Hello, and welcome back to the seminar. My name is Carl Korsheden, and I work as an equity analyst here at DNB Carnegie, and I am going to moderate this session with Scanfil. This will constitute of roughly 15, 20 minutes of presentation, and then we will be followed up by a Q&A session. During this Q&A session, you are very much encouraged to participate. I do have a microphone here, so if you wish to ask a question, feel free to raise your hand and I will bring out a microphone. For those of you who are dialing in online, feel free to type a question in the chat and I will make sure to cover them here in the room. With that said, please go ahead. Thank you very much. Let me start with giving some introduction about who is Scanfil and what we work with. We are a contract manufacturer, and our main focus is on producing components for industrial company and mainly connected to electronics. Our size today, we have roughly 5,000 employees that are spread across 16 factories, spread in four different continents, with presence in Asia-Pacific, in Northern Europe, Central Europe, and finally, Americas. When we look at the markets we address, we obviously are tapping in a quite sizable market. We talk about EUR 649 billion, quite positive CAGR of 6% forecasted over the coming years. I think the main driver for that industry are related to both resilience of supply chain, a need for a new footprint when it comes to manufacturing and relocalization and supporting the customer where they have their own business, as well as some dynamic in different market segment from defense, energy and cleantech, and in healthcare. When we look at where we play in that market, that is obviously a very big market. You can look at different segments. There is obviously a market for what we will call low mix and very high volume that usually is driven by consumer goods or very big industry like, for example, automotive. We are not present there. Here, you find a few giant in that industry. We play in a way in the opposite box, which is what we call high mix, low to mid volume. What it usually is, it is mainly industrial goods that are characterized by a more complex offering, but also by the need to adjust to the local footprint of the customers. In that field, you will find a couple of players that are either U.S. or European-based. When it comes to who we deliver to, we work with global leader in the industrial field. Some of the names are already communicated and are well-known as being our customer, company like ABB, like KONE, like Thermo Fisher Scientific, that have a strong presence or a strong, I would say, position in their industry. From that perspective, we either produce electronic for them, we produce sub-assembly, which is a sub-part of a product, or we even, in some scenarios, produce the full product and take care of the full supply chain for our customers. Our journey has been really on diversifying our customer base, and that's always a graphic that is a bit difficult to read for people that are not in our industry. We have come from 2003, our biggest customer, weighing about 20% of our revenue, 19% at the time, to at the end of the second quarter, having our biggest customer below 10%. That has been a trend for us to diversify our footprint, diversify our exposure to different customer. Saying that, what we need to recognize and what is important to realize is that even when we count a customer as one, we are talking about eventually companies that have multiple divisions, that have multiple programs, and multiple products. So it's not one product produced in a factory. It's usually 10, 20 different programs produced out of four, five, six, seven factories. Quite a diversified exposure, which also create the stickiness with our customers. All the customers we have today probably have been there for many years and grown for a long time. When it comes to the way we have developed, we have clearly taken the past two years ago to grow and develop the business, both through an acquisitive journey and an organic journey. The organic journey has translated by a significant step-up in the customer deal we have won. You can see quarter-to-quarter, Q2 was 72% above what we won the year before. That was already on a positive trend. That has been driven by a move towards a focalization and a focus on a few industry where we believe there is a long-term attractiveness. When you look at our customer portfolio, we used to divide it in four different sub-segment. The first one is Aerospace and Defense. That is clearly today showing strong traction and a strong development. We have grown that segment through both organic development, but also through acquisition, where we acquired last year two companies, one in the U.S. and one in Italy, that both have about 40% of their footprint in that field. The second segment that is extremely promising on our side is what we call Energy and Cleantech, and it's in big part related to the transition to clean energies. It can go from grid balancing tools to air conditioning, to different type of system, or a different alternative way to manufacture electricity, different type of subsystems that are filling that segment. That segment is historically very strong in Scanfil, but we can see a prospective above market average. If I was talking about 5%-6% for the industry, here we are talking 9%-11%. Our strong exposure historically with those customer is driving significantly our growth. You can see quarter-to-quarter, we took a 20% increase that is mainly related to organic development with customer we have been dealing with historically. The third market and group segment we have, customer segment we have, is Industrial, which is, in a way, the rest of the other segment, you could say. So we have in that box all the customer that don't belong to the previous three but are still manufacturing industrial product. Here you get a little bit more balanced growth. Then the final one is Medtech and Life Science, where in the same way in Energy and Cleantech and Defense, we see a growth potential of that industry that is higher than the average industrial goods. In that field, we have had the deliberated strategy since two years to qualify some of our factories to deliver higher added value for this segment, but also to go after Medtech customer. We have won a significant amount of deals where we have basically taken a step during the previous quarters that has translated into revenue. At the same time, our business is a lot about anticipation and forecasting what is going to happen and managing utilization. So we are constantly reviewing our footprint and adjusting our footprint. The main element that we have announced or that have happened over the last 12 months are we are doubling our site in China. The reason being we have had a strong growth in China, and here we mainly deal with global customers. It can be a European, an American company that has a footprint in China for the Chinese market. Here we have a top-notch factory that is both digital and automated and that we are continuing to invest in by increasing the capability. Then we have also set up electronics manufacturing in the U.S. Historically, our U.S. operation was not producing electronic. We started two years ago with the first line, but the success of the implementation has driven the investment of a second line that we installed at the beginning of this year, and that now is going to ramp up. Then, third investment we have made that is also an investment to the future is our Johor Bahru operation in Malaysia, where we have also invested in fully new and automated assembly line, because it supports our development for the Asian market. Actually, there is preferential trade condition for Malaysia against many Asian countries, which gives us a double strategy for Asia: China for China, and a plus one for the rest of the Asian market. Also driven by the demand of our global customer to have an alternative footprint. Obviously all those elements are supported by our ESG strategy and our sustainability program, where we got EcoVadis Gold in 2025, and we see it as a positive step, both to create the future of our company and keep it attractive, but also to match our global customer. This is a qualifier to do business in the area where we are in. In terms of performance, we have, and we report four different regions. As you can see, our market in U.S. has been growing strongly quarter to quarter. We talk about 70% about increase and margin gradually stepping up as we are both winning market share, but also integrating ADCO Circuits. Our APAC region, where we have, In 2026, a purely organic development, roughly 5%-6%, which is driven at this point in time mainly by our development in China and start to ramp up in our Malaysian operations. Then Central Europe. Central Europe for us goes from Poland to Italy, passing Germany. There there is two effects. One is the acquisition of MB Elettronica that is quite sizable. It's a EUR 100+ million company, where we have had a very positive development since the acquisition at the beginning of the year, but also by a strong organic growth in our Polish operation, where we have actually a strong weight toward Energy and Cleantech customer. Then finally, Northern Europe, where the growth is purely organic in the range of 6%, driven mainly by our Energy and Cleantech business, but also our Aerospace and Defense industry business that is also developing positively there. So all in all, in terms of revenue, we have had a growth of 28%, if we look quarter-per-quarter, 2022 against 2026. You can see that we have had in revenue a steady growth since the summer of last year, and we have been able to post positive organic growth in the range 5%-7% for the last four quarters. In the same times, we have managed to keep a good balance on the profitability with an increase there of 34%. I would say for us, it's always the challenge. We want to keep at least our margin in the range 7%-8%, when in the same times, we want to grow as fast as we can. We know that growth has a price. But as long that we keep a reasonable level of margin, we believe in moving things forward through acquisition. So in a few numbers, at the mid of the year, we posted an organic growth about 6%, total growth 24%, and also a positive development in EBITDA, where there the growth was in the 27%. We have reiterated our guidance to be between EUR 940 million and EUR 1.60 billion, and EBITDA between EUR 64 million and EUR 78 million. Long-term targets we presented three years ago soon, or we expect on business cycle to grow in the range of 10%, which is a mix of acquisitive and organic. We try to stick to our EBITDA range of 7%-8%, which we believe is driven by both our market positioning, but also our capacity to keep building new contracts and new customer presence to fuel organic growth. Then we have a net debt to EBITDA level of 1.5, which is actually the level where we have been lately. Then it's pretty conservative. So we have said we might go a bit higher from time to time, we might be a bit lower at other moment. What we believe when it comes in summary on Scanfil, we believe that we are facing a market that is going to grow, no matter what, at a reasonable pace, and that this is a market where there is opportunity to consolidate the position. So we are doing it both driving organic development, but also acquisitive development. From that perspective, we see a long-term opportunity to grow and develop our earnings. That was for the presentation. Perfect. Thank you very much for that. If you have any questions, feel free to raise your hand and I will make sure to bring by this microphone. Until we get any questions from the crowd here, I might start off with a few on my own. Looking across your different segments and verticals there, which of these do you believe has the strongest growth potential in the, say, short to mid, long term? If we talk both from an organic growth point of view as well as doing acquisitions within. Yeah. I would say there is one that is obviously already quite material and that we have demonstrated very strong capability to grow, which is Energy and Cleantech. I think that we have there a very strong customer portfolio. We have there strong history, and because the customer we have have also their own acquisitive strategy, we can see that we don't only win from their development and organic development, we also win from the acquisition. For example, in Q2, we were announcing a deal of EUR 25 million that we will start to deliver end of this year. That was in that customer group. That obviously is material. Because of the weight, you could say if you exclude industrial, it's our bigger single customer segment. So there is positive opportunity. Then obviously the second one, Aerospace and Defense is also, I would say, very active right now and we benefit from that. But a bit smaller for us, we were at 5% last year. We have now moved to 11% of our revenue. But see opportunity in that one, both in organic way, but also in an acquisitive way. We still see many company that are mid-sized, that are potential target for acquisition. I will say if I will look a bit more long term, I would say Medtech is interesting. There, things takes more time to materialize, but are also very solid and very long-term relationship and contract. So for us, trying to balance those three is very important because we don't want to be too much at risk on one of them. Yeah, that's clear. I guess both Energy and the Defense, Aerospace areas have quite robust structure, we call it organic growth drivers at the moment. Given that, do you see any risk in terms of valuation multiples when you investigate targets in those two industries? Have you seen valuation multiples coming up a bit recently, or are they fairly stable? Yeah, I think that we have seen some deals that have been at quite high or multiple. Then where you need to balance it. Our sweet spot in terms of acquisition is company in the range of EUR 50 million- EUR 150 million. You could easily say that there is three to four per country, and then there is quite many country where that could be a relevant element. So actually, the number of target is quite important. Some deals might be closed for any specific reason on the willingness of a buyer to invest more, but we still believe that we can find multiple that are reasonable. We bought MB Elettronica at very reasonable multiple, even if it was a very sizable aerospace and defense business. Yeah, that's clear. I think we have a question here. Just short. Okay, just short regarding the acquisitions, the profitability of the acquired companies, are they similar to your profitability, or how do you think about that? What we have said is we don't want to buy company that are in bad shape. So we have mainly acquired company that had a level of profitability that was either equal to ours or superior to ours. The last two have actually a better level of profitability than ours. I think that we believe that we can help them to accelerate and continue their growth journey, but we want to start from healthy base, just because we aim at buying more company, and we don't want necessarily to spend the next five years to try to fix a company that has wrong fundamentals. Perfect. On that overall, you always have a growth target of growing 10%+ per year over the cycle. How much would you estimate of that will come from organic growth versus M&A? What we have communicated is that probably it is a half, 5% comes from organic growth, 5% comes from M&A. Then maybe it is a little bit conservative, but that is an average. We have been delivering in reality a much higher number over the last business cycle. Super. That is clear. I guess on M&A more broadly, obviously close to two deals here quite recently and leverage is approaching your ceiling in the, call it the short to mid-term. How should we think about M&A there? Do you think you still have capacity to execute initiatives? Yeah. As I said, our worth, what you call our ceiling, we see it more as an average guidance. So we believe that we can go above it or from time to time, we are slightly below it. So we keep looking at potential acquisition, it is just a matter of finding and deciding to close the one that suit us. So we do not see limitation at this point in time. Perfect. If we turn a little bit to current trading and how the business is trending at the moment, I think Q2 was a very strong quarter, both from a revenue and contract wins point of view. As you look at the business now, does the underlying momentum still feel strong here going into Q3, or has there been any sort of changes in the market here in the very short-term? What I said at the end of Q1 that I reiterated at the end of Q2 was that, we gave guidance and quarter after quarter, we have been building a solid feeling on what we believe in. We believe in it even more. I think that's still the same picture today. We have been winning significant amount of deal. We have been moving forward at a pace that is at least at the level of our expectation. So no reason to change the guidance. We are very confident in the year. I think as we are moving forward, we are moving very close to a moment where the things are becoming very clear for us. Obviously, the summer is always a little bit special. Some countries work more and less, and then we get much more speed September, October, November. But all those things, we're manufacturing, so all those things get planned much before. So the visibility is good and the guidance we give, we are very comfortable with. Yeah. Perfect. The fact that you didn't raise the guidance, was that just a precaution? Given the results were very strong and the backlog and so on. We have a corridor that allow us to move within the corridor, and we have said we will be very simple and disciplined. If we are still in the corridor, we do not change them. If we get out of the corridor, we will change them. I think that we like to spend times on making the business happen. Yep. Sounds clear. One thing you mentioned there was, I guess in the quarterly report was that memory components prices has been coming up a bit and would be interesting to hear you talk a little bit about that, how that could impact you. Is there any risk there on the margin side or? There are two things. Until 2023, we had a market that was really a seller market when it comes to component. Then followed the period that was a buyer market. Then market rebalanced toward end of last year. Now we have come to a situation where, okay, we start to see some price increase in some areas. Those are things that are managed contractually with our customers so that we actually balance. But it is not a catastrophic market. Some price increase, some more challenges on some components. In a way, it always happens. But it is less of a buyer market than it was two or two and a half years ago. Perfect. I guess on the margins, thinking more broader, I guess that 7%-8% corridor has been quite intact for some time. Do you see that? Do you see any potential for lifting that in the mid to long term, given that your mix seems to be shifting a little bit now more towards the Defense and Energy sectors? Is there more margin upside in those sectors if you speak more broadly based on a more broad- I think there is variation, obviously, because of our size. Every tens of a point is quite a navy move. We are trying to evolve within that corridor. In the same times, we believe that if we can accelerate the growth, we would rather like to accelerate the growth. So we are trying to balance this equation between faster growth, if possible, but still within the corridor we have given. I will say, today, we feel that we have felt actually for quite many quarters, an opportunity to accelerate the growth. Yeah, of course. What's your view on the mix between what are the pure EMS and the box building and where you're coming from and where you- Yeah. Additional notes. Yeah, I think that we have an historical, but I will say we have a balance that is 30% is pure electronics manufacturing, 30% is box build, 30% is final product. I will say the trend we are seeing today is we managed to move and moving more towards box build. I think the box build part is something also that we like because it gives us more added value on the product and more impact on the overall cost of ownership for the customers. So that's really the part I will say that is growing in the portfolio. Perfect. I guess on the topic of exposures and so on, I'm sure that you've been asked this quite a lot, but we talk quite a lot about data center and those kind of exposures. Do you have any data center exposure today? Can you share any comments in terms of the magnitude of that exposure potentially this year? Yeah. I think obviously our Energy and Cleantech segment gets some impact related to data center. They consume energy and electricity, therefore, they consume everything from air conditioning to grid management systems. It remains not small, but not totally significant in our overall portfolio. I think that our Energy and Cleantech segment is built out of many customer and many different situations. Couple of customer come from that. It has brought a positive development there in the beginning of the year. But I think that what is driving our development is broader than that, actually. Super. I guess if we go back a little bit to M&A, just talking about valuation multiples overall, if you look throughout your history, what tends to be the average acquisition multiple and has that changed over the, say, last one to five years? Is there any geographers that are standing out as- Yeah more expensive and so on? Yeah. I think that what we have seen over the last couple of quarters is some acquisition in the aerospace on customer that have strong footprint in aerospace and defense being at much higher multiple. We might talk about 15x, 16x profit, which has been a step forward. It has not necessarily been a generalized trend. It has been a couple of acquisitions that have been made in that field, and which can be justified by position of the acquiring company. Otherwise, I think you will balance between six and 10, 11, depending on the size of the company, the customer portfolio, and the quality of the contract. I think you mentioned that overall you strive to acquire businesses with slightly higher margins, but is there also any point in talking about synergies, and do you do anything on that side as well? We have synergies because obviously, as I said, we mainly acquire company in the range of 5%-10% of our size. So on the supply chain side, even if we are pushing responsibility and are quite decentralized, we still have a global agreement with some suppliers for components that are actually global components. So there we get synergies, and we get savings coming from supply chain. That's, I would say, the first driver. The second element, and the reason why we look also at geography is it's usually an option for us to acquire contract with customers. Meaning that very often it's discussion that we maintain with our strategic customers on where will you need manufacturing footprint. And for example, when we acquired SRXGlobal in Malaysia, we knew that, potentially there was a medtech company and there was an energy company that will be moving already some business there. So that is the two type of synergies we see and that we see materializing. Super. I think we have time for one final one, just looking a little bit on your current order intake and order backlog, I think you received orders of roughly EUR 72 million here the last quarter in project wins. Can you say anything in terms of the typical lag between receiving orders to converting those to actual sales? Yeah. I think that what is quite typical in our industry is you will usually get a six-month to 18 months, which is in a way quite big windows. But that is quite typical. It depends on the complexity of the program we win and the speed the customer can ramp up their outsourcing program. Then I think that what has been clear is this trend in winning orders is back to one and a half year ago. So we have seen that materializing during the last four quarters, but we also see that that is also gaining momentum in transforming those new orders. Thank you. If we do not have any final quick question, I think we are going to end the session there. So thank you very much for listening and thank you to Christophe and Scanfil. Thank you very much.