Ladies and gentlemen, welcome to the HMS Networks' audio cast for teleconference Q3 2021. Today, I'm pleased to present CEO Staffan Dahlström, Joakim Nideborn, CFO. For the first part of this call, all participants will be in a listen-only mode, and afterwards, there will be a question- and- answer session. Staffan, please begin. Thank you. Good afternoon, everybody, this beautiful Friday afternoon. I'm Staffan Dahlström. I'll start this and then Joakim will come in halfway and more about the numbers but w e do as we normally do. We start with a small, quick summary and introduction to our business, then I do a small business update then Joakim dives more into the Q3 results and a bit of the analysis. We finish up with a Q&A at the end. One hour ago, we published the Q3. A few headlines from that. Good net sales, good growth from last year, but compared to Q2, quite flat, but it was also a bit of challenges to deliver old orders due to component shortages. We'll talk about this later. What is fantastic to see is a continued order intake that is very good. Last quarter, we were up 100%. We are slightly below that, only 99% up, but 99% is a fantastic growth orders. There's also partly a boosting element. Joakim will talk more about these details going forward. EBIT, slightly over 100%. Good growth from last year. We are a few points on the EBIT margin down, I would say, mainly due to a little bit lower gross margin than usual due to some of the component challenges. We'll talk more about this later. Very strong cash flow, fantastic cash flow and t his looks very good, SEK 148. This results in a good growth of our earnings per share. That's quarter three in a nutshell. For the first nine months, this just concludes the strong growth continues. Order intake is super strong. Profitability, cash flow, everything goes in the right direction here. So far this year have been good, and we actually think the remainder of this year and going forward is also quite strong and w e just make a little bit of a dive into our business. Several of you already know it. We have our four main brands with Anybus, Ewon, Intesis, Ixxat. Some acquired business the last couple of years, WEBfactory, Procentec, and also last quarter, Spanish Owasys for wireless communication. This is what we do. HMS is hardware made software, so this is a combination of hardware product with embedded software, but also cloud communication, visualization software, and that kind of thing. As a company, we are having more than 7 million installed devices around the world, mainly for our Anybus brand. Our Ewon brand is about remote access of machines, and we have over 300,000 machines connected to our IoT systems called Talk2m. Our field is really industrial ICT, information and communication technology, and we are a tech company. We focus quite much on 5G, IoT, wireless, and these new technologies. Most of our customers are industrial customers where end users like paper mills and steel plants have a very long-term view on technology. We also see a mix of new technology, but also very long life cycle in our products. That's part of the capacity we have in this company to make a good mix of new technology, but also maintain technology for over 20, 15 years. 15, 20 years, sorry. We are slightly more than 700 employees around the world, and we operate with subsidiaries in 16 countries, and we work with partners and distributors in over 50 countries. We are here, actually, I'm here today in our head office in West Coast of Sweden in Halmstad. If we move into more of the business, we have two types of customers. We have users of automation systems. This can be system integrators at an automotive plant, for example. This is 25%, 30% of our business. The majority of business is towards machine builders, device makers who makes industrial equipment, and they embed our communication technology and software and hardware into their machines and have this as a part of their offer to their customers. Last year, we communicated our 2025 ambitions, and it's three things. We talk about the environment. Secondly, we talk about staff and customers, and we talk about sustainable growth and profitability. We put ambitious targets for sustainability. We really focus on our CO2 impact and we would like to become net positive, both from the internal perspective, what we do ourselves, but also from the external perspective, both downstream and upstream in our value chain. We do quite many activities, and this looks good. Secondly, we believe that happy and high-performing employees generate loyal customers, and our business is really about loyal customers. We measure Net Promoter Score within our employee groups, but also with our customers, and we have targets of beyond 25 above this. At the moment, we are good over these levels. We are safe there and doing the right things. We have financial targets to continue growing and maintain a good profitability. We would like to have a revenue in 2025 of more than SEK 5 billion, more than SEK 3.14 billion, maintain a healthy EBIT margin, 20%, and keep our dividend policy of 30%-50%. All in all, this is things you have heard before, just a short recap. Let me move into what you really would like to hear today, it's the business update for the third quarter and w e feel we deliver a strong report. We see a very strong demand across the line, both in geographies and in different automation sectors. We see drivers from increased automation and robotization. We see digitalization, we see energy monitoring, but also remote access of machines. Now in the post-pandemic view, of course, a lot of customers realize that it's been difficult to access remote sites at customers. Our technology see a very good acceptance of customers today. We think that a lot of the good development we see right now is mainly from our existing customer base, machine builders, device manufacturers, and users of these technologies. We see that many of our machine builders have very good business in all our different geographies. We see a good order intake, but we estimate there's a stocking effect where we have, we call it boosting order by SEK 140 million. Joakim will talk more about the details to help you understand how our order book looks like. We see also that the continued challenging on especially semiconductor market, makes our customer place more and more long-term orders. We get orders for 2022 to some quite big extent today. We are seeing a gross margin push almost 2% down. The reason why is that we are hit by increased component cost from our suppliers and t his is coming quite quick to us. We are increasing our prices, but we don't change the prices on the existing accepted orders, it's for new orders. Of course, we have a big order book. We expect that we'll see effect on our price increases from mid next year fully but over the year until mid next year, then we have the full effect. We mitigate this and we'll be back on the traditional higher margins beyond 63%, probably from the middle of next year. The current level of 61%-something is temporary due to the component shortages. I think already last call, in July, we talked about this company, Owasys, we acquired them 1st of July. Spanish company, small company, where we acquired 60% of the shares. The four f ounders are having 10% each and keep around the business. We see a very nice business in cellular applications for 4G, in the future 5G, and other wireless technology where they use this in mobile machines. Mobile machines could be anything from excavators, but also for AGVs and these kind of moving machines in factories. It's a good company and we are very happy about this team in Bilbao, and we also see that we can use our technology that we have in other sectors in HMS and make sure that Owasys can take this to grow faster. The outlook is positive for the remainder of the year. We see that the good investment climate for our customers continues. Of course, there's a boost effect on the orders, but the underlying demand is high. We see a lot of investments. A lot of our customers are very successful in their business, and we think this good outlook will continue. We see that the current challenging component situation will continue to be a challenge for us the couple of more quarters. It will be balancing out during 2022. It's not that we are seeing that we need to stop our supply chains or stop our production and w e have a broad range of different products, but we have seen some of our products have long lead times. This is a problem for us and our customers, but we also see that many of our customers understand that this is the situation, and they also have other suppliers with long lead times. We feel that we have a quite good acceptance for this difficult situation among our customers. All right. With that, I would like to hand over to Joakim and talk more about the financial results in Q3. All right. Thank you, Staffan. I think we're going to start with the order intake, which is also the highlight of the report. Starting looking at the graph up to the left, you can see that we've had a pretty good development. We're reaching new all-time high of SEK 669 million, which corresponds to 99% growth, out of which 80% is organic. It's a very good number for us, and I'll try to explain to you now a little bit with the boost effect, how that is impacting and what's actually more underlying business going in the right way. First, we can say that if we're to take away this boost effect, we still see about 43% underlying organic growth. We still have a very strong business behind these numbers. It's almost unfair to point out something since everything is going well. All our markets are delivering, all our brands are delivering in a good way. We should also mention Anybus, which is the main driver of this, with more than 100% organic growth in the quarter and then o bviously here is also where we have the strongest boosting effect in the Anybus Embedded segment. We see a lot of customers placing our orders into also second half of 2022 to make sure that they will get deliveries. We have some small headwinds from currencies. You see we have - 5 in FX effects in the quarter and nine year- to- date, which we believe will even out a little bit as we go forward, and leaving the strange comparison numbers from the first half of 2020 behind us in a larger extent. With that, let's go over to look at the net sales as well. Here you see starting looking at the graph again up to the left, you see a bit of a more a slower development than the curve. We moved up 37% in comparison to third quarter in 2020, out of which 18% is organic and roughly flat compared to Q2 2021. What we say is basically that the delivery level where we are at right now is what we expect to be able to get out in maybe the coming one or two quarters as well due to the component situation. We see also that we could probably have achieved around SEK 50 million more if we didn't have to push out orders in the quarter. That would've taken us a bit above the SEK 500 million mark, which would've been a nice milestone. I'm sure we'll get there soon. What I also want to point out is the Procentec business that we acquired a year ago quite exactly, which has been developing in a very positive way. We started to see this already in the first quarter that we're moving in the right direction, then it's just been getting almost better and better. It's quite clear that we've been taking a step in that business with some new won accounts that will be very positive for us going forward as well. I think this is a level where we believe we should be able to stay at them and also continue to grow from so v ery positive development of that acquisition for sure. Also here we see that small headwind from the currencies not impacting a lot, actually now in the quarter, only- 2%, but still. I've included this time, a couple of extra slides to try to explain to you how we see the underlying markets. I think that should be interesting to understand and also how the backlog has developed in relation to that. Here we have first looking at the left side of this graph, I'm trying to show you the order intake. The full bar would represent what we have actually reported, and the dark blue bar would be showing then what we say is the underlying demand, and then the light blue bar would then be the boosted order intake. What you can see here is throughout the year from Q1 to Q3, we've been seeing a larger impact from the boosted orders, and this is simply what we believe is an effect from the component situation. Our customers are seeing this as a bigger and bigger problem, and they want to be more and more careful and place orders further out in the future. I'll show you in the next slide also the effects of this, but it's quite clear that the underlying market is improving quarter-by-quarter, even if we see the 9% improvement quarter-by-quarter that you see in total is maybe a bit over-representative of the actually underlying demand. We've been trying to do the same things looking at the net sales, and here you have the dark blue bar would be representing the reported net sales, and then the total of the dark blue and the light blue bar would then be representing what we believe is the underlying demand. Also here you see that we have an up-ramping demand throughout the year, a little bit better each quarter. You also see that we have a larger share that we are not managing to deliver given the sourcing situation. Still, we think this is a very positive trend that we're seeing and, as Staffan commented in the beginning, it's pretty much across all markets and all geographies that we see this improvement. We believe it's very positive for the future, and all our customers are having a very strong business on their side, which is spilling over to us. Just to also put in perspective, I think this is quite interesting looking at the backlog. As you can see, if we now compare the closing balance of Q3 of SEK 746 million is an improvement with more than 200% compared to a year ago. You also see the ramp up throughout the year here with every quarter being significantly better than the previous one. Also to put that in perspective, on the right-hand side, we have orders for delivery further out in time than three months. This is normally quite small part for us. We have the vast majority of our order booked normally within the coming two months. We see normally between 15%-20%, that would be more than three months out. You see here in January and February, we are on normal levels with 16% and 17%, you just see a pretty steep ramp up. Now we're up almost at 40% of our backlog, which is for delivery for the coming year, since we're now at the end of September. This means that we're going to have a super strong backlog going into 2022. Already with almost SEK 750 million, we expect that to build up also during Q4 to be even higher. It also means that Staffan commented on the price increases. We are not changing the confirmed orders, and we have long-term relationships with our customers, and they understand that we need to make price increases, which we are doing now. I think that discussions have gone well, and we expect to make up the margin drop. It will have a limited impact over the coming two or maybe three quarters before this will get an effect due to, of course, then the big order backlog. Sales per region. Here you see that Europe is, or the EMEA region, I should say, is at 63% of net sales in the group, which is slightly higher than what we normally have. The main reason for that is that we have the strong development within Procentec and the new acquisition with Owasys with almost 100% of the business in Europe. As I said, we're happy with the development across the line. It's simply the nature of the business that we have more business in the EMEA with the acquired entities that is making this sort of change. We can also note that China is almost as big as Japan in terms of market. That's quite interesting because we've been having a big gap there. Japan has been the main part of our APAC region. Now we have two strong markets, which will be great for the growth going forward that we have two good markets to work with. Having a look at the profitability level, we are delivering SEK 101 million, equal to a margin of 21.5%. Slightly down in margin compared to last year. As you already understood, there are two drivers for this. One is that we are losing out a little bit in the gross margin. We're down about 2 percentage point comparison to Q1 and Q2 this year and t hat is to almost to an extent driven by the price increases we're seeing in order to get source components. This varies a lot from component to component. In some cases, we pay 10x and even more than the normal price to make sure that we get that last piece that will make us being able to complete the product that we're going to ship. This is a continued fighting for our supply team, which has been doing a good job to keep the delivery performance as good as we've managed to perform so far and w e already covered the price increases that we are now working with t hen again, the effects will start to show, we believe mid-2022, given the strong order book. The other thing that's impacting the margin is the OpEx ramp-up. I think we've been transparent with this throughout the year. We made some new investments in Q2, which we are now starting to see the effect of. We have SEK 189 million in OpEx, which is organically up SEK 33 million or 25% in comparison to Q3 last year, so It's a big change. Then you should also keep in mind that 2020 was not a fair comparison in that sense, since we had a very low activity, no traveling and so on. Now we see the traveling is starting again. There is a built-up demand for meeting customers, for meeting the organization, we see this is also some key activities to get things started again and to move on with our growth initiatives. We believe it's quite positive that we're doing these things. Of course it's going to impact the margin, the 21.5% could maybe be a bit better with better gross margins. Otherwise, we believe it's a fair level to be at. We said it before, I'm just going to say it again. We are continuing to see this OpEx ramp-up will also hit Q4 of course. We don't have the vacation effects that we have in July and August, making the OpEx come down a little bit in Q3 and so w e believe that we'll be roughly 10% up in OpEx in comparison to the levels that you see in Q3. Looking at the earnings per share, also here good development, 36% up. There's not a lot interesting happening. We are pretty much debt-free in terms of interest-bearing debt. That is smartly impacting the financials. A solid conversion to SEK 1.81 in earnings per share in the quarter, and SEK 5.75 for year-to-date number. Looking at the cash flow, also one of, I think, the highlights in the report. We're quite happy to be able to perform in the quarter a cash flow of SEK 148 million, which corresponds to cash conversion of 117%. If you take the year-to-date number, we're very close to a cash conversion of 100%, which we believe is very positive given that we have pretty high growth going on. The reasons for being able to convert this good in cash conversion is, first of all, we have the inventory. Despite the high increase in net sales, we basically don't have any finished goods. Everything is going out as fast as it's produced due to the high demand. The other thing is that we see our customers are paying us better than ever so w e have a pretty big gap between the DPO and our DSO, given that nobody wants to pay late, because then they know they won't be getting stuff, and everybody's desperate to get goods in time. We have a very well-behaving bunch of customers in terms of paying on time, which is of course very good for our cash flow as well. We're quite happy to be able to keep the working capital low. We're at 7.4% in relation to sales, and compared to then 10.7% a year ago. It's a good improvement. It might not be sustainable over time, it's good to see that we can be on this level also when we grow the business. Also for the full year, we have a very strong cash flow of SEK 405 million, even if we have big growth, only SEK -5 million in terms of the working capital changes impacting the cash flow. Final slide, which I think is maybe more important to explain now than most time, and looking at our net debt situation, we have a big thing impacting a lot now. We acquired, as you know, Procentec last year. We acquired Owasys this year. In both cases, we have both a put and call option, which means that the probability that someone will acquire or that the deal will happen, that we'll acquire the rest is very high. Looking at IFRS, this means that if that is the case, you should be reporting the most likely purchase price and the sorry, the effect of the purchase price into the increasing debt level. You take away the consolidated minority, and then you report the expected purchase price as a net debt. In total, this will add SEK 390 million to our net debt. You see, if you look at the dark blue bar without this SEK 390 million, which is of course not interest-bearing, in terms of interest-bearing debt, we would be debt-free to have net cash. I think with that, we have a very good position. We have a big room still for continued M&A and a very solid balance sheet to work with. Quite satisfied with that situation. With that, I think we have said what we had to say, and operator, why don't you see if we have any questions? Thank you. Just to remind you, if you have a question for the speakers, please press zero one on your telephone keypad now. Our first question comes from the line of Joachim Gunell from DNB Markets. Please go ahead. Thank you. Good afternoon, Staffan and Joakim. Really helpful with this more colorful order chart there. Can you help us just get a sense here on how much of this very strong order intake, excluding the stocking effects you highlighted, that are really, call it catch-up effects after years of low investment activity, that can be, so to say, sustainable and how much of this upturn is green versus brownfield? Maybe I can start with the general picture here, Joachim. I think we've seen that now for the first quarters, we thought it's more like a pent-up demand, this is coming quarter- by- quarter. We believe now that there's a strong new investment cycle coming, and I think especially for brownfield, that we see a lot of activities, a lot of more capacity built out. I think a lot of our customer's customers are investing in their supply chains and building more capacity. We believe that this is not only a pent-up demand from the pandemic, and then it's even more a new demand that is coming. Maybe Joakim, maybe you can put more flavor on that. I think you're right, Staffan. It's of course, very difficult to start to dig into how much could be one or the other. I think what we said in Q1, we were thinking it's more about an effect of building up that inventory that had been taken down for some time. The last two quarters, it's more about securing the delivery capacity for the coming quarters. We believe that what we see is a quite fair representation and of course, excluding this boost effect of where the market is. We hear that from all our business managers that the customers are having a very strong demand on their side as well from them. As we sell mostly to the makers, so from the user side, there is a strong demand and new investments going on. Thank you. With the book-to-bill at this very high levels, can you talk a bit about how the order backlog margin is evolving? What I'm trying to get there is that, is it fair to expect that the operational leverage here, which was obviously slightly down now in Q3 versus the past quarters, is a good representation for what we can expect till mid-2022 when you expect to see the price increase initiatives? Yeah, I think that's a fair assumption. The margins that we'll have on the order book will obviously be a bit squeezed since we are getting the price increases now. From the component suppliers, they are pretty clear. If you want to have the goods, then you have to pay, and it's now. We are very cautious with relationships with our customers, and we could, of course, be a bit harder than what we are, but we believe that that might injure some of the relationships. We're trying to be a bit cautious with how we handle it. We've had good discussions. They're accepting the changes. As you also commented yourself, Joachim, it will take until mid-2022, because we start to see the big improvements. There might be some exceptions, of course, so we'll probably start to see maybe a small improvement in beginning of next year, but it'll take up until mid-2022 until we are back recouped for these 2 margin percentage points in drop that we've seen. Just finally, if you can talk a bit about with Ewon and Intesis being hit hard despite the delivery disruptions here, why is that and how do you see that developing to the coming quarters? I think that is- I can- Do you want to go, Staffan, or shall I? It's for you. Yeah. I think it's a coincidence. The things that we were having problems with, it varies from quarter- to- quarter. When we solve one problem, we have another one that's coming up. Right now it's memories to a large extent. It's just been the components that we have in these products. When it comes to Ewon, we expect to have that situation solved, I think, in mid-November. We hope to be able to recoup a little bit in Q4. With Intesis, it's a bit tougher, and we're doing some redesigns to try to solve the problem. I think it will be an ongoing struggle for the coming months to try to get this solved. That is just Ewon and Intesis, I think that's just a coincidence. Understood. That's helpful. Thank you. I can only fill in there from, what we also see that we have a quite big mix of different products. We have 500, 700 different part numbers. I think we don't have supply problem on everything, but on some of them there are problems. I think this is maybe also one benefit of having a broad range of products, that some have problems, but some keeps on running. For this quarter, it happened to be Ewon and Intesis. I'm quite sure that next quarter it's something else. That's clear. Thanks. Okay. Thank you, Joachim. We have one more question from the line of Viktor Högberg from Danske Bank. Please go ahead. Yeah, hi. Just a couple of questions. First one on Procentec. It seems like impressive growth of the 2019 level of SEK 120 million when you acquired it, up to SEK 200 million now. Did you say that you think that level is sustainable? Yeah, I think we are very- Joakim, please go ahead. We're sitting in two different locations, so we don't see each other. Shall I start, Staffan, and you can fill in? Please start. Yeah. Please start. Yeah. We believe that, I think we've managed to, or I can say us, I think the Procentec management team has done a great job in driving the business up to this SEK 200 million level and that's been through some really good new customers coming in, plus a strong underlying demand as well for them. We think that is business that will be here to stay. We think that we'll have a good base in this EUR 20 million, or SEK 200 million, and then we'll be able to grow from that level going forward. We're quite happy with that. I can only echo that. We're also saying that we see also even more business opportunities in this market. I think this is a very nice company, well run from the management team. The potential is keep on growing there, have a high potential. Okay. Well, sounds good. On the delivery capacity, you said short term to expect it to be at these levels, to improve slowly into 2022 or during 2022. What does slowly mean in this context, in terms of timing? In Q1 at these levels as well, and potentially Q2, or would that be to stretch it too far? I think the reason why we're not being super sharp in that comment is because it's so difficult to say. We know that in Q2 we have some things that will settle itself. If something wouldn't be very changed compared to what we know today and t hen we see that we have a slightly better situation for various stuff in the beginning of the year. We believe that we might have a similar situation in Q4, Q1, and then hopefully we'll start to be able to deliver out in Q2. Obviously we have a big backlog, so if we just get components, we will be able to see a pretty big uptick in the sales to get the orders out. What we will end up in that case is of course, then the capacity constraints, because if this situation is resolved, then everybody's going to get the components, and everybody want to have the deliveries at the same time. I think we're going to be a bit careful to guide too much now. We'll have to come back, I think, in Q4 and Q1 to give more flavor on that. Okay. Fair enough. In the slide on the orders that have a duration longer than three months, 40% of the current backlog, did you say anything about how much of that were for the second half of 2022? I did not say that. It's a part of it, but most of it is for the first half. Okay. In terms of price increases, what kind of magnitudes are we talking here to mitigate? It's different on different customers, but I would say on average high single digits in percentage. That's what we are negotiating, that kind of level. We think our customers understand that we have increased costs. I think we are getting acceptance for that. That is drastic, but it's not more dramatic than that. Is that in the same magnitude that you have been hit? Yeah. On your side? That's- yeah. Yeah. We've only seen a part of it on our side so far. We expect to get more also going forward. Our expectation is that with what we are doing towards our customers, with the price increase we are pushing out, we should be able to recoup on the full price increase that we will also see for the coming quarters on our side. Okay. Final one on M&A. You still have a decent headroom in the balance sheet to do further acquisitions. You changed the targets a year ago to include more focus on M&A. What are you seeing out there? What are you focusing on? Is there a problem with the current situation on sourcing that takes away, maybe not focus from you guys, but maybe the potential for the willingness from others to meet with you, to speed up the potential M&A talks? Shall I go, Staffan? Yes, please. Yeah. I think I wouldn't say that has had an impact, the current situation, we have not seen that. We've had some good discussions going on. As you know, we're picky. We work with the same ambitions as we talked about last year. It's long processes in some of these cases, and we just hope that we'll be able to have some good things to present here going forward. I think meeting targets in Europe is now back on normal level. I think there's a challenge still in U.S., but especially in Asia, where there's a lot of restrictions still. Of course this is delaying some of the processes and some of the discussions. We have local teams working in Japan and China, so we can meet them locally, but our global management team is not able to meet face-to-face with these targets. Okay. I see. Thank you very much. As there are no further audio questions, I'll hand it back to the speakers. Okay. Thanks, operator. Thanks a lot for joining this quarter three presentation, and thanks for good questions to Viktor and Joakim here, so t hank you for participating, and please stay tuned. We have some interesting quarters coming up here. Have a nice weekend. Thank you. This concludes our conference call. Thank you all for attending. You may now disconnect your lines.