Welcome to the HANZA Q3 2023 presentation. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now, I will hand the conference over to the speakers, CEO Erik Stenfors, and CFO Lars Åkerblom. Please go ahead. Good morning, and, thank you for joining this presentation of HANZA's third quarter 2023. My name is Erik Stenfors, I'm the CEO of the company, and I will be glad to give you this update together with our CFO, Lars Åkerblom. Now, we understand that there are some concerns about the general economy and its possible impact on subcontractors, and therefore, we are pleased to report a good growth in the quarter and also that we see a solid 2024. We will spend some time at this call to go through our sales and marketing position to make it more understandable why we are so confident in the continued growth. We will also look at the mechanisms behind the rapid growth in earnings. This report shows the strongest operating margin to date, 9.3%, and we will try to give you more about this as well. Again, it will keep the normal structure. I will first explain the development in words, then I hand over to Lars, who will describe it in figures, and after that, we will make some conclusions for the future. At the end, we have the Q&A session. Please use that. Lars and I will be more than happy to answer any of your questions. But first, this was a very special quarter. We turned 15. It was back in 2008 when we created a company with just a vision to try to make value in this industry. Here we are, 15 years later. We have about 2,200 colleagues in seven countries, and we have sales about SEK 4 billion. So it's been quite successful. And how did this happen? When we turn our vision into a strong business model, as you might know, we have combined different kind of manufacturing technologies and also services. We help our customers with product development, and we also have advisory services, so we help our customers to streamline the supply chain. And this business model has led to a solid customer base, which in turn resulted in a long-term growth. Actually, we are still the youngest contract manufacturer of our size in the Nordic Region. Also means that we have been growing the fastest. But the business model, of course, is just a part of the explanation. The main reason is that we've been able to collect really talented people in HANZA, and this is something we are very proud of. If you have a chance, please visit our factories. Okay, here we are, 15 years, and we have created the company in phases. Actually, we can grow in three dimensions. We can grow by technologies. That was what did in the beginning. We added different manufacturing technologies. We can grow by geography. It's also something that we have done, and most recently, the expansion to Germany, and we can grow in size. And now we decided that this phase, HANZA 2025 strategy, we will focus on capacity. The reason, when we see we have different sizes and degrees of maturity of different parts of HANZA, and we see that there's a clear scale advantage when one of our manufacturing clusters reaches sales of, let's say, about for above SEK 1 billion. This is also one of the reasons for the increase in earnings, that we are simply growing, and Lars will give you more about this. Also interesting to see our growth history. It took seven years to reach the first SEK 1 billion, and then it's been faster and faster. Then we move to this quarter. Take a look closer at the sales situation, which we know is quite important for understanding the HANZA's future. I would say we have two advantages. First, it's regarding our current customer base, and secondly, it's about new sales. We take them one by one. So the current customer base have some features. First of all, we have made sure that we have no dominant customer. The largest customer we have is well below 10%, and if we add the 10 largest customers, we will still go below 50%. Then we have been focusing to bring in customers from industries that doesn't move in line with the general economy. So for instance, we have defense company, energy, recycling, and then we make sure that not everyone moves up or down at the same time. And number three, the features of our customer base is that we focus on customers with long order cycles. So for instance, we are producing for Siemens gas turbines. This is something with a long lead time, same thing with forest equipment to John Deere or equipment for the textile industry to Oerlikon. It means that if the demand is moving in any direction, we will have a heads up over a year or so. So these are the three things that makes it easier for us to predict the current customer base, and then the new sales. Also here, some advantages. First of all, we are not selling, we are not selling just a part, like an electronics board or sheet metal mechanics. We are selling a concept. We are selling all you need in this one, so parts production and parts assembly. It means that we have a range of different products, from compasses to reverse vending machines, the small units and large units, and the potential for new sales is rather large, much larger than if you were just selling one commodity. In addition, we have this advisory services we call MIG, Manufacturing Solutions for Increased Growth and Earnings. That's when we go and sell a better supply chain, and that led to the largest order so far in HANZA's history, the one we took in July to Mitsubishi, where we are replacing, and listen to this, somewhere between 40 and 50 suppliers with HANZA. Gives them a great advantage and gives us a large order. These are the features of new sales. Then it's operations, so everything is not just about selling, it's also about executing. And here we work in different directions. First of all, we have something we call modular expansion. We try to expand on the places we are located right now. You see some examples on the picture to the right, where we have bought an adjacent supermarket in Poland and are now connecting this to our factory. So the factory is to the right in this picture of Szczecin. In Estonia, we have expanded in steps. Now we are opening a new factory down to the right by the end of this year. We have also a new factory in Narva. This is part. So all in all, we are just 5-10,000 new square meters in Estonia by the end of this year. So this is one part. Second part is that we do acquisitions then to increase capacity. We had a really good acquisition in October 2021, a company in Germany that was a nice factory, but underloaded due to the pandemic. We were able to add new orders, and now it's profitable. And this is also, this is also another reason for the increase in earnings. If we buy a company with lower margin, it will download us, then we fill it, it comes back. Quality is, of course, the main thing in our industry, and we have been running at a very high level of quality and continue to do so. Of course, reason for being allowed to have new orders, but we are still having a backlog in parts of the group. We have not been able to catch up with the capacity, especially in other markets, so that's why we have this big expansion, as you see in the picture also, of the other market. It will be ready by the end of this year and the beginning of next year. And this together is why we then are confident that we will be able to continue to grow, and especially in other markets, that we have a strong sales model and also we are catching up with capacity. And with that, I will give the floor to Lars, who will start with a very important area, sustainability. Thank you, Erik. And yes, sustainability is important for us, and Erik mentioned the importance of the employees. And what we have done in Q3 regarding sustainability is to do the normal annual employee survey, and we were glad to see that the feedback was positive. We have improved the result in all important segments. And also we have started a project to release a new intranet in 2024, and with that new intranet, be able to communicate with all the employees in HANZA. And then we also see more work, more cooperation with both suppliers and customers in the sustainability part. We have started up two factories with the Ecovadis sustainability platform, and we also have a pilot project with a Norwegian customer on the carbon footprint of the production on item level. But we see generally higher activity in the sustainability work. And then we have the KPIs that we since a couple of quarters disclose in every quarter, and we can see that the injury is on a flat level. It is, as always, a little bit high, and we want it to be zero, but we are, on the other hand, glad that there are no major or severe incidents or accidents that we have. Then we can see that the energy use in relation to sales and the waste in tons in comparison to sales is decreasing, so that is positive. Coming into the financials, I will present highest level of profitability so far in HANZA history, together with a strong balance sheet and a little bit weaker cash flow, but I will come back to that. Starting with sales, we are up 14% to SEK 955 million in Q3. We had in Q3 last year a bit of material and energy that we invoiced to the customer with no or a low margin, and we actually disclosed that already a year-ago. If you adjust for that, we are on 10% in growth, and we are now on rolling 12 on SEK 4.1 million, compared to 3.5 for the full year 2022, or at 3.3, if we look into the rolling 12 a year-ago. So we have increased rolling 12 by 25% a year from a year-ago. Earnings, we have a significant increase of the earnings, and we are up to SEK 89 million in EBITA, compared to SEK 50 million a year-ago, and we have increased the margin to 9.3%, compared to 6% a year-ago. And rolling 12, we are on 324, compared to 215 a year-ago. If we look into the rolling 12 a year-ago, we were on 192. So we have increased profitability quite substantially. If we look into the rolling 12, and we adjust it for the subsidies of energy that we received in the beginning of the year, we are on a margin of 7.9%, so very, very close to the financial target of 8%. We also increased the earnings per share. We are on SEK 1.21, compared to SEK 0.73 for the quarter, and year-to-date on SEK 4.21, compared to SEK 2.28. So we've been able to get the result also down to the net result, and glad to be able to show increased earnings per share. The segments, and starting with the main market, we have an extremely strong organic growth of 16%, and with a record level of profitability of 12.4%. And part of that is again this material and energy that we invoiced in Q3 in 2022. But still, it's extremely high growth and profitability. Looking into the other market segment, we reached SEK 405 million, compared to SEK 391 million. Here we have a quite big effect on the currency on one side, and then on the energy and the material side. So if we compare and include those things, we are on a 1% organic growth. The reason for the weaker organic growth in other markets is the things Erik presented before: the expansion programs and bringing in new products, projects into the production, et cetera. We have said this many times, that in the long run, we do not see any difference between other markets and main markets in the growth or the profitability. So here we expect an improvement in the coming quarters. Looking into the KPIs and the cash flow, we had, as I said earlier, a weaker cash flow in Q3, and the reason for that is, again, the new projects that we bring in. We had a big order in the beginning of Q3 to MLE. That is one project that is consuming working capital, but we are not satisfied with the cash flow we had in Q3, and we have activities, and we expect the cash flow to be better in the coming quarters. Net debt is on 1.5x compared to the EBITDA, and a year-ago we were on 2.3x, and we have a net debt of SEK 642 million. It has increased a little bit in the last quarter. And CapEx, we have invested in the quarter of SEK 77 million, and a part of that is the new factory in the Baltics, and that is 10 out of those 77. And year-to-date, we are on SEK 238 million, and the buildings are quite substantial part of SEK 74 million. The reason for the CapEx is of course to meet the growth and the expansion program, but also to support the automation and robotization programs we have within HANZA. Looking into where we are compared to the financial targets, we are on rolling 12 on SEK 4.1 billion, and the financial target for 2025 is SEK 5 billion, and 7.9 in rolling 12's EBITDA. So very close to the financial target of 8%. We are well above the financial target in equity to asset ratio and also below in the net debt compared to EBITDA on 1.5, and the financial target is 2-2.5. And we, as you know, paid out dividends in May. By that, Erik, I leave back to you and the conclusion and outlook. Thank you, Lars. And, let's end this presentation with some important conclusions for the future. First of all, for the reason mentioned, we have a solid outlook for 2024, based on our current existing customer base and also potential for new sales. And we expect also a new MIG to happen. And also, we see that the trend is still our friend. We attended an exhibition in Finland in September. That's the picture down to the right, Alihankinta in Tampere. And it's clear that also in Finland now, production is moving back, so this back-sourcing trend is strong in Finland. We will increase our presence also in Finland. And finally, it's worth noting that the M&A market is growing. We see more and more opportunities, and we also see price expectation return to realistic. It was a bit of a price frenzy some months ago. It means that we are also open for further capacity acquisition. But it should be then within our existing technologies and our existing geographies. Again, what we're aiming at now is to increase capacity before we take the next step, which we also said will be geographic expansion. All this together is why we stay very positive about the future, and by that, we are ready to answer any questions. If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Fredrik Nilsson from Redeye. Please go ahead. Hi. You mentioned that you see increased demand from current customers in next year. But could you elaborate a bit on how good is your insight and visibility into that? Because I think we have some other examples where the tide turn quite fast anyway, so to speak. So I want to... if you could elaborate a bit on your insight into that number. Yes, of course. Good morning, Fredrik, Erik speaking. Yes, and I think that's back to what I was referring to a couple of slides earlier, that our customer, many of those, has a very long order cycle. So it means that they can see far in the future, and it means that we get very long forecasts. And also, what I mentioned, that we have been aiming at, some areas which are still in a very good growth phase. We talked about defense, but we also have agriculture, we have forestry, we have, energy companies, we have recycling companies, and all of those are actually increasing. And I think what is also important is that we have avoided some markets, so we are not into telecom, or automotive, or consumer products. That means that we don't have this destocking problem that many others are talking about. We don't have these quick fluctuations in our demand. Was that a fair answer, Fredrik? Yeah, yeah, absolutely. I think it was. I want to move on to the very strong margin, in my view, in main markets. I mean, are there any one-time effects or similar, or is it fair to assume that you have reached a higher underlying level? I mean, the second quarter was strong as well. This is Lars. No one-time effects. As you know, we disclosed the one-time effect we have had so far in 2023, and that was the energy subsidy. So no, there is no. This is a fair underlying, fair result on the main market. Part of the reason is the fact that we have done the acquisition in Germany, and as we said, it took a year to reorganize and get the volumes up and get it profitable. And now we see effect when Germany as a cluster is profitable as well compared to last year, when it was on zero level or so. Okay, thanks. And lastly, you showed some figures on your efficiency regarding energy, and it had improved quite a lot over the last years. Could you elaborate a bit on that? Is that partly due to acquisitions with another mix, or what have you done in order to improve that figure? We are investing in machines with better efficiency. We are improving the how to produce products. We are also having new facility where that is more energy efficient than the old factory. I don't know if Erik, if you want to add any comments on the energy use. Not really. It's an ongoing process, and we have started in one, and then we will continue with that. So no, no more comments on it. Okay, that's all for me. Thank you very much. Thank you. The next question comes from Niklas Elmhammer from Carlsquare. Please go ahead. Hi, good morning. Thank you for taking my questions. I was coming back again to the very strong margins, and you are basically down at the level of your financial target. I mean, do you see room for further expansion in the short term, or in seeing that you are then almost at your targets? Good morning, Nicholas. Erik speaking. The target is first of all at least 8% and at least SEK 5 billion. We may surpass that. We will grow, and we know that growth will also affect earnings sometimes. That's what we see in the other markets, but instead, we are getting better and better, so it's on a higher level every time we grow. So far, we have not said that we're going to change the financial target. Of course, if growth continues and earnings goes up, at some point, we need to restate that. And we also said when we have reached our goals, it will be time for the next geographic expansion, and it should be no later than the end of 2025. Sorry to sound a little bit like a politician, but I have no, no specific answer more than that because. Okay, thank you. And you write in the report that order intake is still good, but there are some variations between customers and geographies. I mean, maybe you don't want to talk about customers, but could you elaborate a little bit on geographies, if you're seeing some areas that are very strong or some that are lagging behind? We don't see any weak market. Germany is strong, Nordics are strong, but of course, we see variation between customers, and that's normal. It would be very odd if everybody was increasing or decreasing at the same time. The idea is that we will have more increase and more new sales than decrease, and that's what we have, thanks for the recent mention. But I would say the geography, we have strong markets everywhere. By customer, of course, there's a different grade of expansion. Okay. And then, finally, maybe just a little bit of a housekeeping or detailed question. I mean, you had some negative impact in Q3 from, you know, the extra sales of energy and components from last year. I mean, I would assume that we are seeing something similar in Q4 as well, or? Do you want me to answer that, Erik, or? Yeah. Yeah. What we saw in Q3 in 2022 was this booming energy prices. And right now, we do not see the energy prices, or we see that they are on a stable level and not as high as they were a year-ago. So from an energy perspective, if the prices are not changed, we do not see that we will have similar one-time sales as we had in 2022. I think the same goes for the materials. Yes, I would expect that we will have similar, maybe not as high impact, in the coming quarter when we compare the Qs between the years. Okay, thank you. That's, that's very helpful. That's, that's all for me now. Thank you. The next question comes from Anders Roslund from Pareto Securities. Please go ahead. Yes, hello. I had a couple of questions. I'll start off with the cash flow. You mentioned that you are having a little bit restrained cash flow because you are building up orders for new orders, but also older orders. Could you elaborate when will we see the Mitsubishi coming on board? Is that the new starting point already, or other new areas like the defense? Okay. Good morning, Anders It's Erik speaking. It's already not up and running, but we have come far. We didn't give a precise timetable for that. We said that within a year from when we announced it, it should be in full swing. So we are somewhere starting this, cannot give you so many more details on that, but I'd like to comment on the cash flow, because I think that the easiest way to have a positive cash flow is to stop growing. And what we have been able to do is to grow and have a positive cash flow. This quarter, it was weak and not up to our expectations. I will not blame circumstances. It is a quarter with a lot of challenges due to vacations and with start and stop of the production. But that's something we must come back to a normal, very strong cash flow. We should be able to both grow and have a strong cash flow. So it's a bit disappointing this quarter, but it's, again, for a good reason, and that we continue to grow. Okay, so it's not really about building up inventories for coming orders that you are preparing? I think that's what I'm trying to say, that when you get new orders and you are building up inventory, that's when you have a negative cash flow, and that's the challenge of growing. But normally, we've been able to both grow and have a positive cash flow. So, yeah. I don't know, Lars, if you will take this further. No, but short answer to Anders is that, yes, that's part of the reason for the increased working capital. Okay, let's look into next year. You were saying that from your existing clients, you expect an organic growth. Is that their plans you are talking about then? Or your plans or together, or? We are very close to our customers, and I spend a little time out to our main customers trying to see their end market, and things are going really well for our main customers. So we see that there's a growth needed, and there's expectation also that we can follow that growth. And then we're talking about the existing customer base. Of course, we expect also to get new customers. Okay, and could you say something more about the defense sector, where it seems you also get some new orders there? Yeah, it's a huge demand from that sector, and we have a defense and security. So it's also cybersecurity products we are producing for other customers. It's a huge demand for sad reasons, and we expect it to be like this for a very long period of time. Finally, do you have anything more in the pipeline regarding the, similar to Mitsubishi? Yes. New, interesting deals? Yes. Good to hear. Short answer. Yes. No, that's all for me. Thank you. Thank you. Thanks, Anders. The next question comes from Oliver Uusitalo from Aktia Sparbanken. Please go ahead. Hi, Erik and Lars, and thank you for taking my question. I just had one, question regarding the outlook for 2024. The organic growth is declining but remains in a positive territory. Despite the economic outlook, you guide for a positive growth during the next year. Could you add some more information here? Are we talking about one-digit growth, or where are we? Good morning, Oliver. That would be your forecast, so, I cannot give you... I can say that the standard growth in our previous financial target was, 10% per year, and I think that is what you should expect, but I cannot give you any numbers for next year. I understand, that's all the guidance I need. You mentioned that you have a large potential customer as well coming in, and you also mentioned that the acquisition market is becoming more normalized. Are there any interesting dialogues here? Yes. Exciting news, then. Again, the short answer, that we are constantly monitoring, but we are really careful. We are not the buy and build case. We are not- we would like to increase our skills with an acquisition. It should not just be to get bigger, and therefore, it should be within our existing technologies, our existing geographies, so it limits it a bit. But yes, we have some exciting discussions. We always have that. I understand. Thank you so much, and have a good day. Thank you. The next question comes from Tommi Saarinen from Inderes. Please go ahead. Hi, guys, and thanks for the presentation. I have a couple of more questions regarding the market. So, do you have an estimate for the market growth for your relevant markets in 2024, and do you expect to outgrow the market? Good morning, Tommi. It's really difficult if we were an EMS company selling electronics, there are tools that you use that provides the market and the growth for next year. We are selling products, so rather it would be an estimate on the BNP or something, or GDP in English, and it's really difficult. So, we cannot give you any such number, but what we can say is that we've been able to grow also when there's been a shaky market. That's when we have been able to sell more MIGs, and that is something that is combined then with our solid customer base. So I would just put it like this: I think we will grow faster than colleagues in our industry. All right, thanks. And then my last question would be, you touched on the report about the regionalization trend, where the supply chains are moving from Asia towards Europe. Do you see a change in this recently, talking to your customers, or is this something that has already happened in 2023? Could you elaborate on that? Yes, I think it's been a lot of talks about this, and now it's happening. I would say it's more, if you go into details, I see more new products being born and produced locally because it's always a hazard to move production, and that's why we sometimes come in and say, "But you can actually do it, we can help you." But the easy way out is to say that for the future, we produce locally, and we will keep the old products where it is today. But it's happening more and more, I would say, I see an increased discussion. And this Alihankinta exhibition we were in Tampere was really exciting because you heard so many people talk about this, both colleagues, prospects, customers. So yes, it's getting a stronger trend. Thanks. That's all from me. Thank you. As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments. Okay. Thank you, and thank you again for... Continue to follow us. Thank you so much, and bye for now.