for mission critical systems and we have pre-started Li-Fi training projects in order to be proactive there. So all in all, a lot of good things going on to prepare for the future. Okay, looking at some key figures then for the quarter, net sales and profitability is not where we want it to be. If we compare to last year, Slightly different situation though. Last year, when we looked at the figures in quarter one, we didn't have the order backlog to support our organization and to make sure that all our resources were put to use. This year it's differently. We are now in full development mode, as I referred to earlier. So our resources are now involved in development efforts. However, it is not yet showing on top line. So, of course, a disappointment that we can't do better than this right now. But looking at what's happening in the organization, I think that we are in a better position. On the positive side is also the order book and the orders received during this quarter. And as you can see, it's a steady build up of the order book. Worth mentioning is also that this order intake of a little bit over 100 million SEK is more or less only bread and butter and no big projects. And the majority of these orders are to be delivered this year. And yeah, again, net sales and profitability from a slightly different angle. Here we see the development over the last couple of years. And as you can see, quarter one is normally not the best quarter, especially not when you have a good quarter for the year before. So some seasonal aspects of the first quarter as well that we see this reflected in this year's figures as well. And now something that many of you have been asking for and waiting for, and it's the first time that we now present our segments, our business areas and their performance. And worth mentioning before we look into the numbers is that behind these three business areas, we still have the legal structure with seven subsidiaries. So there might be some aspects of how we slice the cake, a little bit of a shakedown period right now where we need to make sure that all revenues and costs end up in the right place and in the right business area. But regardless, this gives you a good indication of where we stand. And as you can see, it's a fairly even split between the three business areas when it comes to turnover, but not when it comes to profitability. And that is, I would say, primarily because of where we have larger development projects and where it's more of a sort of ongoing production and invoicing. Um, Yes, and one last slide with looking at the order intake. This is a pie chart showing the split between this year and next year and when we can expect the orders in the order book to become invoiced and delivered. And as you see, two thirds of what we have in the order book right now is to be delivered within this year. And this means that we have a huge focus right now on order to delivery. We need to get these orders that we have transformed into deliveries. And it's a lot of it. So if we've had a huge focus on order intake before, it's now slowly shifting to delivery. And a glance at the book to Bill still indicates an organic growth somewhere above 20%. And I think that's worth mentioning that that is really what we have in the strategy. Together with that organic growth, we have growth through acquisitions. And together, that's sort of where we aim to be in order to meet the financial targets that we have for 2027. So to conclude this quarter and where we stand, we are ramping up. We have no negative impact due to the geopolitical turbulence. On the contrary, there might be some positives for us. We have a record high order book. We have an improved cash position. That cash position has enabled investments in product development that we hope will pay off within short. And we have a very strong focus on order to delivery at the moment. Of course, not neglecting order intake and building the order book, but it is really a shift of focus now from only winning orders to also making sure that we turn this into deliveries. Okay, that was it. Thank you.

Thank you very much, Evelina, for that presentation. Now it's time to move over to the Q&A session. What I can see is that we will jump into it right away. To start off with, my first question is, after the end of the period, we secured a key order from the Finnish Defence Order. Sorry, the Finnish Defence Forces, not the order. But could you tell us a bit more about what that means for us and the impact on our business?