Welcome to HANZA Q3 Report 2025 presentation. During the questions and answers session, participants are able to ask questions by dialing pound key 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. A warm welcome to HANZA's third quarter presentation. This is a quarter in which we enter the final phase of HANZA 2025. I'm Erik Stenfors, the CEO of the company. I will do this presentation with our CFO, Lars Åkerblom. We are in different places today. I'm in Germany, Lars is in Sweden, but I trust we will be able to calibrate our efforts. We will follow our usual path: progress, sustainability, financial delivery, and what comes next. As you know, we truly value your questions, so please use the Q&A session at the end. Let's start with the progress across our manufacturing clusters. In Sweden, we opened a factory in the beginning of the year, in February, in Töcksfors. Now we are expanding another factory in Årjäng, which is 20 km from Töcksfors. 1,000 sq m that will be ready to migrate in the beginning of next year. In Finland and Estonia, we are working with the Leiden units. They are now integrated. We do see that sales are increasing, which is very positive, but it has also put some constraints on our capacity, as we have reported earlier. I still believe that this will be handled by the end of the year. It was great to see the attention we got at the subcontracting fair in Tampere in September. You see the picture to the right. On a group level, we are working with the LINX program. This is our program for the defense industry. We announced an order to manufacture drones the other week. Initial value about SEK 40 million, and the target value is SEK 300 million. We also coordinate our activities with the Estonian government. Down to the right, I had the privilege to meet him a couple of times. They are building a defense park close to Pärnu, where we have our factories. The most important milestones, of course, are that we closed the deal with Milectria on October 1st, and we closed with BMK on October 15th, two weeks later. I will go through this in the coming slides. In summary, we see a strong finish to HANZA 2025. That's the strategy we announced almost exactly three years ago. I think it was on November 8, 2022. The idea was to create five well-balanced manufacturing clusters in Europe. Let's now move on and put this Milectria deal into context. I think we all woke up in the beginning of this year and realized it was not a good idea for Europe to outsource the defense to the U.S. and the manufacturing to Asia. We need local defense and we need local manufacturing. As a response to this, we started this LINX program in March this year with the aim then to allocate some capacity for the defense industry. This fits HANZA well, as our offer is a combination of mechanics, electronics, cable harnesses, complex assembly. It's a good match with the need for the defense industry. That's why we, a few months later, signed the deal to acquire Milectria. It's a company that contracts manufacturing for electrical systems for the defense industry. They have sites in Finland, two in Estonia. We see one on the picture here and one in Abu Dhabi. This then gives us this platform which we need to increase with the defense industry. It's important that we keep the capacity, of course, for other customers. That's why we are building this platform. Maybe curiosity, we see to the right, we were having an opening ceremony when we finalized the deal. We had Mr. Paasikivi, a well-known military expert in Sweden, for that opening ceremony in Finland. His great-grandfather was actually the president of Finland. We were having this close to the Paasikivi bridge. To summarize, we launched LINX in March and we equipped it with this manufacturing platform, Milectria, and all within seven months. I think this is a very rapid execution in this market where demand clearly exceeds capacity. Now let's turn to the landmark acquisition we announced a few weeks ago, which is the foundation of the HANZA 2025 puzzle, as we will show later in this presentation. I would rank this as Europe's most powerful provider of electronic manufacturing services. They have a leading flexibility. They have a leading quality. If you like contract manufacturing, you would love BMK. Just to give you one feature, if you have a contract manufacturer of EMS in this range, around SEK 3.5 billion in annual sales, typically you would have, let's say, 10 factories. Here we have one master plant. It's outside Munich, 70,000 sq m, 1,200 people. Therefore, this is both a large but also rather simple deal as it mainly involves one main factory. Let's have a closer look at this. Founded in 1994, they had the 30-year anniversary last year. It's in the main site, 80 km northwest of Munich in Augsburg. Sales about EUR 300 million, a margin of 7.3%. Total 1,500 people were then located in Augsburg. It's also a very nice factory in the Czech Republic. In Israel, it's partly owned. A sourcing office in China that, by chance, is just a one-hour drive from our operations in China. They are in Shangzhi, we are in Suzhou. A good fit for our strategy. It completes the 2025 strategy I will show on the next slide. It's a fantastic company with this leading quality, not to be too technical, but if you have an EMS company, you measure the number of defect units per million units produced. If you have a good company, you will run down to maybe 200 PPMs or 100 PPMs. This company is around 5 PPM. Also, very good flexibility. You can run EUR 500,000 or EUR 20 million volumes in this same factory without a challenge. Also, a very good customer base and almost no overlap from HANZA. This is good. Speaking about clusters, around Augsburg, there are these defense clusters, you might know, with defense companies of Germany. We see that there are new LINX opportunities within range, and we will work with this also in Germany. Most importantly, the culture. I know these people who own the company for many years now. I know that the culture was good. Having said that, of course, we send in our HR Manager to check and do HR due diligence before we do any deal. She was really happy about the people we see. Some of the good people down. Therefore, we went ahead and signed this deal, and it's supposed to be closed by the end of the year after the standard approvals from the authorities. This means that we come to an end to the HANZA 2025 strategy. If we visualize how we will look after closing, you see it on this map. It's great. You see the balance in Sweden, 700 people, Finland, 700, Baltics, 1,200, Central Europe, 700, and Germany, 1,400. Perfect balance. We are exactly where we would like to be right now. We also have three gateways. They are single units, not clusters. One in China, one in Abu Dhabi, and this partly owned unit in Israel, by the way, also a really nice factory. That's where we are right now. With that, I will leave the floor to you, Lars, and talk about sustainability. Thank you, Erik. I will start with informing a little bit about our sustainability work. I will come into the financial figures and also come back to the acquisition of BMK and the impact that we'll have and how it will be closed. Starting with the sustainability, we are preparing for the sustainability report for 2025, which will be according to CSRD. We are working with the double materiality assessment. We are working with the greenhouse gas reporting to be able to provide a sustainability report in the beginning of next year. You can see to the right, the energy use is slightly up compared to previous years, and that is due to the acquisition of Leiden with the more heavy sheet metal mechanic work that requires more energy. We're also glad to see that we have a slight decrease in the lost time injury frequency rate on a stable level. We also, as always, once a year, do an employee survey and see that we are improving parts. The parts that we are not improving, we have a plan on how to work with to be able to develop that the coming years. Looking into the financials, it's a stable quarter. It is in line with the previous quarters with the positive development of the profitability. We have an organic growth of 2%. We have a growth of 27%, of course, due to the acquisition of Leiden. Q3, the weakest quarter due to the vacation period. Both from a sales and profitability perspective, it is normally a weak quarter. We see to the right the development during the HANZA 2025 phase of the development of HANZA. You can see the increase of sales during that period. We have increased approximately SEK 2.2 billion on a yearly basis in sales. SEK 3 billion increased in SEK 2.2 billion is from acquisition, and approximately SEK 1 billion comes from organic growth. We are running the old HANZA, so to say, the comparable units on 8%. Remember, that is also our financial goal for HANZA 2025. We have a development that is positive. We are on 8%. In Q2, we were on 7.8%. A year ago, we were on 6.7%. We are continuing the positive development on the underlying profitability in HANZA. We have informed you earlier that we have delivery challenges due to rapid growth in Leiden. The Leiden part of HANZA is decreasing the profitability within the HANZA group. That also leads to that we, in this quarter, released the earnout of EUR 5 million, SEK 53 million over the P&L with a positive one-time cost. We expect improvement in Leiden when we are back and have capacity early in 2026. The profitability development is due to a higher gross margin. We see an increase of approximately 4% in gross margin in Q3 this year compared to Q3 a year ago. We have more or less unchanged financial debt. We have a tax rate only on 8.5% due to that the release of the earnout is not taxable. That leads to that we have an earnings per share of SEK 1.69 for Q3 and SEK 3.73 for the full nine-month period. Cash flow. Q3 is normally weak from a cash flow perspective. The fact that we are seeing an increase of volumes in Q4 leads to that we need to increase the working capital in Q3 to be ready to be able to deliver in Q4. We have several times said that we did quite a few investments in 2024 and 2023. Now we see a decrease of the investments. You can see in the table to the right that we are decreasing the investment, the CapEx, in 2025. We decreased the net debt by SEK 69 million down to SEK 1.67 billion. What is really positive is that we have a net debt/EBITDA ratio of 1.8. You can see on the table to the right that we increased it in Q1 2025 when we did the acquisition of Leiden. Over time, we decreased the net debt/EBITDA ratio. That's the way we work with acquiring companies and being able to release working capital. With a positive cash flow, we have a stronger balance sheet. The equity-to-asset ratio is 36%, increased 2% since the end of Q2. Looking into the segments, what we see as a general comment is that the other markets are, over time, quarter by quarter, coming closer to the profitability of the main markets. For comparable units, we have in main markets reached 8.4%. The Leiden part in Finland, in Åland, which has the capacity issues, is decreasing the profitability within main markets. Also, the low market in Germany is affecting both sales and the profitability in main markets. Other markets, as I said, are increasing profitability and reach for comparable units 7.6%, which is quite a lot higher compared to where other markets were a couple of years ago. Coming back to the BMK acquisition, we had a separate call for the acquisition, but I anyhow come back to how the deal is structured. It is a share exchange based on relative valuation. The owners of BMK, they will get 9% each. They are three persons, so that leads to 27% of the combined company they will get as the share exchanged. We have called for an extraordinary general meeting on November 21st when we expect to get the approval to do this deal. Shareholders of 28% have expressed that they will support the transaction. A part of the deal is that BMK has the right or will not have a net interest-bearing debt exceeding EUR 50 million. We also have started and expect to get the regulatory approvals before year-end and be able to close the deal around New Year. The financial impact, and you can see in the graph to the right that it will, of course, have a major impact on the size of HANZA. We expect to go into 2026 with the size above SEK 10 billion. BMK is today running at 7.3% in EBITDA. We expect that to increase in 2026. We expect this acquisition to increase the earnings per share. The net debt/EBITDA, we expect to be on the same level as today since BMK is having a net debt which is in line with the net debt/EBITDA that HANZA has that I previously said was 1.8. Also, since it is a share exchange, the equity-to-asset ratio will continue to be on the same level or even higher, so well above the financial target of 30%. We expect the new group to continue to have and generate strong cash flow. We also, in discussions with the banks, are expecting to be able to lower the interest rate margin post-closing. By that, I leave back to you, Erik, for the conclusion of the quarter. Thank you, Lars. Let's end this presentation with some conclusions and look towards the future. As I said, we are entering the final phase of 2025, and we have created a really balanced manufacturing platform, as you saw on the slide previously. If we look at the targets, three years ago, we were running a SEK 3.2 billion company in November 2022. If you look at the graph, you saw that we put our first goal on becoming a SEK 5 billion company. In the beginning of 2024, we, like many others in our industry, increased the target due to a strong 2023. We said SEK 6.5 billion. Now we see we're entering 2026 as a SEK 10 billion company, also being the largest listed contract manufacturer in Europe. That's fantastic. We've also shown during this period that we can create healthy margins also with the acquisitions we make. The companies we buy become stronger inside HANZA than outside. As Lars mentioned, we are ending this three-year period with very strong financial positions due to the strong cash flows along the way. If we look to the future, the near future, Lars also said that we have a strong order intake, so the organic growth will increase as of Q4. We are into the next phase. We have now a very solid foundation for the next step. We said that we're going to have a capital market day as soon as we have got the authority approval, closing of the BMK deal. We really look forward to present our new plan to you, including our new targets for 2028. By that, I think we are ready to take your questions. If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Anders Åkerblom from Nordea. Please go ahead. Yes, good morning. Thank you for taking my questions. Firstly, I wanted to ask Erik and Lars on Leiden. I mean, it continues to weigh somewhat on profitability. Could you elaborate and discuss a bit more on your expectations for when this should be resolved, apart from just the beginning of 2026, and particularly what main points you need to address in order to improve profitability here? I can start. Of course, customers first. We need to make sure that we do deliveries on time, where we use a lot of different capacity with overtime and splitting manufacturing over several units, etc. Not the best setup, but the main thing is that we're increasing the capacity of the main building in Oulainen. It's going really well, so we should be able to fulfill all the customers' needs by the end of this year, as stated. That, of course, gives a large upturn in profitability. Meanwhile, we get some kind of compensation from this additional purchase sum, as Lars stated. Would you like to add something on that, Lars? No, I think it's quite clear. That was also the reason why we also have this setup with an earnout. We knew when we did the acquisition of Leiden that they were just moving into a new factory, and there was some uncertainty on how long that would take in order to get back into good margin. Okay. Yeah, thank you. That makes sense. Following up on just your comments there on order bookings developing positively in the quarter, organic growth was slightly lower than what it was in Q2, but positively you shared their order bookings are improving. Could you quantify this a bit for us, sort of, and what the reasonable expectation towards the year-end should be here? I can talk in general, and let's see if Lars can give you any figures. I guess not, but we are not out of the recession. We see some industry that is moving strongly now, like, of course, defense and energy, but also mining, forestry, and industry. This is giving us an upturn in the order intake. In addition to this, we have been securing the future by taking new customers and new orders, and they are also kicking in at the same time. That's why we are really positive about the future. Any numbers, Lars? No, of course, I cannot tell you the numbers. What we can say is that we also, during the quarter, had a positive trend in Q3 with a stronger organic growth in the end of the quarter compared to July. Okay. That's good. Thank you. Just a final question, sort of more high level. I mean, based on your recent acquisitions, not just Milectria but also on BMK and what you stated there about kind of defense having not been a prioritized end market for them previously, I mean, two, three years out, what do you think defense could realistically account for as a share of HANZA's total sales? Again, you're asking about numbers that we cannot provide. Clearly, this is the strongest upturn in one industry we have seen. The demand is huge. The need is huge. What the missing link is capacity. There is a challenge that we don't have this capacity. As I said, we outsourced our manufacturing to Asia. Now we are in need of a local complete manufacturing, which we are offering. I will pass the question to Lars. Do you have any numbers for that? You are passing all the questions to me that you know that I cannot answer. Anders, you said Milectria. I fully understand you. Milectria had quite a big part into defense already at the acquisition. What is important is that we are providing to all the other customers capacity. The capacity needed for defense should not sort of move out the capacity from the existing customer that is also growing right now. That makes sense. I appreciate that it's hard to quantify all the questions. Just to be clear, when I said defense volumes having been a fairly low share, that was BMK, not Milectria, of course. That's what I understood. Okay. Good. Thank you very much for that. I'll get back in line. Thank you, Erik and Lars. Thank you so much. The next question comes from Oliver Uusitalo from Aktiespararna. Please go ahead. Good morning, guys. Hope you can hear me well. First of all, regarding the growth outlook here, of course, the defense being a driver of volume going into 2026. As BMK has quite a low part of the revenue coming from defense, how should we view growth during 2026 for BMK? Can you guide us in any way here? That would be very helpful. I think that BMK is a very good tool for the defense industry because they are not just a world-class electronics producer. They are also world-class in complex assembly, so they do complete products. I think the knowledge we have from the defense companies in the Nordics, big companies like Saab and Patria, could be applied together with a strong knowledge of manufacturing competence in this defense cluster area. The need again is huge. We are already in contact with some companies. I cannot give you any numbers, but we see that the fit is really, really good. Was that some guidance for you, Oliver? Sorry? Was that some guidance for you, Oliver? The other question I had was regarding the low defect rate of 5 PPM. I mean, can you explain how have they been able to be reaching these low levels? I mean, is it safe to assume that it's anyway linked to the fact that they had this one huge plant? How should we think about this? I think it's almost in the water of Bavaria. Here is the place where they have built the automotive industry. You run large volumes, every cent counts, so you have to do it perfectly. It's really the main challenge to run this automotive industry. That's, of course, created a lot of special competence in this area. Now, BMK has not been focusing on automotive, but of course, they have a lot of the competence for the area. That's also a good match for the defense industry. Of course, if you do military products, you must have extremely high quality. That's also one thing which is really good when we now move into the defense industry in southern Germany. Fair enough. Being this efficient, do you think that there is any untapped margin potential here in the long run? Yes. Can you elaborate? You want a longer answer? I think that every company we bought, as I said previously, has been better inside HANZA. We have a good combination of companies. We see that Leiden gave us mechanics, Milectria gave us defense capacity, BMK gives us world-class electronics. Together, we are not only bigger, we are better. That's why I can answer yes on that. We do expect the margin to be better inside HANZA than before. Yeah, fair enough. Thank you so much, Erik and Lars. Thank you. As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time. I hand the conference back to the speakers for any closing comments. Thank you so much for being with us this morning. We really look forward to meeting you when we launch HANZA 2028. Bye for now.