Hello, and welcome to the Vaisala Q2 2021 interim report. Throughout the call, all participants will be in listen-only mode, and afterwards, there will be a question and answer session. Today, I'm pleased to present President and CEO, Kai Öistämö, CFO, Kaarina Muurinen, Head of IR, Paula Liimatta, and Chair of the Board of Directors, Ville Voipio. Please go ahead with your meeting. Thank you, welcome also from my part to Vaisala Q2 earnings call. I am Kai Öistämö, the CEO of the company, and I'll walk you through the prepared remarks before opening up for questions. We had a great second quarter, excellent growth in orders and net sales and operating result margin at 10%. The recovery that started already during the Q1 of the year has continued stronger and faster than we earlier anticipated. The recovery had a positive impact effect on our Q2 demand, particularly in Asia Pacific and in Europe. The recovery was visible in overall segments except aviation and in emerging markets. If we look at the geographies in China and in the U.S., the economic recovery started earliest. That was clearly also visible in the orders received, especially on the industrial measurement side. Thanks to the strong growth in order intake, our order book now is all-time high at EUR 165 million. The shortage of component, which is very prevalent on the marketplace today, did not affect Vaisala's delivery capability during the second quarter. I'll come back to this a little bit later in the presentation. The EBIT margin was at 10% when compared to the previous year second quarter was 8.7% of net sales. The operating result increased to EUR 10.9 million. Now, before diving into the financial figures, let's look at some of the key events during the second quarter. I'll start with talking about the operational excellence. We were very successful at the pace of the increased demand, scaling up our delivery capability in a very challenging supply environment, and we were very successful in matching the demand without any hiccups on our deliveries side. I am extremely proud, especially on our sourcing and operations personnel and teams on making that happen in reality. The environment in terms of the component shortage is something where the established suppliers of electronics components, not only ICs, but broader also in other electronics components have had to inform us, like other customers, that they are unable to deliver their earlier commitments, forcing us to deal with that then evident shortage of components through acting on secondary markets, through other suppliers, through redesigning our designs to match other corresponding components. Being successful in terms of delivering against the demand from our customers, especially in the increasing market like we have experienced, is really, I think, a great proof of the excellent operational capabilities that we have in our high-mix, low-volume environment. The second key point I would like to take up is the fact that Financial Times listed 300 European climate leaders of 2021. It includes European companies that achieved the greatest reduction of their greenhouse gas emissions reduction between 2014 and 2019. We are very proud to be on the top 20 list in Europe. Our total greenhouse gas reduction during that timeframe was 94%. We have even improved, obviously. Actually, during that timeframe, it was 86.9%. We have seen since 2019, increased that number to 94%. I'm very proud of on our responsible investments and behavior. Happy to be among the leaders in terms of companies on fighting the climate change. Speaking of climate change, the weather origin systems in the face of ever-increasing extreme weather conditions, especially facing the most vulnerable nations, namely emerging markets. I'm very happy to see that we were able to close the Ethiopia project, and now have a go ahead to implement this in the coming three years together with the local authorities. I think this is an extremely important piece of infrastructure, and even more important in the future in all nations around the world, but like I said, especially in emerging markets. We focus on culture and leadership practices, our ways of working, and our future work to retain and recruit the best possible talent in the world. To lead these activities, I'm very happy to note that we will have Timo Leskinen to join us to lead these activities in end of third quarter, beginning of fourth quarter. Vaisala is creating new innovations for sustainable planet. When we look at the recent events like Fit for 55, like I said, the very unfortunate extreme weather incidents, for example, in Germany and in Central Europe, but also around the world, it's ever more important that we carry our responsibility of fighting climate change and really building a more just planet. In second quarter, I'll give you a couple of examples that we are not just talking about this, but we are actually doing this, putting our money where the mouth is in terms of launching new solutions and products to our customers to help them to create their operations to be more sustainable. In second quarter, we launched several new products, all of which link into one or more UN Sustainable Development Goals. These highlight really the Vaisala's purpose and drive to create products and solutions with an impact to a better world. We are closely linked to many key mega trends today, and we can play a very important role in, as I said, helping our customers to drive their operations and decisions to be more sustainable. Examples of products and solutions. In renewable energy side, we introduced a new dual scanning Lidar to the market, which is very important for building, especially for renewable solutions in wind parks. In continuous monitoring system side, we launched a new combination of carbon dioxide probe and a wireless data logger, which is an example of use of this product is in vaccine research. In air quality, the new sensor advances our offering to improve air quality monitoring and decision-making capability for urban communities around the world. Let's look at more closely into the financials during the second quarter. In terms of an orders received, very strong quarter that the orders received increased by 25% compared to the previous quarter a year earlier. The increase was in both business areas and in Industrial Instruments, Life Sciences. The same market segments that led the orders received increase were Industrial Instruments, Life Sciences, meteorology, and renewable energy. Order book continued also positively in power industry and liquid measurements and in aviation market segments. It's worth noting, obviously, that in meteorology, this includes the earlier announced EUR 13 million Ethiopia contract as well. When we look at the order book, thanks to the excellent growth in orders received, I'm very happy to note that order book is now at the all-time high of EUR 165.3 million. This represents also a, when we look at the quarter-on-quarter, represent the 6% growth when compared to the first quarter of this year. The increase was in both business areas, and in industrial measurements, the order book grew in all market segments, and in weather and environment, the order book increased in renewable energy and meteorology market segments, whereas aviation and ground transportation experienced a decrease. We had an excellent quarter also in terms of net sales. Net sales increased by 20%. If we look at constant currencies, net sales increase was 23%. The net sales increased most in industrial instruments, life sciences, meteorology, and renewable energy market segments. The net sales decreased in ground transportation and in aviation market segments. When we dive into the business areas, excellent performance continued in industrial measurement side. The orders received for life sciences as well as industrial instruments were very strong, and power industry and liquid measurements were growing as well. While we had an excellent quarter, it's still worth noting that the second quarter comparison to previous year second quarter, obviously the previous year second quarter was impacted by the COVID-19 pandemic, which makes the percent growth when compared year-over-year a bit higher. Nevertheless, I would conclude that we had an excellent performance continued in industry measurements. When we look at the net sales, and the net sales growth increased by 31% with increased operating result and increased EBIT percent to an excellent 23.7% of net sales, despite somewhat lower gross margin compared to the comparison quarter last year due to the slightly different mix. The gross margin was very good at 63.7%, again, slightly down compared to the previous year due to the same reason of sales mix. Net sales growth was strong in instruments, life science market segments, and good in power industry. We continue to invest in the future competitiveness in terms of R&D with 12.2% of the net sales. In weather environment business area, the strong growth in terms of order intake continued as well. The increase in orders received was very strong in meteorology market segment. This included, as said, earlier announced EUR 13 million weather infrastructure project in Ethiopia. The orders received increased also in renewable energy and aviation market segments. In ground transportation, the market segment decreased to the very strong comparison period in last year's second quarter. We do not see any changes in terms of our outlook in ground transportation. The market expectation for ground transportation is expected to be stable. In weather environment side, the net sales growth was 14%, and net sales grew in meteorology and renewable energy market segments especially. The net sales in ground transportation and aviation market segments, at the same time, decreased. The gross margin improved by one percentage point, thanks to improved sales mix and increased volumes, and the operating result improved to EUR 1 million or 1.5 percentage points of net sales. Let's look at how this adds up when looking at the first half of 2021. The first half net sales in Vaisala grew by 13%, and if we were to look at in constant currencies, the growth were 16%. The operating result increased following the growth in net sales. The gross margin was at previous year's level, and the operating result was 9.5 percentage points of net sales. The EPS grew significantly to EUR 0.43, and it is worth noting that the effective tax rate was low at 13%, and we estimate the effective tax rate to decline due to the ability to utilize the carry loss forwards from previously announced acquired companies. In terms of our cash flow, we had also a strong first half driven by excellent result, positive changes in net working capital, as well as lower capital expenditures. Our financial position remains strong in all aspects. The capital expenses were down as investments to the very large building project were finished, the building project, the R&D building here in Vantaa, as well as the office building in Boulder, Colorado. The 2021 CapEx is still slightly higher than a normal year prior to these investments due to the fact that we are still investing and furnishing the laboratories here in the R&D building here in Vantaa. Looking at how does the rest of the year look like. We do expect that the market for high-end industrial instruments to continue the growth after strong start of the year in 2021. Life sciences and power industry markets are also expected to continue to grow as well as renewable energy in the weather environment side. Liquid measurements market is expected to continue to recover. In meteorology markets, developing market demand is expected to continue to suffer and recovery is expected to take longer than in developed markets, where we expect the market to be stable. In aviation market, as you may recall, the market declined significantly during the year 2020, and the market outlook remains weak, although some market recovery is expected gradually to happen. This is really a tale of two cities where the domestic flying, if you look at underlying factors, the domestic flying has picked up in the U.S. and in China, whereas in Europe as well as in intercontinental or international travel, remains on a very depressed or decreased levels at the moment. The ground transportation market, as I said earlier, is expected to be stable. When we look at the business outlook for this year, we raised the outlook exactly 10 days ago, based on the strong first half and despite the risks that I spoke about in terms of a component shortage. We saw a increase to sort of the net sales range we estimate now to be EUR 400 million-EUR 420 million, and the operating result to be in the range of EUR 40 million-EUR 50 million. The limited availability of components we see as expanding. We do not see the end of this during this year, at least. We are actively mitigating this. As I said, we were very successful in doing this during the first half. We are facing the same issue now during the second half. We are working with our suppliers, secondary and tertiary sources, as well as then redesigning some of our products when needed. Especially when we have to utilize spot markets to compensate for the lack of delivery capabilities from our regular suppliers. Now we see that the component prices on the spot market can be manyfold when compared to established supplier prices that we have. The shortage of components, therefore, has increased the material costs and the transportation costs have increased as well. We do estimate that these will have a negative impact on the operating results during the second half of this year. Now, just to summarize what I just said, we had an excellent growth continued in the second quarter with a very strong profitability, and we ended up with an all-time high order book of EUR 165 million. This is the end of the prepared remarks, now I'll open the floor for any questions that you may have. Operator, please. Thank you. If you wish to ask a question please press zero one on telephone keyboard. If you wish to withdraw your question you can do so by pressing zero two. It seems like we have no questions from the line. We have one question from Matti Riikonen from Carnegie. Please go ahead. Hi, it's Matti Riikonen, Carnegie. A couple of questions. First about the component and transport costs that you mentioned already in the speech. You already touched upon the topic, how long you expect that to continue, but do you have any idea how long we should extend those higher costs? Naturally, 2nd half this year, but how long into 2022? Do you have any kind of idea how it could be, or is it just as black box to you as it is to us? It's very difficult to say exactly when this will end. I'll give you two kind of glass half full, half empty statements from the market the past few days. TSMC, which is the largest supplier of integrated circuits in the world, said that they see some easing up of the supply from their side already now in the third quarter, early fourth quarter. At the same time, the CEO of Intel said, I think this morning, that he sees the shortage continue into next year. There you go, I think where the visibility into this is. Okay. Is it so that has the component cost already affected Q2 gross margin, or were you still relatively safe in Q2 and you expect that this price increase would take place only in the second half? Yeah. First of all, we did not see any impact of that in the second quarter numbers yet. Second comment is that there are kind of two separate issues in terms of when we talk about the price increases in terms of component prices. As I tried to allude in my prepared remarks, there's obviously an inflation on the marketplace and the prices like with many other things from established sources and vendors and so on. There's this kind of a separate item, which is more dealing with the shortage at the moment. As I said, when one has to go to the spot market to compensate for the lack of capability of delivery from established sources, then often you end up paying multifold the regular prices for those components. Right. Okay. Thank you. Basically, when you had some kind of small negative impact in gross margin in the industrial business, that was just driven by the sales mix impact and nothing else? Yeah. Okay. Technically, I just want to confirm that how it actually goes in your accounting. When the component costs are higher, then your gross margin is affected. How is it with transport costs? Is that in the fixed costs so that we don't see all the change in the gross margin, but in the overall cost level? No, it will be above the gross margin. It's a variable cost. Okay. Good. related to the tax, which was extremely low, as you said, in Q2, and including those past losses becoming receivables, was this a one-time thing, or can the tax loss carry forward still increase if you kind of see that, okay, it's even better than what you saw? Obviously, this was an estimate of when I said the tax we estimated to have a 13% tax rate was an estimate for this entire year. We do see that we have a possibility to benefit from the tax carryforwards for some time forward. Okay. Good. Just another technicality. Were there any other unusual cost increases in Q2 except the EUR 2.2 million cost, which was related to a previous M&A transaction? No. That's it. Okay. Finally, if I look at your weather business numbers, and particularly the order intake, which now included the Ethiopian EUR 13 million order, is the weather outlook basically unchanged compared to Q1 if we just exclude the Ethiopian order? Orders excluding that, they came down a bit, and if I interpret your comments about the outlook for weather business, I didn't see so many kind of new positives there. Is it basically unchanged or has it improved? In a big picture, I think you're right. It has not really materially changed since first quarter. As I said, we do expect the aviation eventually to recover. A quarter of time has passed on that side since first quarter, and likewise on the emerging markets. I think you're right, your summary is fair that it has not materially changed since first quarter. Okay. Perhaps one theme still, you discussed in the Q1 report that it's possible that some of your customers have been buying products a bit ahead of normal schedule to prepare for any kind of component shortages affecting your delivery capability. Do you still think that that would be one theme behind the kind of very strong growth in industrial measurement side, or is it something that the ramp-up is just being so high and strong that basically that was the only reason why Q2 was so strong? I think now when we look at the entire first half, I think the big driver on the growth behind the industrial measurements is first of all, the significantly increased economic activity around the world, and partly also the pent-up demand. Many of these components actually go into the different processes, different facilities of our customers who are building up capacity to match today's and tomorrow's demand. Right. Okay, that's very helpful. That's all from my side. Thank you. Thank you. Thank you. Once again, if you do wish to ask a question, please press star one now. Our next question comes from Joni Grönqvist from Inderes. Please go ahead, line. Hi, happy summer there for you, and congratulations for a nice result again. I'm not quite sure, my line was a bit bad in the beginning of Matti's question, so I'm not sure if he talked and you talked about it already. Just to follow up again on when you were hammering again market expectations and you're quite cautious being traditionally in your guidance. Again, like last quarter when we discussed. Looking now at the Q2 growth trend, so why do you see growth slowing down in the second half that much? At least how I interpret the market comments there in the report, you see some areas in weather picking up now after the pandemic and the order book is good. First question on this, so which elements do you see slowing down in the second half? Not really seeing any slowing down. I think part of it is if you look at the comparisons to the previous year, obviously they changed and percentage-wise, if you look at the second quarter growth, especially on the Industrial Measurement side, Industrial Measurements were very much hit during the second quarter of last year. The percentage growth numbers are obviously kind of elevated due to that fact, and it really was a bad quarter last year on the Industrial Measurement side, not so much in Weather and Environment. I think the other comment, as we've said when we came out with the new guidance, the uncertainty in the marketplace, especially in terms of the component supply is absolutely there. As I said in my prepared comments, many established vendors, big established electronics vendors have had to come back and tell their customers, like ourselves, that they are not able to fulfill their existing contracts in terms of volumes. This is the environment that we've been living now during the second quarter, and will most likely live during the second half. While we were successful in meeting the demand during the second half, this is obviously something which is something that we have to succeed day in and day out to fulfill all the demand in the marketplace. The component risk is only price risk. There's no risk in that you won't get any components, so you wouldn't be able to deliver. It's purely you'll get the components, it's only price question. No. I don't think that's a fair summary at all. My worry, first and foremost, would be on availability of the components. In order to get the available components have made some cases, as I said, act on the spot market that may lead to elevated costs. The spot market is day by day drier, let's put it that way. Okay. Maybe, thirdly, only on the Capital Markets Day. I know traditionally you've been looking at both business segments and R&D, but can you give any teaser? Is there any specific area that you are focusing now on in this Capital Markets Day? I love the question, Joni Grönqvist. Great question. No, I would not like to pre-market yet or pre-release anything on the Capital Markets Day agenda yet. Okay. We will come back in due course of time. Okay, thank you. Congratulations for a good report again. Thank you. Thank you. We have no more questions from the line. I will hand it back to our speakers. Yeah. We have few questions also. They were already handled, yeah. Joni was on the phone line as well. Okay. They are handled. Yeah. Okay. All right. We had a few questions online, I believe we answered all those questions as well. With that, I would like to thank you for spending the time with us, and I wish you a very good continuation of the summer and a very good week. Thank you very much.