Welcome to the Hexatronic Q2 2023 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing star five on their telephone keypad. Now, I will hand the conference over to CEO Henrik Larsson- Lyon. Please go ahead. Yes, welcome to this. It's actually our first conference call, presenting the Q2 report, and you will hear myself, Henrik Larsson- Lyon, being the CEO, our CFO, Pernilla Lindén, and our Deputy CEO, Martin Åberg. We expect to talk or present roughly 30 minutes, and after that, Q&A. Here you see the agenda. First, a bit about, overall about Hexatronic, Q2 highlights, acquisitions, financial overview, a bit about the market and business overview, and then ending with a summary and outlook. First, overall, Hexatronic Group, we are roughly 68,000 shareholders, market cap at around SEK 15 billion, close to 2,000 employees, and the U.S. is our single largest market since more than a year. You see our revenues, SEK 7.9 billion, and that's on rolling 12 months, and an EBITDA level of SEK 1.4 billion on rolling 12 months. We have had a very strong growth of revenue, 46% yearly, last four years, and an EBITDA growth even stronger at 84% growth every year. Looking at the market drivers, there are several strong market drivers for the industry we operate in. Today, fiber networks and communication networks is a must. I would say most countries regard fiber networks as a critical infrastructure, just like electricity. You have the 5G deployments. 5G is totally dependent on fiber backbones, but also fiber connection to the antennas. 5G is a driver of investment in fiber networks. We also see an increasing use of data-intensive technologies, this creates a growing need for fiber and connectivity, I would say, especially in data center applications, more and more data centers being established. On top of that, you have significant government initiatives to support fiber rollout, and this is especially in rural areas, where it's expensive for the network owners to build and have difficulties to get the business case together. In particular, the U.S. market, and I will come back on that, has huge initiatives here. Also U.K., Germany, and most countries, I would say, have this today. When you look at Hexatronic, we have four business areas, the largest ones being Hexatronic Fiber Solutions. That's where you have our Fiber to the Home business, Transport Networks, submarine cables, and so on. That's the largest part of Hexatronic. We have Hexatronic Harsh Environment, which is growing, and we will come back on that, the last latest acquisition we have done. That's fiber optic solution for Harsh Environments, a growing market. Two smaller areas, Hexatronic Wireless, so it's passive solutions for the wireless industry, and Hexatronic Data Center, where we today have two companies, one in the U.S. and one in U.K., for connectivity in data centers. The majority of our business is in Hexatronic Fiber Solutions, followed by Hexatronic Harsh Environment. Harsh Environment represents roughly 11% of our total revenues after our acquisition of Fibron that we will come back to. Reasons to choose Hexatronic. This is normally how we present Hexatronic to customers also. We sell, to a large extent, complete passive solutions, meaning fiber optic cables, micro ducts, connectivity products, and we are quite unique in this approach to the market. We focus very much on easy-to-install products and solutions. The reason being, if you build a Fiber to the Home network, normally, 85% of the investment regard the installation, and 15% is the material where we are. Everything we can do to speed up the installation, making it more quick and problem-free, has a very good payback for the network owner. That's a strong focus. High quality, important. It's a big investment to build fiber networks, and our customer expects a long lifetime on their network, so we are a high-quality producer. To this, we also have field support, so in all markets, we are active. We have engineers who are out there helping our customers. Small trainings, if there is a problem, they solve this. To that, we also have training. We are the market leader in fiber optic installation training in Sweden, U.K., and the U.S., and target more markets for training. Most of what we do is designed by ourself and produced by ourself. We have a very value-based approach, approaching the market, and I should also say that we target small to medium-sized customers, where we see a great fit, supplying a system. Sustainability, more and more important, and we are very active here. You see on the left side, the six areas, that's six out of the 17 UN Global Compact areas, where we focus our activities. We have a roadmap up to 2030, and in that two to three targets that we highlight here, one is climate-neutral own operations. We target a 55% reduction of Scope 3 climate intensity, and we also have a minimum 40% gender equality of all employees in the group. Of course, we have more targets, and we have regular follow-up on the progress. I would say in many countries, we see more and more that customers require us to sign up to different sustainability targets to qualify to do business with them. Very important. Q2 highlights. We had a record quarter in terms of both revenue and profitability. Net sales increased 36%, and out of that, 7% was organic. EBITDA increased 45% to SEK 405 million, that represents an EBITDA margin of 17.9%. Both these figures, we are above our financial targets. That is at least 20% revenue growth over a business cycle yearly, an EBITDA margin, which is between 15%-17%, also over a business cycle. Earnings per share follow and develops nicely, also strong cash flow from operating activities in the quarter of SEK 348 million, or 112% cash conversion. The leverage ratio of 1.5 is still on a good level, I would say. We have room for more acquisitions. We have an organic decline of our order book of 29% in the quarter compared to last year, same quarter. This is primarily due to a normalization of our, the customer behavior. Pre the pandemic, we had an order book that was roughly two months of sales. We saw through the pandemic and also last year with the war in Ukraine, a lot of problems with logistics, lack of raw materials and components. That made us, and also our customers, to make sure that they have products when they needed them to place orders more well in advance. Last year, we had an over order book that reached almost five months of sales. Now when things are working, I mean, we don't see any shortages of raw materials, transportation works on pre-pandemic level, our customers start to place order with a shorter, more normal, lead time, I would say four to six weeks. This is the main reason, also to a lesser extent, a bit softer market demand. Three important events during the quarter. We signed a new contract in the U.S. with a new fiber network builder. It's a one-year contract of $20 million. First orders have arrived, we expect to deliver here in late August and increasing September and onwards. Very important for the U.S. business. We bought back 1.2 million shares, which is less than 1% of total shares, primarily to cover long-term incentive programs. We signed an agreement to acquire Fibron, which strengthens our position in Harsh Environment. As I said before, after that closure, we expect to close that in Q3, Harsh Environment will represent roughly 11% of group revenue. We are performing above our financial targets. If we look at sales, I already mentioned the 46% revenue growth on average over the last four years. The EBITDA level increasing even more, 84% over the last four years, and increase in earnings per share, also increasing 102% over the last four years. Strong developments of, I would say, all key, key financials and above our financial targets. When it comes to acquisitions, I will hand over to Martin Åberg, our Deputy CEO, who is also responsible for M&A activities. Martin? Thank you, Henrik. As Henrik previously mentioned, we signed an agreement to acquire Fibron end of June. Fibron is based out of U.K. and produces submarine electrooptical cables for Harsh Environments. In numbers, it adds 114 employees and an expected EBITDA of approximately GBP 5.3 million for the full year 2023. Fibron will give us a significantly stronger position within the growing market for fiber optical solutions for Ha rsh Environment. In total, the group sales within Harsh Environment will account for more than 11% pro forma, and thereby gives a further diversifications to the overall group. Fibron was identified as the most synergistic acquisition to Rochester Cable during the due diligence of Rochester last year. ... We see great opportunities within cross sales due to the complementary product range and also geographical end markets, as well as opportunities to optimize utilization and produce close to our customers. As mentioned, the deal was signed end of June, and we expect to close the transactions during August. Thank you, Martin. We will now have a look at financial highlights, and I will hand over to Pernilla Lindén, our CFO. Thank you, Henrik. Let's see if I can demo. If we're looking at our sales, as Henrik said, we had a all-time high for Hexatronic, SEK 2.3 billion sales in Q2, which is an overall growth of SEK 259 million, or 36%. That's mainly driven by both organic and acquisition-driven growth, mainly in our strategic markets, U.K., U.S., and Germany. We had an organic growth of 7%. We had double-digit growth in our strategic markets, U.K., U.S., and Germany, and that was partly offset by a decline in our Swedish market due to delivery of a large submarine cable order in last year. APAC is developing according to plan, with a small decline in the quarter, and mainly due to a strong Q2 last year. We had an acquisition-driven growth of 23%, driven by the acquisition of Homeway, IDS, and KNET, that was acquired during 2022, and Rochester Cable, that was acquired in March 2023. Last but not least, we had a positive FX effect of 7% in the quarter, mainly driven by the strengthening of U.S. dollar, euro, and sterling. If we're looking at our gross margin, we had a gross margin of 44.1%, which is 1.6 percentage point higher than last year. That is in line or slightly lower than Q1, but within our expectations to fluctuate between 43%-45%, depending on product and country mix. Operating expenses increased during, during, during the quarter compared to last year, due to the acquisitions and investments we are doing to support further growth. It's a stable OpEx compared to Q1 and at 24.7% at sales. Last but not least, EBITDA. EBITDA of SEK 405 million, a 45% growth compared to last year, and an EBITDA margin of 17.9%, which is 0.9 percentage point higher than last year. If we look at cash, cash flow overall, we had a strong operating cash flow conversion in Q2 due to increased cash from our operating activities or EBITDA, and continued focus on reduction of working capital. Operating cash flow after working capital changes of SEK 348 million, or a cash conversion of 112%. Our accounts receivable are operationally stable at 56 days. It fluctuates up and down, with approximately a couple of days due to currency translation. The effect in Q2 here is negative with two days, hence the 58. Operationally, we are more or less stable, around 56 days. We continue to focus on the reduction on inventory. We have actively reduced with another seven days since Q1. The positive effect of the reduction of inventory is partly offset due to that accounts payable have decreased due to that we do less purchases as we actively are working to reduce our inventory. Last but not least, we are continuing to invest in capacity. Approximately 70% of the investments we've done in Q2 is linked to the Blue Diamond Industries, with the new investments there, also the Swedish manufacturing site in Hudiksvall. In summary, a positive cash flow from the operating activities, stable working capital, and continued investment in capacity. That puts us in a position of having SEK 677 million cash at hand and another SEK 707 million of unutilized backup facilities, which gives us a liquidity of SEK 1.4 billion. Leverage, as Henrik said, net debt to EBITDA pro forma, including IFRS 16 at 1.5, which is stable compared to last quarter. Thank you very much, Pernilla, and we will continue with the market and business overview. Starting by looking at revenues by region, this is on rolling 12 months of the Q2. North America represents 36% of total revenues, primarily U.S., but also Canada. Europe, excluding Sweden, 46% of total revenues, the big ones there being Germany and the U.K.. Sweden, 10% of revenues. Last but not least, Asia Pacific and a small part, rest of the world, is 8% of total revenues. If we look into the different regions, so the first one is Europe, excluding Sweden. Here we had a nice growth of 47%. It's primarily due to Germany and U.K.. We see CityFibre being an important customer in the U.K., that they have quite a stable build plan. They target to connect more homes. We are growing our business in the U.K. with one other large incumbent and also with some AltNets in the U.K.. The acquisition driven growth comes primarily from KNETs, the business they have in Germany, but also IDS in the U.K. and Homeway in Germany. We also note that the activities in Finland is growing, so that's growing nicely. Market development, I mean, we see, and this regards most markets, I would say, higher cost of financing, interest rates increasing, banks being more restrictive in funding, inflation making it more costly to build networks. It has a slowdown effect of the growth of the Fiber to the Home market. We also see that customers prioritize connecting customers to more and more extent, and, so it's more Homes Connect than Homes Passed. That's also something we see in the market. We expect to see a U.K. market with a flat or small single-digit growth this year. We also expect to see more consolidation in the U.K. There are so many AltNets building in the U.K., we expect that there will be consolidation, primarily due to financing. Most probably, one of the large three, four players in the U.K. will be acquirer. We also foresee German FTTH market with a small flat or small single-digit growth this year. If we move on to North America, we have had in the quarter, a very strong performance in our pipe and conduit business of Blue Diamond Industries, but also our Fiber to the Home business in the U.S and Canada. We decided to invest $30 million in a new conduit and pipe production facility in the western part of the U.S.. We actually decided that earlier. We expect that plant to be in operation early Q3 next year. The acquisition-driven growth we have seen in the U.S. comes primarily from KNET and Rochester Cable. Rochester Cable has had a very strong order intake. They are expected to reach group level profitability early 2024. We expect as it's a carve-out and it takes a lot of effort to ensure that we have all the functions in place, that we will have a little bit lower profitability for the rest of this year. If we look at the market development, we expect a slower growth of the fiber optic market in 2023. We have seen a slowdown in the market in Q2 versus Q1, and we expect the market to be flat or low growth for the rest of the year. It's the same reason here: interest rates, inflation, a lot of talks about inventory levels, big inventory levels in the market. We see a lesser effect of inventory levels on our customers. Another big thing in the U.S. market was the announcement by President Biden of the BEAD Program. It's a $42 billion program, it's part of the Infrastructure Investment and Jobs Act. That is on $1.2 trillion. The target here is to build, finance, fiber optic networks in areas with low or no connection. Early 2024, we expect that this money will start to be distributed, and it will have a major effect on the U.S. market for many years to come. In this Infrastructure Investment and Jobs Act, there are several hundred billion U.S. dollars also for general infrastructure, roads, railways, and so on, energy grid upgrade, and they use a lot of pipe. We expect a very positive development for not only Hexatronic US, but also Blue Diamond Industries, and that's why we feel so confident with the two rather large CapEx investments we are doing in the U.S. These subsidies will require American products, American-made products, to different percentages, but for fiber optic cables, it looks like it has to be produced in the U.S., also the fiber. We have plans to ensure that we can provide U.S. production of fiber optic cables. Sweden, a decline of 28% in the quarter. This is due to two large submarine cable projects that we delivered in Q2 last year. We see the underlying fiber optic system market rather flat in the Swedish market. We have a good mix of Fiber to the Home, Transport Network business, but also hybrid cable for mobile towers. We expect the market in Sweden to be rather flat this year, excluding the submarine cable projects we had last year. Last but not least, Asia Pacific and a bit of rest of the world, we had a growth of 7%, primarily due to the acquisition of KNET. We see our New Zealand business stable, and we are making progress in building up our Fiber to the Home business in Australia with a couple of customers, so that is developing well. Market development, we expect to see the Asian markets and New Zealand and Australian markets to be rather flat in 2023. We see in some Asian markets that it's quite tough price competition from Chinese competitors. We also see a growing market in Micronesia and Polynesia with a lot of different projects there. Finally, a summary and outlook. In summary, we had another record quarter, with a strong growth and also strong profitability, and also strong cash flow from operating activities. We saw the organic decline of the order book of 29%, and I already commented on the normalization of the customer behavior here, back to pre-pandemic behavior, and also partly, but to a lesser extent, the softer market demand. If we look at the outlook, we expect most of the markets we operate in to show flat or low single-digit growth in the second semester. We are very positive regarding the medium and long-term market outlook. It remains strong. Strong macro drivers, and I would say fiber optic networks is a necessity today, and many countries are far behind. We expect the BEAD Program and other programs in the Infrastructure Investment and Jobs Act to have a very positive effect on the U.S. market, starting in 2024, and then increasing in 2025, and this will probably last for the next seven, eight years. With the fourth plant of Blue Diamond Industries in Utah, we become a national supplier of conduit and pipe, and that opens up new customer opportunities. We expect the plant in Utah be in operation in early Q3 next year. Yeah, we are well positioned there for the IIJA and BEAD funding. We continue to have a strong M&A pipeline, and that is with a focus on Harsh Environment data center and wireless. That was what we wanted to present to you, and now we will do a Q&A session. 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 Max Bacco from SEB. Please go ahead. Yes. Good morning, Henrik, Pernilla, and Martin. Thank you for taking the questions, a few ones from me. If we start with the Q2, was Did you say that the demand again, throughout the quarter, was it quite stable for the quarter? Do you have any comments on that, and perhaps also what you have seen in July and August here in the beginning of Q3? That would be helpful. Thank you. First one. Do you mind repeating the question again? We had difficulties to hear you. Yeah, of course. So during Q2, was it stable month- by- month, or did you see a weakening in the demand month- by- month? And do you have any comments on the start of Q3 with July and August year? I think we saw a little bit softer June. Regarding Q3, I, we don't have any comments on that. You have to rely on what we say, that we, we expect the second semester to be a bit softer. Okay, perfect. The next one, if you look at Q2 sales with roughly SEK 2.7 billion-SEK 5 billion in sales, in absolute numbers, do you see that that sales level is doable in Q3 and Q4, give or take, or do you expect to see a sequential decline in sales here in Q3 and Q4 compared to Q2? I'm not sure we have the answer to that. I would say we expect increase in revenues versus Q3 last year. Mm. I cannot answer regarding the comparison to Q2 this year. We, we noted we had a very strong Q3 and Q4 last year. Okay. Still, we expect a growth. Yeah, and that growth that you expect includes the acquisition contribution? Yeah. With the- We talk about- Yeah we talk about total growth. Yeah. Okay. Given, given the, the weak, or weakening market that we see here, how, how should we think about the profitability here in the second semester, in light of the relatively strong margin here in Q2? Will you be able to, to protect that margin level, or should we expect a margin decline, in the second semester? ... I mean, on a yearly basis, we feel confident that we will meet our profitability targets. Yeah, we expect to continue well. Okay, perfect. We are saying that some of your peers, mainly in the U.S. Clearfield, Corning, and CommScope, and so on, have, have witnessed that some customers are being hesitant with deploying new fiber projects while awaiting the BEAD funding, mainly since they have to match to some extent the government money with, with own money. Have you seen any similar signals from your customers, or is it mainly the higher interest rates and inflation that are the main headwinds as we speak? I, I think it's probably right that some are waiting for BEAD funding to come out, and that's also making it a little bit softer. I would say that probably affects Blue Diamond Industries, but not Hexatronic US, where we don't currently work with that kind of customers who use public funding. We have two small customers, but that's a very small part of our total business. Also, I mean. Okay, perfect. If I compare to Clearfield, I mean, Clearfield is primarily U.S. and also Finland with the acquisition they did there. Overall, we have a totally different geographical footprint and also much wider products and system offering than they have. Yeah. Yeah, right. One final question regarding the BEAD Program. We saw that Clearfield indicated a timeline that the effect on material providers like Clearfield and Hexatronic alike will be notable in the end of Q2 2024, that it will have a positive impact on the volume then of 2024. Do you agree with that timeline, that it will take in until second semester 2024 until the positive impact? I'm not so sure about that. I mean, we, we hear different statements about that. Some believe that it will come earlier, and I've seen some competitors saying, you know, maybe in the second semester. Too early to say when it will start to kick in. Okay. Perfect. That was all for me for the moment then. Thank you very much. I will jump back in the, in the line. Thank you. The next question comes from Jacob Edler, from Danske Bank. Please go ahead. Thank you, Henrik, Pernilla, and Martin. A couple of questions from my side. Starting off a bit on the organic order book development, are you able to maybe give some more clarification of, you know, how much is explained by the rapid change in order lead times, and how much can we kind of attribute to the underlying kind of market demand deceleration we're seeing here sequentially? the majority- I'll take some more. Yeah. Sorry. Yeah. The majority is due to the normalization of customer behavior, definitely, we have had a couple of customers who have placed orders, you know, with a long lead time, and also asking if they can cancel them and go back to what we did with them pre the pandemic, you know, working with forecasts. I would say the majority of the decline, organic decline of the order book regards the normalization of customer behavior, and to a lesser extent, softer market. Okay, perfect. very clear. Just getting a bit into the U.S. market, talking about Blue Diamond in specifically. Blue Diamond has a pretty sizable exposure to energy as well. We've been talking a lot about FTTH and, and stuff in this presentation thus far, and early in the Q2 season, we, for example, saw Nexans and Prysmian hiking guidance on energy grid investments in the US. Is there, some demand support there, would you say in H2? Is it different from what you're seeing in Fiber to the Home? No, I think, as I mentioned before, that this Infrastructure Investment and Jobs Act. Yeah ... it will have a very positive effect on Blue Diamond Industries. With regards to the energy grid upgrade, as long as it's underground, you know, if it's aerial, you don't need ducts, but also transportation, I mean, roads, railways, and a lot of infrastructure, where you use a lot of conduit and pipe as a cable protection for both telecom, but also energy cable. So, I share the view of Nexans and Prysmian that it will have a positive effect on also Blue Diamond Industries. Okay. You know, I mean, right here in the short term, you're not really seeing a difference there between, you know, energy and the Fiber to the Home. Customers are still kind of, I guess, awaiting these packages to arrive, or what would you say here short term H2? Yeah. I would say that. Yeah ... it will probably take some time before that really comes into play also for the transportation part. Okay. So. Okay, perfect. Just two more questions on, on Blue Diamond. Obviously, Blue Diamond's part of the business is a bit more commoditized than what you see on the system solution within Hexatronic US, and price kind of fluctuations within, you know, high-density polyethylene, has historically at least kind of been important for dictating, I mean, pricing power. What are you seeing in the price development of, of, of your raw materials right now? Because they're been rather flat, kind of, year to date. Yeah ... I would I would say. We have seen quite stable margins, and we have seen a small decline in the plastic resin prices. I would say then with some customers, you know, we have contracts that follow these plastic indexes, so then the price goes down with some delay. We have seen quite stable margins in the Blue Diamond industry activities. Okay, cool. Last two questions. On Clinton, South Carolina, I think there are 15 lines being installed in total, and I believe, believe roughly nine lines were, you know, operational at some point during Q2. Can you just maybe shed some light on how the capacity utilization was on those lines during Q2? Do you foresee any kind of, you know, risks that lower capacity utilization in, in this plant could kind of hurt the growth margin further as we head into, to H2? I think the part of Blue Diamond Industries, that plant in, in Clinton producing microduct- Yeah is, fully booked, you know, producing as much as we can. Then, the later lines being installed are on the more traditional conduit and pipe. We will see how the market develops in Q3- Yeah and onwards, how much of that capacity will be fully utilized. It's difficult to predict. Okay, perfect. Just last question, sorry for taking up so much time. On the framework agreement that you're set to kick off with volume here at the end of August, how should we see that framework agreement as being kind of back-end heavy, or does it hit full run rate in September, or how should we think about that one? I think it's as usual, you know, it's a ramp-up, as you will see. Yeah ... growing volumes over this year. Perfect. Thank you so much. I'll, I'll jump back into the line. Thank you. The next question comes from Fredrik Nilsson from Redeye. Please go ahead. Thank you. Hi, I want to start with your guidance for UK and Germany. If I got it correct, it's, what, 0%-5% for the full year. Considering that the growth seemed to have been quite strong so far this year, should we expect even a negative growth in the second half, or did I get that wrong? I, I expect to see a more flat to a small digit growth in the second semester. I mean, we have had a strong development in Germany and the U.K.. I'm not talking about the market when I say we have had a strong growth. I think we have grown very nicely in a market that has grown more slowly, if you see what I mean. Okay, thanks. Yep. Also, your OpEx was flat relative to last quarter, despite having Rochester included for the entire quarter this time. I mean, why is that? Have you done any cost savings in some other areas, for example? No, we haven't done any cost savings in other areas. Obviously, there are integration costs that was already, already came in, in last quarter when it comes to Rochester Cable. Normally, the cost from a seasonality perspective is a little bit lower, also in Q2, end of Q2. Okay, thanks. Also, you touched upon it a bit already, but considering that the Clinton factory will be running at full capacity during some parts of the second year, half of this year, at least, I mean, should we expect flat growth in North America despite that? Is that related to you might not fill that facility, or is there any other places where you see negative growth, perhaps? I think, again, we talk about the market where we expect flat or low single-digit growth in the second semester. We clearly have ambitions to continue to grow, and especially Hexatronic US, where we are really a challenger. I see good opportunities in that. Okay, thank you very much. That's all from me. Thank you. The next question comes from Stefan Wård from Pareto Securities. Please go ahead. Hi, thanks for taking my question. It's a little bit follow-up on, on, some other questions related to the US. If you could describe how much capacity expansion you've had, from the Clinton expansion so far. It seems like you, as, as you mentioned, Henrik, that you, you've been growing at full capacity, in the first half of the year without building any inventory. That sort of signals that there are quite good, good demand situation for Blue Diamond in the U.S. market. Is that correctly understood? For the first semester, we have had a good development of both Blue Diamond Industries and also Hexatronic US. What I commented on before is that, you know, the microduct production in the Clinton plant is running full speed ahead. Then the later investments in the conduit and pipe part of the plant, they are still, you know, being installed and ramped up. It depends very much on the market development, the second semester, how much capacity we will have to utilize of that, if it will be full capacity or if we have to run it on lower capacity. Difficult to predict. Yeah. How much additional capacity would you say you have come online during the first half compared to where you were at the end of last year? difficult- Roughly. Roughly. I mean, it's a considerable increase with these high-speed lines that we're installing. I, I have difficulty to give you a percentage, Stefan. Yeah. No worries. Is it fair to say that most of this increase in North America, 58%? I mean, I guess some there's some effect in that number, but most of that was organic in the first half. Can you give any details on that? Yeah, to large extent, organic, but then, of course, also, I mean, we have Rochester coming in from first of March, and you have the KNET acquisition in December last year, and U.S. is an important market for them also. We are very happy with the organic growth we have had, not only the U.S., but also, Canada de-developing very nicely. Yeah. It seems like you, you are growing your FTTH business quite nicely in the U.S., while the competitors have, as mentioned, previously in the call, the competitors have negative growth in fiber optic solution offering in the first or in the second quarter. Is that correct to understand? Yeah, that's my also interpretation when I look at the competitors', Q2 reports. Many of them showed a decline. I would say our position is different than them. We target, another customer group, you know, quite new entrants, often private equity funded. We haven't seen any problems with the funding, for our customers and potential future customers. We come from a small position compared to many of our competitors in the U.S.. I would say many of them are much more into the tier one, tier twos, the really big ones in the U.S., where we are not. Mm. Okay, that's very helpful. A little bit also on, how would you say, the, the level where you are at in, in Sweden? Is that a fair sort of sales volume to expect for the second half? Could you repeat that question? Just the development in Sweden. We had this 29% decline for, for the submarine, orders that were included in Q2 last year. Are there any sort of similar orders that we should, consider for the second half? I would say this year we are more heavy on submarine cable projects in the second half. We will see more submarine cable projects being delivered in the second half of this year. Mm. Okay, final question, just out of curiosity, regarding the Rochester integration and the outlook for, for market, for Harsh Environment, products. Is that market more stable if you compare it to FTTH or? How has the integration gone so far? Generally, the market for Harsh Environment is, is strong. We see both Rochester Cable and Fibron having a strong order intake. We see that also in other, other businesses within the Harsh Environment space. In terms of integration, it is, as Henrik and Pernilla mentioned, we closed the transaction early March, and they're always when you have a car, but it will take some time, but I think we're on a good track. We say that after nine months or early January 2024, we, we see that we will have the same profitability annually as the group. Okay. Thank you very much, Martin. That's all for me. The next question comes from Adrian Gilani from ABG Sundal Collier. Please go ahead. Hello. Just two questions from my side. First of all, regarding your more, more optimistic statement for the 2024 market. I mean, for the U.S. market, we can see a clear catalyst with the government investments coming in, but for the European markets, what do you primarily base that outlook statement on, that it's going to be a better market, 2024? Partly the same as in the U.S., that we see more and more of these government subsidized projects being rolled out for rural areas, both in Germany and U.K.. Then also, generally, we see I mean, the demand for fiber is there. I would say today, it's a customer-driven demand. When we talk to our customers, they expect that, you know, it will increase again. In general, and we have said this before, we believe, you know, the U.K. market, in general, for Fiber to the Home, has had a very strong development over the last two, three years. We expect that market to start to flatten out on a high level for a number of years until the market has matured. The German market that is quite far behind the U.K. market in both, fiber connections, Homes Passed, and also the speed of rollout. We expect that to, you know, continue to grow for a number of years ahead, before it probably flattens out also on a high level. Okay, that's helpful. Then on cash flow as well, given the sort of softer outlook for the second half and shorter order lead times, can you give us some sort of indication on how much working capital you expect to release during the second half of the year? No, not really. Clearly, our focus is to continue to decrease our own inventories. That's the main thing going forward. Okay. Just to be clear, that's not just in% of sales, that's absolute figures as well for second half? Is it absolute? Absolute numbers or% of sales. % of sales.% of sales. Okay. I guess a final one as well from my side on orders, and apologies if you mentioned this, but you gave us the figure for the three-month backlog at the end of this quarter. Did you give us the corresponding figure for the length of the order book at the end of Q2 last year? We can sort of understand how much of the decline is due to shorter lead times. It was roughly five months, in Q2, end of Q2 last year. Okay. Thank you. In that case, then, that's all for me. Mm-hmm. 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 written questions or closing comments. Right. We will start here, with a question: Could you give us an update, up-to-date FTTH statistics for the globe? Where are the biggest markets today? I mean, what we can say there, we have a yearly report and analysis made by Fiber Broadband Association in the U.S., Fiber to the Home Council. I would say still, when you look at those figures, it's very much left to do in many countries. Like Germany and U.K. still have a very low penetration. Italy, the U.S. and Canada, also on a low level, huh? If I take an example, and these figures are from September last year, that's the latest research we have. Sweden is, you know, when it comes to Homes Connected, roughly 70% of all homes are connected with fiber. At September last year, Germany was at 7%, U.K. at 11%, U.S., 24%, and Canada, 10%... 28%. I mean, you have several big markets with a very low fiber penetration. Okay. How did price add to organic growth? I would say that, this is primarily volume-driven growth in the quarter versus quarter last year. Yes. Very small price effect. Let's see here. It's the same question again around pricing, so we, we disregard that. Then second, can you explain why Mr. Åberg owns his shares through an investment vehicle with Erik Selin? Basically, Erik Selin and, and me, we have a joint investment company where we owned our shares in Proximion that was acquired by Hexatronic in 2014. As part of the proceeds, we received shares in Hexatronic Group. Mm-hmm. Next question: Can you explain why debt went up despite strong cash generative? That's the first question. When it comes to, when it comes to that, of course, it's a, it's something we need to manage over the quarter when it comes to sometimes increasing our, our CF, but also looking at that. Overall, when it comes to this, we increased it somewhat and had more cash at hand. We did investment during the year, during the quarter, we bought back the shares, and we paid dividend. That's the main reason for that. What are your inventories? Inventories is raw material. It's our finished products, but also, of course, goods in transit. After adjustments, why was your cash generation only SEK 60? And as I said here, it has to, has to do with that we pay dividend, bought back stock, but also that we did have a very high investment in CapEx and capacity during this quarter. Can you explain fully the changes in intangibles? Well, intangibles did not change that much between the quarters, very limited, so it's just about valuation when it comes to translation effects. Of course, also that you are depreciating your trademarks. Why do you give companies orders before you acquire? We don't do that. I, I, I don't understand the question, but that's not what we do. Only with companies that we've been working with before? Yeah, I mean, if it has been a sub-supplier- Mm-hmm ... we normally buy from them, and, there's no change. Mm-hmm. Basically, I mean, we're looking at the most recent acquisition, if we bought, that was not a supplier of ours, and neither was Russia. Okay, then we explain your movements in working capital. For the quarter, the movements from a cash perspective, we had a positive cash effect of inventory of SEK 113. We had a positive effect of account receivable of SEK 46, and then a negative cash effect of SEK 60. That makes a positive of SEK 38. The rest is related to revaluation in the end of the year, if you... end of the quarter, if you look at that. Mm-hmm. What is your total number of days in inventory? Is all that inventory usable and modern inventory? Our inventory in the end of Q2 is 124. Of course, this is something that we always look at on a quarterly basis to make sure that we make the accruals if there is something that should be, that has been too long at our stock. It is, yes, it is 124, 124 days is good stock. Why-- Oi. While the mid to long- term demand seems likely to be strong, what do you see in terms of potential supply increase? While you are increasing capacity, what's the outlook for the rest of the industry? No, I, I think, you know, we are investing in more capacity. We see competitors also invest in more capacity. So I think overall, the capacity in the market, in many markets, is increasing. Normally, what happens is that, you know, the players invest a little bit too much. So, so, the supply is greater than the demand, and that could have a negative price effect. However, to a large extent, we sell system. I described before, we have a value-based approach, so I'm not so concerned about that. How do you feel about the year's dramatic decrease of Hexatronic stock? Are you happy with the company's market value as it is now? We don't comment on the Hexatronic share price. Question, regarding organic growth in 2024, do you expect it to be around 10% or below? No, we don't give outlooks for percentage-wise and so on, but we are clearly optimistic about the market development on mid and long term. If you haven't talked about it already, how will your production rates be in H2 versus H1 be, please? I, I expect that we will have good production rates in H2 also. Even if we see the, a little bit softer market, we expect to have a good demand, and the production will continue on a high level. Can you elaborate on how you would like to grow going forward? Will it mostly be organic or through acquisitions? It will be a mix. We expect to show good organic growth in growing markets. As I mentioned before, we, on mid to long term, we have a very positive outlook for the market, and we will continue to make acquisitions, and as I mentioned before, now primarily in Harsh Environment, Wireless, and Data Center business areas. Do you today qualify for the BEAD Program, or will you need to ramp up production in order to qualify? I mean, we qualify for American-made products. All micro ducts, conduit, and pipe are made in the U.S. We have quite a few connectivity products that we produce in the U.S. today. The big thing is the fiber optic cables, as we mentioned before, where if we want to be in BEAD Programs, we have to ensure that we have U.S. production for fiber optic cables, and there we have plans to ensure that. Mm-hmm. I think this is the last... No, with BEAD demand, this is more similar question, but with BEAD demand made in Americas, will you need to produce all fiber in U.S.A., in a new factory to be eligible as supplier to BEAD? I mean, it doesn't have to be a new factory. One is that we set up production in one of our existing plants. You need to produce all fiber cables in the U.S., and it's even so that you have to produce the fiber itself in the U.S. There are only three producers of fiber in the U.S., but we know that we will get U.S.-made fiber also. Mm-hmm. Then the last question: how do you see the APAC market developing, and do you see Hexatronic as a key player in markets such as Japan, India, and China? No, I don't see us as a key player in Japan, India, or China. That's not target markets for us. I would say, if we look at the Asia Pacific, there are markets where we are active and have a good footprint, like Philippines, Indonesia, Thailand, and so on, and that's that kind of markets that we focus on. I think we start to run out of time, so, do we have one final question, or... No, I think it's fine. We have answered most of them. We have answered most of them, yes. We want to thank you for listening in, asking questions, and we are available for follow-up questions after the release this day. We welcome you back to the next conference call when we release our Q3 report, and that will be in October. Thank you very much.