Welcome to CTT Systems webcast with teleconference Q3 2021. For the first part of this 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 CEO Torbjörn Johansson and CFO Markus Berg. Speaker, please begin. Good morning and welcome to our Q3 earnings call. We take slide number 2. It's me, Torbjörn Johansson that's presenting, and with me I have Markus Berg, our CFO. We take the next slide number three, and go directly onto slide number four. The net sales for the Q3 came in at the upper end of our forecasted range. It was SEK 40 million. It's a slight increase compared to the same quarter last year. The aftermarket continued to increase. It is the fourth consecutive quarter where the aftermarket sales are increasing. We take the next slide number 5. Financials in short. As we said, the net sales was SEK 40 million. The EBIT was SEK 12 million. It's doubling the EBIT from last year, and it came out in an EBIT margin of 29%, which is very good. We normally have a very good EBIT margin in the Q3 where our costs are a little bit lower. The cash flow, I'm happy to see that it's back to normal again. It was SEK 10 million, which is in line with our earnings. We take the next slide number six. If we look at the sales mix and compare it to last year, you can see what has happened. The OEM sales has gone down significantly, and that is because Airbus and Boeing still produced some aircraft or to a relatively high level a year ago. I think now we are down at the bottom level, both at Airbus and Boeing. The aftermarket has compensated for this. As you can see now, the aftermarket is almost 70% of our sales. We take the next slide, that is slide number seven. If we look at the net sales bridge, as I said, the OEM sales is down with SEK 9 million compared to last year, but also private jet is down. On the private jet side, you can see last year was a very strong private jet year for us. We had 2 large projects that was in the middle of those projects when we were in Q3. So it was a high sales in private jet last year. Therefore, it looks a little bit worse than it is. The aftermarket, on the other hand, has compensated for both the OEM and the private jet. The other segments, retrofit and Encore, is a small plus. We take the next slide. That is slide number eight. If we look at the profit bridge, as you can see, the U.S. dollar exchange rate was a little bit higher last year, so we have lost a little bit because of the currency. The sales volume is higher, so there we have compensated for the currency. The performance is driven with the sales and price mix. Of course, it's the mix is that we have more aftermarket sales this quarter than last year and less OEM sales. We have doubled the EBIT compared to last year. If we look at cash flow, I'm glad to see now that we are back to normal. It means that, we have a cash flow conversion that should be as it is now. Most of our earnings we can convert directly into cash. The cash flow was about SEK 10 million positive. It's a real improvement compared to last year where we were pressed on the cash side. If we look at the order intake and the backlog, the order intake was much higher this quarter than a year ago, but a little bit lower than last quarter. Anyhow, the backlog has continued to grow, so we are on the right track. Historically, we had more in the backlog because especially Boeing were placing long orders with lead times up to a year. Of course, at that time, they produced much more aircraft. I think we will have a backlog that is not as high as it was a couple of years ago. The way to get back to a higher backlog is really that Boeing and Airbus starts to produce more aircraft again. We take the next slide number 11, where we are looking now at the year, the first three quarter of this year. We go directly over to slide number 12. If we compare those three quarters with the three quarters, the first three quarters last year, of course, it's not fair comparison. The Q1 last year was before the COVID. Therefore, we are down on all figures. The sales has decreased, the EBIT has decreased, and, of course, the earnings per share is also lower. What is positive is that we have the cash flow is positive again. Last year, we were running at negative cash flow because we built up the inventory to have security to be able to deliver during the pandemic. We take the next slide number 13. Here again, we look at the sales mix, and it's the same picture as for the Q3. The aftermarket is much more important for us now, and the OEM sales is very low. The rest, private jet, is a little bit lower also, as you can see. The big thing is that the aftermarket has been recovering and the OEM sales has still not recovered, as you know. We take the next slide number 14. Here you see it also clearly, we have lost about SEK 50 million in OEM sales compared to last year. The first and the second, and also partly the Q3 was relatively normal last year regarding the OEM. The private jet, as I said, was a strong year. 2021, we have not so much deliveries. We have made a lot of improvement in our development of private jets, but not too much deliveries. The aftermarket, as you can see, has recovered. Even though we had a good aftermarket Q1 last year, we are higher now, after three quarters. We take the next slide, and that is slide 15. Here again, we see the cash flow. Now, over the three quarters, we are positive on the cash flow. We still have some work to do with the working capital. You could see that in the Q3 it was okay. If you look at the first three quarters, it's a little bit weak. It's mainly driven by accounts payable, and also we had the payment for remuneration in the Q2. We take the next slide, and now we went to rolling four quarters. We go directly into the slide number 17. Of course, if we look at the rolling four quarters, it's even more unfair to compare really, because for the comparison period, we had two quarters before COVID and two quarters in COVID. You see it very clear again, what we have lost is the OEM sales. The aftermarket, we almost are zero, and the private jet is slightly lower. Even though we have lower net sales, we still make an operating profit, and we have an EBIT margin on 13%. As I said, the cash flow is back to be positive again. We take the next slide, which is slide number 18, and now perhaps we goes into the more interesting part of the presentation. We take slide number 19. We have a forecast for the Q4 to be sales between SEK 40 million and SEK 45 million. That will give us an estimate for the total year of SEK 149 million-SEK 154 million. It means that we will continue to increase sales. As you can see on the lower left diagram, we have passed the bottom of the situation for the pandemic, and we slowly increase sales from quarter to quarter. Of course, then we also increase the rolling four-quarter sales. You can also see here in the blue parts of the bars, you see the aftermarket. The aftermarket was at the lowest level in the Q3 last year, and from quarter to quarter, aftermarket increases. You can also see that we are pressed on the OEM side. It was much higher before the pandemic. Then now we think that it will start to grow. There you also see that the private jet was relatively strong during 2020. We are continuing to increase sales. We take the next slide number 20. Now I'm very happy to notice that the intercontinental flights start again. I think you have seen that the U.S. market will open up from November. We also see that there is opening up also in Australia, Singapore, in the Pacific markets. They slowly open up intercontinental travel. That will mean that our important platforms, it means 787 and A350, many of those aircraft has been flying during the pandemic, but they have not been flying the maximum amount of hours. I think over the next quarter or two, we will see that the fleet of 787 and A350 will go back to normal. It means they will fly each aircraft 4,000 hours a year, and that is very good for our aftermarket sales. We have recovered aftermarket sales over the last four quarters, and I think the next step is now that the intercontinental travels starts again. You can see in the Q3, 2021, we had about 76% of an average quarter in aftermarket sales for 2019. It means to come up to the level of 2019, we still could grow our aftermarket with at least 30% more. Then, of course, the fleet will be bigger, and so the aftermarket will continue to grow. In short term, again, the aftermarket increase is the most important part for CTT. We take the next slide, and that is slide number 21. Here you can see on the diagram, the OEM sales. Of course, this is hard. It's hard for the whole aerospace industry. It's hard for Boeing and Airbus. We believe now that the Q4 2021 was the bottoming of the OEM sales, and we will start to slowly recover. We expect that the recovery for CTT will start during the H1 of next year. We think that the sales forecast for 2022 will be significantly higher than 2021, but I think we will not reach the level of 2020. It's also positive that at least Airbus has decided that they will increase production of the A350 at the H2 of next year. We really hope that this Boeing with our 787 production problem will fix that and that they also could start to produce more 787s. 787 has really been the most popular aircraft during the pandemic. I think it's the aircraft type that has been flying most of the flight hours, compared to other long-range aircraft. I really hope that Boeing fix their problems and start to build at a higher pace. They should go back to 5 aircraft a month, but, you know, they were up to even 14 aircraft a month before the pandemic. I think there will be a demand in the next year for a small long-range aircraft like the 787. We have to be a little bit patient. We cannot change anything regarding Airbus and Boeing, but one thing is sure, they are really at the bottom now, so everything must go in the other direction now. We take the next slide, and that is slide number 22. Here we are talking about the retrofit business renaissance. I think really that we have a chance to get the retrofit business back in growth again. On the left side, we are talking about humidification in the cabin. You know, we have humidifiers as optional equipment on A350 and on the new 777X aircraft, but we have a great retrofit opportunity on the 787. There is 1,000 787 aircraft out there with the drying system. The only thing we have to add to that aircraft to get a humidified and comfortable cabin is to install one humidifier. One humidifier with the installation kit and so on, we can sell for a price that is less than one business class seat. If you consider a business class with 30 seats-40 seats, the extra investment to get humidified air in this aircraft type is very low. There we have a great opportunity. Of course, it's not easy to sell when the airlines are not flying very much intercontinental routes, but now they start again. We have several big 787 operators that is really interested in humidification for the cabin. Sooner or later, I hope sooner, we can have a breakthrough here, and we have a real opportunity. On the other side, we are talking about a drying system. You know, I have been in the business for a long time. It has been sometimes easier to sell dryers that are retrofit and sometimes a little bit more difficult or more challenging. Now we are in a phase where many airlines, and here we especially are interested in narrow-body aircraft that fly short to medium distance. Typically, the low-cost carriers where they are also flying a lot of passengers, high density, high utilization of the aircraft. In this community, they start to talk about sustainability. In every airline, they have one person responsible for sustainability, and we have started to market the system through sustainability, and it's very positive feedback. We have a system that could really make a change. We can reduce the weight of an A320 or 737 aircraft by up to 300 kg. That makes a lot of impact on the fuel consumption and the CO₂ emission. That's on one hand. On the other hand, we also have a very high fuel price. The times where we have had problems to sell the Zonal Drying system has been when the fuel price has been very low. Now we are at seven years high, so we have two really good arguments, sustainability and the high fuel price. We have more interest than I can remember on the retrofit side of Zonal Drying. For example, we have TUI, you know, we are in the delivery of system to ten aircraft, but they will take 40 more aircraft on the 737 model. That is our, I think, best short time prospect that they will continue to install systems. During the quarter, it was also clear that Jet2.com, which is the airline where we have sold most of our Zonal Drying systems, they have it in their complete fleet, and they have confirmed that they will normally equip those new aircraft with Zonal Drying system also. They will take delivery of those new aircraft from 2023. Of course, it will take a little bit time, but for us, the best customer is the customer that repeatedly takes our drying system. We are also making efforts now to get the system certified for the new Boeing aircraft, the Boeing 737 MAX. We have a cooperation with SunExpress in Turkey. They will install the system, and we will certify it because the certification is necessary when we should market the system for a new platform. As you can hear, I am really optimistic regarding retrofit businesses, and that is exactly what we need now when the OEM businesses is slow. This is the midterm growth opportunities for CTT. First the aftermarket, then the retrofit. We take the next slide, and that is slide number 23. There we go into the next very positive area for CTT. It is private jet. As you can see, we think now that we will scale up the private jet. On the right-hand side, you see the A320 ACJ. As you know, we have worked the last 1.5 years-2 years with Airbus and modified our humidification system, so it is easier to install. We call it a bolt-on kit. It means it's very easy. It's only to bolt it onto the aircraft. We have done that in cooperation with Airbus. We have certified the system, and the idea is really that we should deliver the same kit to every A320 ACJ aircraft. It will not be so much of a project for us to modify it for each and every conversion. It's also clear, Airbus has expressed it very clearly, that they are supporting the sales of this system. The target by Airbus Corporate Jets is that every A320 VIP aircraft should go out with a humidification system. We will deliver the first system now in the Q4, and I expect that we will get orders and deliver several systems during 2022 and on. This is the first time we have an OEM aircraft manufacturer behind us, and they are actually marketing the system. The value of this program, I think, will be around $1.5 million a year. On the left lower side, you see the Global 7500. That has been the biggest development program we ever had during the COVID-19 phase. This aircraft was delivered to the customer now in October, and I have talked to the president of Flying Colours who made the outfit of the cabin, and he informed me that the customers was very pleased with the aircraft and also very pleased with the humidification system. This is really a milestone for us because we have so far never delivered a system into a business jet. It was a challenge. It has 4 humidifiers. It has not a lot of space, but the system is working, and it's to the satisfaction of the customer. Now the next step for us, it means we have ticked the box for completion projects on the Global 7500. Now we are working hard to get Bombardier, which is the aircraft manufacturer on the train. We really hope that they will promote the system and that they will start to install it in the production line of the aircraft. They have the normal production line of the aircraft, but then they have interior lines where they have standard outfittings of the aircraft. We are now trying our best to make them offer our humidification as support of their standard cabins. For me, it's absolutely clear that if you buy an aircraft that can fly 15 hours, 17 hours, it should have a humidification system. I think now we really have a chance to get humidification into the business jets, and there, you know, we have a higher volume. If we would succeed in the same way with the Global 7500 as we have done with the A320, I think we can the market for there is $10 million per year. It's about 30 aircraft-40 aircraft. For us, it would be a really great program. The next thing we are hoping on is Airbus new business jet aircraft. It is the A220. It's actually a passenger aircraft that they make a business jet version of. They are in the process of selecting the supplier of the humidification system, but as I understand from for their communication, they will promote humidification in every of these aircraft also. That will normally not be sold in the same volume as the Global 7500. Still, it is a very interesting market, perhaps they build 10 aircraft, 20 aircraft a year. That could also add us $3 million per year. If you add those opportunities we have with the normal sales we have in VIP, the average sales over the years has been about $2 million. Private jet, if we can scale it up now as we have started to do, we could have a segment here that is in the same range as the OEM sales was before the pandemic. This will not happen immediately, but if we have managed one program, we are in the middle of the other program, and we hope to be selected on the third program. I think here it's really the future for CTT. It could really be the breakthrough of humidification on long-range traveling. Okay, that was my presentation. We take the next slide, and that is slide number 24, questions and answers. Thank you. If you have any questions, please press zero one on your telephone keypad. We have a question from Carl. Please go ahead. Thank you. Good morning, Torbjörn and Marcus. My first one is on the OEM comment. We hear a bit of news that, you know, you have not only the 737 MAX issues, but also a bit of production inefficiencies, let's call it that, for the 787. Just thinking about that in connection to your comments on the OEM bottoming out in the Q4 and improving in the Q1 of next year, should we see, you know, a bit of another step down in the Q4? Will it be fairly similar to the third one on OEM sales, that is? I think it will be fairly similar. You know, Boeing, they are producing aircraft, even if they don't deliver aircraft. The problem that Boeing has now is that they have stopped the deliveries of the 787. Of course, they try to fix the built aircraft that they could deliver them, and they are down to a lower production rate to be able to deliver already produced aircraft. But that is not meaning that we are not delivering. You know, we have purchase orders to a certain level, and those purchase orders are valid. We are in an, it's a little bit problematic situation with the 787 for the moment, but they would really like to build five aircraft a month, and they would really like to increase the output. The problem is that they have to get approved by FAA. I don't forecast any big changes in the Q4. As I say, it's a bottoming out, and then we will increase deliveries again. We have purchase orders in the beginning of next years that shows an increase compared to what we deliver now. But of course, Boeing, if they could not deliver aircraft, it could be questioned. They have to fix this. The aircraft is flying and they have some production problems, and I'm pretty sure that Boeing will fix this one month or another. It's a little bit uncertainty, but for sure we cannot go much lower now on the 787 because they have to build and deliver. Yeah. All right. Just another one on a bit more short term oriented here before turning toward long term. Your Q4 guidance here of sales of SEK 40 million-SEK 45 million, I think if we listen to you and your comments here on fairly similar OEM and retrofits approaching the kind of, I think you had SEK 6 million in Q1 2019 that you were referring to, and maybe not that much, but similar, and then a bit of a pickup in VIP. I'm just thinking here in terms of the aftermarket sales here, does that mean that you implicitly expect the aftermarket revenues to be fairly similar to the Q3 and that it should pick up during the H1 of next year instead? If we look, that is also a little bit difficult to exactly forecast quarter to quarter. If you look at the aftermarket, we have increased sales now since a year ago for every quarter. Generally, I expect that this will continue, but you can always have a little bit of a weaker quarter, and you could have a little bit more increase in the next quarter. We don't have the orders for the whole Q4 because the aftermarket, you know, that is not a lead time of six months, it's a lead time of two weeks. We don't know exactly, but the tendency and the logic is that the aftermarket should increase from quarter to quarter. Understood. Then looking into next year, I think just taking the Q3 aftermarket, that is kind of an annualized level of 110. If we expect this to improve into next year, you know, we would see a continued improvement in the annualized sales. Just maybe following up on that, do you think that, you know, as aftermarket continues to improve, that we will have any form of seasonality from, you know, peak flying seasons or peak flying quarters for you? Or, you know, I mean, we've noted that the installed base continues to grow. I guess that you continue to implement price increases. You know, the support should be there to potentially have aftermarket revenues next year exceeding 2019 levels, if I'm just reasoning, or am I missing something? Generally, you're not missing something. You know, it all depends on how much the A350 and the 787 fleets are flying. We think now with opening up of the intercontinental travel, you know, you open up between Europe and USA, which is a big part of the intercontinental travel, and then you see openings up in Asia also. That will generate more flight hours on the 787 and the A350, and that will generate more consumable sales for CTT. As I said, there could be small differences between each quarter. Generally, I think we will grow. I have not analyzed if we will pass the 2019 years level during 2022. That would mean a 30%-40% increase. If it happens in 2022, I don't know, but it will sure happen. When we have reached 2019's levels, we will continue to grow because the fleet then 2022 and 2023 will be bigger than the fleet was during 2019. You know, we are talking a lot about long range aircraft and so on, but with what we have learned during the pandemic, the aircraft that definitely will fly are the 350 and the 787, which are efficient and relatively small. I'm very optimistic that we will continue to grow the aftermarket. Exactly when we pass the 2019 level, we will see, but we will definitely do it. All right. Understood. My final question is, or second to last, I should add. I think previously you commented on the private and business jet, this entire segment for you, it could have an annual sales potential in the long term of $200 million. You know, thanks for clarifying these different product groups here in the prior slide. When I sum up those dollar values, it's not exactly 200. So just out of interest, is it more like rounding rough numbers, or is there anything where you might have seen a bit lower sales potential compared to your prior estimates? No, you should not understand it like this. If you look at the table on page 23, here we talk about the A320, we talk about the Global 7500 and the ACJ TwoTwenty. When we have all those programs running, of course there is one piece missing here, and that is Gulfstream. I did not put it into this slide this time, but as soon as we have all three of these in the pocket, we will add the Gulfstream. Because what should Gulfstream do if everyone else has humidification? Of course, they have to also offer humidification, and then you are up to your SEK 200 million. All right, thanks for clarifying. Just on this entire private jet segment, I think you talked about this before, but with these OEM projects and the kit systems and everything, would it still be the case that you might have, as you sell systems or kits that you have in a bit higher margins initially compared to a traditional OEM sale, and therefore the margins in aftermarket might not be as high, but you still have, you know, a significant aftermarket portion, as well? Now, as I see the private jet business, which is VIP and business jet, of course, we have higher prices here when we sell the system, even if Bombardier is an OEM company. We don't want to go down and sell the humidifiers only as we do to Airbus and Boeing. We would like to sell the complete kit. What we are aiming for, and what is very good is that we try to standardize those kits. When we have made the development as we have done now on the A320 and partly on the Global 7500, we have a kit that we can sell to more aircraft. The production for us will be much more efficient. Per aircraft, we will have much less engineering than we have had historically in the VIP. We have done this, first of all, that it is easier for the customer. The end customer will know better what will humidification cost. The room for changes in price from the completion center will be lower. We will principally have the same end price to all customer. For us, we will have an efficient production. In the long run, I think the margins, the total margins we will have out of private jets will be at least as good as it has been on the VIP because we will spend less engineering. On top of this, of course, we will have the same very good margins in the aftermarket as we have on the OEM programs. I see the private jet or the business jet segment as a segment where you have prices, perhaps not as high as a very big VIP special aircraft, but much, much better than when we sell to Airbus and Boeing, where we only sell single equipments. It's another type of business, but I think it will be very attractive for CTT. Understood. Sorry, just the final one. I think you, historically, you've demonstrated good operating cash conversion, and then you've had various investment programs related to different platforms. Just looking ahead now, and understanding investment levels and everything, what are the major platforms that you will be investing in the next year and the coming sort of three years? Should we expect investment levels to remain on the kind of similar levels as you had over the past five years, given the, you know, significant platforms you were focusing on back then? Yeah. First of all, of course, we always are very happy when we are able to invest in a new platform. It means business for long term. We have had 777X, and we have had some heavy VIP projects. I think one reason why we were stressed on the cash side during 2020 was that we took the approach to buy a lot of inventory in the beginning of the pandemic because we were really worried that we would get problems in the supply chain. We invested in our inventory during 2020, and that put pressure on our cash flow. During 2021, we have had the right inventory. We have had no problems with suppliers. That was a decision we made. We used our cash to save our business, and I think it has paid out now during the beginning of 2021. Now we are back to convert cash as we should do. Our investment programs, I think for the next couple of years, we will be very happy to invest in the A220. We would be happy to invest in the Chinese, Russian long-range aircraft. They call it CR929, if it starts. We would be happy to invest in a new Boeing middle of the market aircraft, or if it is a new MAX. I think on the investment side, it will continue. The next five years will look a little bit the same as the last five years. That is my projection. The cash issue we had last year was more related to the inventory and the decreasing output to Airbus and Boeing during 2020. It was a tough year for CTT, but we took the road to save our possibility to deliver. Understood. Thank you. When you say just next five years compared to last five, do you mean in absolute monetary terms or? Yeah. Yeah. Okay, good. Yeah. Thanks. So ladies and gentlemen, I'd like to remind you that if you want to ask a question, you will have to press zero-one on your telephone keypad. Once again, I would like to remind you that if you want to ask a question, you will have to press zero-one on your telephone keypad. There are no further questions at this time. I would like to hand over back to the speaker. Please go ahead. I want to thank you for listening to this earnings call, and I look forward, and Markus also look forward to talk to you again in the beginning of February, where we will have the earnings call for the complete year 2021. Thank you very much, and have a nice day. Thank you. This concludes today's conference. Thank you all for participation. You can [dismiss.]