Good afternoon and welcome to Incap 's Q3 Results webcast. My name is Pauliina Tennilä and I will be hosting this event today. Our speakers today are Incap 's President and CEO, Otto Pukk, and CFO, Antti Pynnönen. Otto and Antti will present Incap 's third quarter results, after which there is time for questions and answers. You can post your questions with the Q&A function already during the presentation. The recording of this webcast will be available on Incap 's website later today. Otto, please go ahead. Yes, good morning from my side. I'm currently over in our US unit, so it's quite early, and that's also the reason for why we started a little bit later than usual. It's not too inhumane time for me, so I appreciate everybody logging in a little bit later. About the Q3 results, we'll do it, of course, as always. We have a walkthrough with Antti, and then we try to leave as much as possible time for questions. The third quarter ended and went as we anticipated. We had seen some uncertainties on the market and some postponement of some customer projects, and we flagged this already. We lost the quarter release, and the outcome was what we expected. A bit lower than we had last year, and in that sense, a low point in the year. We're quite happy with the profitability. We worked very hard with the different teams to protect our EBIT, and I think it shows the strength of our operational model that we can keep also with the lower volumes and less utilization, the same kind of double-digit EBIT throughout, even if some of the units were a little bit struggling. Looking forward, we see that the pipeline for Q4 is promising, and I think we have seen the low point of the year. Overall, we remain within our steering that we have given, so no surprises in the big picture. Impacting, and I think Antti probably can go deeper in this later, but impacting, of course, the result is also the foreign exchange core sources, especially when it comes to U.S. dollar and Indian rupees. You see here the development of both, and this has had an impact on our figures, as we wrote as well, and should be kept in mind when you look at the numbers. We keep on investing in healthcare and developing our business, even if the volumes were a little bit lower in Q3. We have invested in India in new capabilities for flying probe and testing capabilities, and also increased the SMT capability and capacity in India, as we expect more demand here as we develop the unit. Also in Slovakia, we have done a milestone project changing the ERP and updating also the MES platforms. This will take the Slovakian unit into a new era when it comes to digitalization of the production. We keep on adding on and developing our production infrastructure that we take a lot of pride in. Something perhaps newer is also that we are doing some investments perhaps that are more value-driven investments when it comes to sustainability. Incap is now solarizing and going more and more into renewable energy, so usage and so for our manufacturing. We have now installed solar power in the U.K. during this period, and almost half of the U.K. energy consumption or electricity consumption will be covered by this. Perhaps the biggest investment was announced here just a few days ago on the U.S. side, where we are investing in a major solar power, I could even call it a solar power station. There we have the possibility to cover 100% of the electricity need of the U.S. manufacturing with sustainable energy. When we produce in the future in the U.S., we will do it totally green when it comes to electricity. It's an interesting development, and this in combination with our previous commitments and investments into renewable energy will take our group very nicely forward when it comes to our footprint and how we affect the environment. Also, of course, during this period, we continue to work with our reporting, and we reviewed also the double materiality assessment that we had. We have done a lot of work also with sustainability and ESG during the period, apart from the investments. Quality, of course, is in core of us, and part of what I'm doing currently here in the U.S. is also reviewing the development they've had on the new ISO certifications. They have now aligned themselves with the rest of the group when it comes to also environmental and health and safety certificates, and done an excellent job here on implementing these new management systems and making our group now more unified when it comes to the different certificates we carry in the different units. Also a great job from the U.S. team. I'll hand over to you, Antti. You can dig in more deeper into the numbers, and then let's get back. Once you're finished with that, then I can comment on the outcome forward. Yes, sounds good. Let's focus on the third quarter. If we start from the top line, we recorded EUR 51.8 million in revenue, and EBIT was EUR 6.7 million, 13% in terms of the proportional EBIT percentage. Regarding the comparable figure, quarter 3 2024, the delta is EUR 10 million. As we also wrote in the release and explained, there are various reasons. One fourth of this delta can be explained by the unfavorable exchange rate differences, mainly U.S. dollar to Indian rupee, and then Indian rupee to euro. On this slide, we have illustrated the quarterly profitability and the revenue historical trends. The 13% EBIT is, of course, solid. We would like to also highlight that there was this exceptional item. The net proceedings from insurance was explaining part of that one. The EUR 1.5 million impact booked under the other operating income in Q3 explains the 13%. The adjusted one EBIT-wise was 11.1%. Inventory is illustrated here. There is a slight increase there, but it's more or less normal to the business fluctuations. The net cash position is still very, very strong for Incap. It's illustrated as a negative sign, even cash deducted by the interest-bearing loans is a negative sign. Almost -EUR 39 million. There's a lot of opportunities and high power to move bigger strategic moves in that sense. Outlook. Yes, Otto. Yeah, no, you can go as well. Yeah, outlook we remain or kept the same. It's still valid that we gave that we estimate that our year will be somewhere on EUR 210 million-EUR 230 million and an operating profit of between EUR 23-EUR 29 million. Our outlook we haven't changed, and it continues on being valid moving forward. That said, as I mentioned in the report as well, we see a positive development when we look at now on Q4. It's still within the given framework that we have seen. I think we are ready for questions. Please shoot, and we'll try to answer as many as possible. All right, thank you, Otto and Antti. Here comes the first question. Your guidance assumes a strong Q4. What gives you confidence that the target is achievable? Yeah, no, Q4, of course, we already know where we are within Q4 already, and we know very well what orders we have and that we're working on. There we have quite high confidence when it comes to the outcome. Of course, something can always happen, but it's very unlikely that we won't hit our marks and metas. Maybe a follow-up question on that. Is it based on already confirmed orders, or is it more like the signals about improving customer demand in Q4? Yeah, no, it's based on confirmed orders. When we talk about the running quarters, we are already talking about actual orders. As I've said before, in the three to six-month period, we know quite well what we're going to do because there we are already within the orders. We have some forecasts and moving forward from that. Within this short time period, we know very well. In our business, we are driving materials, and when these material lead times often are as long as three months or sometimes even longer, we are very well aware of what we are going to do now the coming months in that sense. This is already production we have planned a few months back. Yeah, we just internally finished this quite extensive forecasting run in the beginning of October. The feedback and the overview we received through this internal exercise is very much supporting this statement on Q4 and is actually the analysis behind this comment we included in the Q4 report. Yes, that's supported by internal analysis. Yes. Thank you. How about the revenue and profitability? Can you comment anything about if there's differences between different units or different segments? How did it develop? Yeah, we normally don't report those separately and comment on that. Of course, there are always differences between the different units, depending on what customers they are, and so on. There's always a variation, that much I can say. We normally don't go into detail on segments or units. Maybe that's related to the actual figures, but how would you comment on the demand situation across different geographical regions? Do you see differences there? Yeah, I think still we see some effect of the U.S. tariffs and uncertainties from some regions. Keep in mind, there are not trade deals in place in all regions. That, of course, is still in the background in that sense on some of the plans and demands. I would say that in general, we see that there is growth in defense and how to defense and aerospace, which we have a quite small exposure to still, even if it has grown over the years. There's also around data centers and AI, an increase in demand. Of course, that infrastructure is normally the bigger tier ones that are taking. We see, I would say, in projects around the infrastructure, that there we see an increase in demand. There we are also active in that sense. Otherwise, I would say that the general market demand is quite flat when it comes to classic industry. We don't see any huge increase in demand. It's more in these two sectors that we see growth currently. Thank you. Maybe then a question about the financial expenses, they were quite high. How would you comment? What is the reason behind the high financial expenses? This is actually a very good question. Indeed, it's a big number that we reported under financial expenses. If we start to first a little bit understanding what that line consists of, there are unrealized currency rate effects, realized currency rate effects, leasing-related financial expenses, and typical bank loan-related interest expenses. I think while I've been speaking with some investors, the thinking has been that this whole amount, EUR 5.5 million, are basically loan expenses that we pay to the banks. About EUR 700,000 cumulatively are the payments that we pay over the loans that we have, so interest fees. By far, the biggest amount is unrealized currency rate effects, EUR 3.5 million from that total amount. Those are basically internal currency-related loans that we have granted to subsidiaries, and then reevaluating those on the end of month balance, end of month rate on the balance sheet. These fluctuations explain the majority of that part. Smaller amounts are related to the leasing liabilities, some EUR 300,000. There was a bit over 10% realized currency rate effects. The biggest amount by far are these currency rate fluctuations, and the minority are real financing fees for Incap. Thank you, Antti. Maybe while we are talking about the exchange rates, there's a question about if you could explain the effect of the U.S. dollar and the Indian rupee more in detail, how it affects your top line. Yeah, I think I already mentioned that, so one fourth of this gap between these quarters and last year comparable quarters or revenue differences is explained by this difference. It's just how the units are reporting back to the HQ, and then we consolidate with the average rates. Compared to the last year Q3 figures, for example, the India rupee against euro has weakened quite dramatically. From the rate being somewhere around INR 90 equaling one euro, now we are far over INR 100. There's like over 10% of fluctuation. When I'm getting the figures in the rupees, as that's the functional currency of the Indian entity, and then we are converting, just mathematically converting the figures to euros to consolidate the subsidiaries. There comes this explanation and story behind this impact. Perhaps to explain that the business in India, for example, is done, we buy and sell mostly in U.S. dollars. This is converted into rupees, of course, when we do the reporting. At first, converted into rupees, then converted into euro. There's a lot of, I would say, mathematical exchanges that take place in between. Also, perhaps for understanding for investors, that Indian business, we have three big factories there. That business is mostly in U.S. dollars. We have, of course, our U.S. factory as well. The majority of the business in Incap is in U.S. dollars that we trade in and not in euro. We have our U.K. unit where we have, of course, British sterling. The majority, yes, are not in euros. This is converted for the reporting into euro. Perhaps that gives a little bit more light on the subject. Thank you. There is a question about the inventories. Are you planning to increase inventories in the coming quarters? Yeah, that's a good question in that sense that if volumes go up, then, of course, inventory goes up as well. That said, we have been working on reducing inventories. As you all remember, we had a big, big exercise on reducing inventories here when we were, so to say, overstocked with the destocking exercise we did here some time ago. Also, material availability is better on the market. That means the inventory levels can be taken down and materials we don't need to buffer up so much like we did here in the past. I understand the question in that sense that is our current inventory level, which was a little bit higher than the previous month, an indication on levels. Yes, it's always some kind of indication, but you can't take it one-on-one because there's more factors into it. How about the volumes for your largest customer? Can you comment on them? How do they look going forward? Yeah, I would say that our volumes to our largest customers are stable, and we continue to serve them on a high level. That said, we have been working very much together with them to reduce the cost for their products and find alternatives when it comes to different components that are cheaper. That, of course, takes down the product price. Even if we earn percentage wise the same money, if the bill of material cost goes down in the product, then we will, in absolute terms, earn less in that sense. That is affected a little bit now when we look at this year. Compared to some years ago, we are producing the same or even higher volumes, but we earn less because the work has been done with the products, with getting them cheaper and more optimized. Perhaps to give a little bit flavor on that, it's part of the service we do, and we try to help our customers to achieve their goal when it comes to cost levels and so on. Thank you, Otto. Question about the shipments from India to the U.S. How much do you ship, and are you now suffering from these higher tariffs from India? Yeah, I don't have the figures on the last quarter, how much. It's about 20% so far this year is the volumes going from India to the U.S. I spoke with Murthy. Fresh information from Murthy. Yeah, that one. In that sense, it hasn't impacted so directly, but India and U.S. are still settling their trade and have not the trade agreement in place fully yet. Let's see where it ends up. We continue to ship to U.S. from India, and we'll hopefully in the future as well. Are there any regulatory or structural challenges for you in getting a larger share of revenue from the defense sector? There's no, I would say, no hurdles in that sense in any law or regulations. We're working on increasing the defense segment as well. You should keep in mind that these companies are old and conservative, and it takes time to qualify. Even if we have now qualified with several of these bigger defense giants, it still takes time before that will become a vital part of our business in that sense. That said, in the newer segments in defense, in drones and other, so more startup companies in the defense industry, there the hurdle is much, much less. There we have, I would say, quicker developments. Defense industry is quite conservative, so it takes time. I think that if you look in the general concept of this, we are not peaking yet in that sense. The defense model is still expected to go up and continue up and perhaps peak on somewhere on 2030 or so. I think the work we're doing will pay off in that sense. Okay, maybe we can then move to the M&A topic, the past and the potential future ones. There's a question about the U.S. Pennatronics acquisition and how much have the cross-selling potential from that acquisition been already realized during the first two years that you have been working or operating as one unit? Yeah, no, I think we have quite good development when it comes to cross-selling opportunities. We have several customers out there that have been exploring and are exploring the possibilities. We have some production started in this, so it has gone well. I think when we did the Pennatronics acquisition, several of our customers realized that now we are more globally positioned and look into possibilities to take advantage of that. I think it has gone very well. Thank you, Otto. There is a question about the, you have a lot of cash on your balance sheet and plans with that. How about the M&A pipeline and the valuation of the potential acquisition targets? Yeah, we have, of course, plans with that cash. M&A market is more active currently, and we have a good pipeline. Antti, do you want to comment? I'm losing my voice a little bit. Yeah, sure. Of course, as we know, Incap is very much looking after different ways of growing. Organic growth, of course, always is something we explore very, very aggressively. On the other hand, we see also this consolidation and a lot of opportunities on the market when it comes to acquisitions. What I think Otto is also saying here is that recently and within the past, I would say, 3-6 months period, there have been also these bigger size acquisition targets, let's say EUR 100+ million, around EUR 100 million and even higher figures revenue companies available. With the firepower and with a very healthy balance sheet and cash position and things like that, we are, of course, keen to explore all the potential targets out there. Growing through acquisitions obviously needs a pile of cash. It helps also to move quickly when the right target arises and so forth. We are ready in that sense if there's a good opportunity and the valuations and everything matches and culture and everything is there for us to grab. We are looking and ready to move quickly in that field. If there's a lot of market activity, has that driven the target valuations up? Is that your opinion or how do you see the valuation? Yes, I think we see somewhat higher expectations in that sense when there is more activity and also more competition on some of these targets. Yes. There is one question about alternative uses for the cash, which might not be in your hands, but how about buying back your own shares? I think that if we are not successful with the M&A pipeline, of course, there's a lot of possibilities there with share buybacks and dividends and so on. That is more up for the Board of Directors. We in the management, of course, want to keep the money and have that as possibilities to make moves with. If that answers the question. Yeah, and also from a management perspective, we see that the bigger you get, the company has better ways of succeeding also in the future. Just because you buy bigger quantities of materials, and then buying in bigger quantities, you get better prices, payment terms. You will be more competitive in the market when other companies are growing. I think that's why how the management sees that we should invest in the business and growing on the business through ways, different ways. Whether it's organic growth and investing in the lines and the latest technology there, or then there's another way, which is inorganic growth. At the end of the day, to be a sustainable business also from 10 years from now, it's key that the business is growing and then staying competitive when it comes to these elements I mentioned. Thank you, Otto and Antti. I think we have been going through the Q&A now pretty well. Thanks everyone for active participation. Would you like to recap once more, Otto, the Q3 before we end this session? Yes, I will try to do so before I lose my voice at least. As always, thank you for the interest in Incap and for everybody who is tuning in. We are always open to take questions. Take the opportunity, of course, here in the webinar, but also you can contact us directly or shoot them in the interest forum or whether not we try to answer them. As I said, we are looking on positive development in Q4. This was more of a last quarter as a down, the low point in all of the year, and now we've moved forward. That said, thank you everybody, and see you next time. Thank you. Thank you.