Thank you for standing by. Welcome to the presentation of INVISIO fourth quarter report 2021. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you will need to press star and one on your telephone keypad. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Lars Højgård Hansen. Please go ahead. Thank you very much. Good morning, everyone, and welcome to the INVISIO Q4 and year-end bulletin for 2021. The headline we have chosen for the quarter is that we had a challenging 2021, but it ended with strong order intake, and we have seen that continue in the beginning of 2022. Before we get into the numbers and the challenges, I would like to say that, despite what the numbers reflect, I think we have had a very good development in 2021 across our business and in line with our long-term strategy. First and foremost, we did our first larger acquisition in the early part of 2021 with Racal Acoustics in the U.K. I think that the acquisition has been a great success and addition to the INVISIO group. Racal Acoustics products accounted for about SEK 149 million in revenue in 2021. The integration of the two companies into one group with two brands has been very successful during the year. We are definitely ready to grow those product lines even further. What the product line of Racal Acoustics have also added is more stability in the sense that the customers are found within vehicle programs with very long lifetimes, and also with an element of service and repair that we have not been used to for the INVISIO product lines. For the INVISIO range of products, yes, it has been a challenging year, much like 2020, because many of our customers have been unable to conduct tests and gather a large amount of people and initiate new hearing protection programs and tenders as we've been used to in the past. We think that this is a temporary delay. We think that we will see some of these programs come back in 2022. The need, fundamental need for our solutions have definitely not changed, and we do not believe either that we have lost business to anyone in 2021. It is a delay in certain programs and activities for hearing protection systems for dismounted users, as we say. Our newer focus areas like the Intercom and the law enforcement activities has done really well also in 2021. In line with our strategy, we have expanded our range of partners, both in the Intercom area and law enforcement. We have seen also very good orders coming from customers in both areas. I think we are on a good traction here for really good development over the coming years. What also is very encouraging is to see that we have now launched a new generation of hearing protection solutions for the dismounted users, our new Gen II platform of products with a lot of new features and also including artificial intelligence algorithms to help our users even more in the very noisy and challenging environments they are in. Last but not least, we have continued to attract very talented people to our group, to our team, people with industry experience and people that can help us grow and continue to make sure we stay the undisputed market leader in the areas where we operate. That is sort of the intro before we turn to the numbers on page three. Of course, when we look isolated on the numbers, we are not, I would say, where we wanted to be. As I said, we have been impacted of the pandemic both in 2020 and 2021. Our revenues in the fourth quarter declined by 12%. For the full year, we saw an increase of about 11% in revenues and, corrected for currencies, we are at a 15% growth for the full year. Again, this is where we would like to focus, of course, going into 2022, where we can see that the order intake has been improving in the late part of Q4 and also now into Q1. We hope and expect that the order level will soon get back to some kind of what we call normal, and then that will also transform into higher revenues. Our gross margin is also a little lower in the fourth quarter and for the full year compared to previous year. We have had some temporary impact on gross margin due to certain components being more expensive than normal. This is, I would say, related to certain spot buys that we've been forced to do in order to make deliveries and certain components have just been very expensive for a period of time. We do expect this to also normalize sometime in 2022. We have as many others seen price increases from suppliers of components and raw material. We have also ourselves made increases to our list prices to reflect that. It is our belief that we will be able to offset the increases from suppliers on components and raw materials and so forth, so that we should not be impacted going forward. It does, of course, takes a little time before things materialize, but it is still our belief and our ambition that our gross margins should be somewhere between 60%-65%, a little, of course, variation across the different types of customers that we sell to. In law enforcement, for instance, our gross margins are a little lower normally because we sell through resellers, whereas for certain military customers, it is a direct sales with a higher margin. There's also some variance between product categories. The mix of products and the mix of customers will determine what the exact gross margin is for a given quarter. Our EBITDA and also EBIT is affected by the lower than expected revenues, but also by the continued investments that we have made into the business. Again, we firmly believe that the pandemic will go away at some point in time, and that we are building the company for the long run, and therefore we should continue to invest in both organization and products and so forth. That is what is reflected here, that we have continued our investments. Therefore of course, the EBIT margin is below, far below what we are expecting going forward and also below our own financial targets. On a positive note, our order intake was good in the fourth quarter, SEK 160 million, and also for the full year, it was up 20% compared to 2020. I think that even with the absence of larger new programs, it is very encouraging that we now have stability in the business, so that we have a number of smaller orders coming from all our focus areas, all our product categories and all our geographies that adds up and actually gives us a very good order intake in the fourth quarter. The order book then stands at SEK 225 million, almost double of what it did at the same time last year. That's a good start to 2022. Moving to page four. Just a few curves to illustrate what I've already said, that we had the currency adjusted growth of 15%, based mainly on small orders and of course the addition of the Racal Acoustics product line. It is below our own internal expectations and for the reasons that I have already mentioned due to delay and prioritizations of budgets, et cetera. On page five, a similar curve on the EBITDA and the EBIT margin that are, as I've also just said, below our own expectations and have been declining for a number of reasons, but mainly due to lower revenues than expected, and that we have continued to execute on our growth strategy with our organization and development of products and so forth. On page six, just a small overview because of course the acquisition of Racal Acoustics was a first time for INVISIO and this also introduces a new type of expenses in the form of amortization. We saw a number of products being finalized and ready for launch that we have invested a lot of resources into, and therefore the depreciations are now at a higher level that we have previously seen. You can say that the operating expenses for INVISIO have grown at a base level because of the investments into organizations and new products, but also due to the acquisition of Racal Acoustics. In detail on page seven, you will see that for the full year 2021. The total amount of depreciation and amortization went from SEK 12.7 million in 2020 to SEK 45.1 million in 2021. It's a significant increase in both depreciation and amortizations that we have not seen before. None of these are of course cash items, but they do influence the way the numbers look on a grander scale as we have not had these items in before. Following page eight, as I've said, we absolutely believe that the market is still there. All of our markets that we address are still there, that they will come back, that they still have the needs that we are trying to address, and therefore, we have done the right thing in continuing to execute on our long-term strategy and continuing to also build barriers and make sure we are the market-leading company in our industry. We, as I've said, have continued to invest in our sales organization. We have a team of more than 16 salespeople globally, which is far more than anyone in our industry. In the same way, in the R&D organization, we have continued to add a number of colleagues across the different functions in R&D. We've added experts in artificial intelligence, more people in software and system integration, which is one of the strongholds of our company. We have, with the acquisition of Racal Acoustics, now also the global market leadership for hearing protection solutions in high noise vehicles. This is a new niche that we add to our total offering. All in all, we have, as I said, broadened our product portfolio significantly with new product categories in the form of the intercom, but also our own first over-ear headset, the INVISIO T7, the new generation control units, and of course, the new Racal RA4000 vehicle headset that has been very successful so far. That leads me to the next page, for the new agreement that we announced in the early part of 2022. We have received a 5-year framework agreement worth about SEK 275 million with a system integrator that holds a contract with an armed forces of a European country. The contract here is related to a vehicle modernization program, and it concerns the RA4000 Magna headset under the Racal Acoustics brand. As usual, when you get a framework agreement, there's no volumes guaranteed, but I would say that it would be very rare that you did not see significant volumes coming from this. We do, of course, expect that this framework agreement will turn into larger orders over time, over the five-year period. It would be my expectations that the order level that we will see will be close to that amount over time. We will, of course, get back and announce once we get specific orders related to this framework agreement. We have also in Q4 been able to put a new army, European army, on our customer list. It is the first order from this army for our personal systems, and we received an order for about SEK 25 million. Now, there is a follow-up order to this, or actually, the two orders are connected, and that's why we are very confident in saying that we will have another order for about SEK 20 million within the first quarter here, probably. The total order for this customer is about SEK 45 million in total. This is definitely an army, also where there is a possibility of larger orders to follow over time. Turning to the next page, a few comments on the intercom. Despite the difficulties in visiting customers and travel and so forth because of the pandemic, we have continued to see good progress for the intercom. Those of you also following our company on social media will see that there are postings now and then from different activities with our intercom and our other types of products. During the fourth quarter, there was first of all a real order from a European NATO country that has bought from us on several occasions, and now they added a new order for 40 intercom systems. We believe this is sort of the pattern we will see for other customers as well, that they start with a few systems, then they buy another five or 10, and then they continue up to 40 here in this case. Hopefully, as we progress, slowly but surely this will spread like rings in water and become even more systems for this country, but also see similar patterns for other countries. In the U.S., we received a very interesting, but non-binding order from a company called SkyRunner, that is a very innovative company for light vehicles. They have contracts with customers in the U.S. that they are expecting vehicle orders from, up to about 200. SkyRunner would like to have our systems tied to that so when they get orders for vehicles, we can then expect to get order for vehicles, or for intercom systems as well related to that. So far there is no orders tied to it, but we do expect to see orders from this somewhere in 2022. In general, very good progress for the intercom, and of course, this is now two years into its launch and we expect that 2022 will be a really strong year for the intercom business. Continuing to the next page with law enforcement and security. I think it's about now four and a half, five years ago since we started our initiatives more focused related to law enforcement and security. We have continued to see good development in all geographies in this area. 2021 was no exception. We have continued to see a reinforcement of the sales force and the distribution network, and we are seeing that we have more and more products out for test. Of course, this is a little bit different because we also often involve partners, distribution partners in different parts of the world. I think we have come to a point now where we have a very solid foundation in the law enforcement area. I expect that we will continue to see good growth in this area also over the coming years. The largest contract so far has been with the Swedish Police Authority, and we were happy to see that they have extended the contract by another year, and we continue to see good orders from this customer as well. Very positive on the law enforcement and security area for 2022 and onwards. All in all, as I said, we have had a good year despite difficult financial conditions. We are positive that markets will return to some kind of normal during 2022, and this is also why our board of directors have proposed that we keep our dividend unchanged for the year of SEK 0.70 per share, the same as last year. This is the dividend proposal. Finally, again, as I said, the last two years has been very challenging for many reasons. For us, it has been related to not being able to do business because many of our customers have been at home and not being able to perform tests and do what they normally do, and also some postponements of funding and so forth. We still believe we have continued to develop our company. We have carried on in line with our growth strategy, and we have a very strong market position now that things start to open up again. We will still see in the early part of 2022 that there are disturbances in supply chains. There are deliveries that are taking longer than normal. There are certain components where we need to pay a little extra to get them in quicker and so forth. We do believe that this will gradually return to normal conditions throughout the year. With that, I will conclude the presentation. Operator, I am open for questions, please. The first question comes from the line of Erik Karlsson. Erik, please kindly state your company. Hi, it's Erik Karlsson from CapeView Capital. Thanks for all your hard work for shareholders. I had a question on your bread-and-butter business, the military segment, which I believe has been perhaps the most impacted by COVID. Please correct me if I'm wrong there. It would be good to hear your views on how you see that part of the business going forward, what you see, and maybe also in terms of radio deliveries, what you're seeing there, which is often a leading indicator for you. That's helpful. Yeah. Yeah. Thank you, Erik. I agree. The soldier system part of the business has been the one that has been most affected. As we said, again, it has been difficult because most military bases and many of the people in the buying organizations have not been available for a period of time. Of course, you can say most of the activities that happens in this area are longer-term modernization programs. They are rarely very urgent. They are always part of a longer-term modernization. That's also probably why we have seen some of the delays. Of course, we are depending on radio supplies as well. Of course, many customers already have radios, but there are also customers where they are tying the activities to acquisition of new radios. We of course try to follow the information that comes from the large radio manufacturers like L3Harris and Thales and others and see what they announce in terms of new radio contracts and so on. There we can see that it seems like the business level has been picking up, and they have been receiving quite substantial radio orders from several geographies, including the U.S. The difficulty here for us is of course, we do not know when those deliveries or radios will take place. They might also be COVID affected in terms of delivery times and components and so forth. On a little longer scale, there's no doubt that the number of radios will increase significantly in both the U.S. and in Europe over the next years. Once that happens, that does open up opportunities for us with our hearing protection solutions. We can also see in general that we do not believe that customers have either reduced or lost any of their budgets or funding. It has just been a postponement. In some countries we have seen that, because of the very high costs associated with fighting COVID, some reallocation of funding has happened short-term. We do believe that the spending on these programs will come back. There's no doubt that the need for modern hearing protection and communication solutions is still there. There's definitely no change in our view to the market need and demand. That's very helpful. Maybe one follow-up, if I may. Just on the order level, you said you hope it to return to more normal levels. I appreciate it's lumpy, but on average, what would you say is a normal order level now going forward? Yeah, that's a good question. We do not give normally any guidance or indications on. What I think if you look back just over the last years, you will see that if you just look at the ordinary order intake per quarter, excluding any larger orders, you can see that that has increased quite significantly. Now I guess if you look back over the last two years, our regular order intake, so to speak, is somewhere between SEK 100 million and SEK 150 million per year. Then we've had traditionally some larger contracts on top. I think to try to answer your question, we will. We are expecting to get back to something that can support our ambition of growing with 20% per year on average. That is where we are still aiming to be and where we think that the market needs can support it. It's also early days still. We've also said that we see large opportunities for the intercom system, and we have not seen any of the larger orders yet. There's no doubt in my mind that will. It is a very large and important market, and it will be important to us over time. As usual, the timing is difficult to predict. Yeah, hope this answers part of it. Absolutely. That's very helpful. Thank you so much. Thank you. Thank you. The next question comes from the line of YIWEI ZHU from SEB. Please ask your question. Good morning, Lars. Thank you for taking my question. I have two questions here. Firstly, regarding Racal. I remember initially you sort of gave a guidance that Racal would contribute around SEK 120 million-SEK 130 million sales in 2021. Now you deliver SEK 150 million for 11 months, SEK 160 million for the full year. Clearly it's better than expected. Now considering the new large contracts, could you please also give us some indication for 2022 here? Yes. Thanks, Wei. Of course, as I said, we do not give any guidance. I think that I can say that even though the Racal Acoustics products are sold to a little more mature market, like the vehicle market than the INVISIO product line, I would still believe that we are in a good position to continue to grow products sold under the Racal brand as well. I think Racal has a unique position in the market with some new product lines, and I think the fact that we are now able to integrate INVISIO and Racal products into systems is a very strong offering that we can bring to the market. As you know, we work a lot with product systems and not individual products. Therefore, including the Racal products into the INVISIO solutions gives us a strong way of increasing sales. We've seen that already where existing end-users of INVISIO systems are now also asking to have Racal products included. For vehicle solutions, we have a possibility of coming with INVISIO solutions as well and adding that to the range. From a geographical point of view, as we have said, the Racal product lines have been sold mainly in Europe and rest of world, whereas there is a large untapped potential for us in the U.S. with our sales team and so on. I think we will still see some lumpiness on the Racal side as well. I think definitely over time you will see that we are able to grow the Racal business and with good profitability. I think this contract, the new framework contract, is just one first example of that. Great. Thank you. My next question is on the OpEx. Is it fair to assume the Q4 85, around SEK 85 million at the run rate when we go into 2022? Should we expect another ramp up on our OpEx? I think when it comes, there's of course some uncertainty related to OpEx in the sense that for quite a period of time a lot of travel has been postponed and trade shows and so forth. There's no doubt that in 2022 we will be traveling a lot. Depending on what the flight tickets and everything else is doing, that will have an impact. We will participate in more than 60 trade shows more than ever. All of those activities which are sales related will have an impact. I don't think that it will have a huge impact on the OpEx level. We have also, during the pandemic, increased our cost to samples and sales support from here. That could of course go down a little bit once we start travel. I think that level is probably realistic for going forward. We do not expect that we will increase our organization significantly over the next year. We do have a very well-functioning and good organization now. As I've always said, we might add a couple of people here and there if we see increased sales levels or increased activity levels that we need to support or something like that. In general, we do not see the need for large organizational increases at this point. Great. Thank you. I jump back to the queue. Thank you. Thank you. The next question comes from the line of Rebecca Jaderup from ABG. Please ask your question. Hello, Lars. It's Rebecca Jaderup from ABG here. My first question is regarding the gross margin that was weighed down by higher component costs and the sales mix. Do you want to give any indications on what products that have better or worse gross margin, for example? Also a question regarding that, is Racal's margins in comparison to INVISIO's. Are there any major difference on gross or EBIT levels between those two? Thank you. If we start with the Racal products versus INVISIO. When we acquired Racal, we said that the gross margins for Racal products were somewhat lower because of the fact that most products are sold to system integrators and to large modernization programs for vehicles. I think the Racal team and us together have worked very diligently on that already the first year. I think we are on a good track here to get up. The Racal team has also been very and the sales team very good at making sure that we get the necessary price increases that we should to get up to a similar level to INVISIO products. We are soon there. I do expect the Racal products to have the same gross margin as INVISIO over time. We do also have a couple of legacy contracts that we've had for many years where pricing and gross margins were a little bit lower at the time, but we are still selling to those customers. That's why when we get orders from some of these older contracts, the gross margins can be a little bit lower. It is a mix of many things. I would say looking forward and just taking it to the core, then our own developed new products does have very healthy gross margins. Okay. Thank you very much. One more question from me. You mentioned that you increased prices for the list prices for customers. Do you think that will affect the orders, the order outlook, in the beginning of 2022 or going forward? No. I don't think so. I think we are doing this gradually, and it's also in certain instances where we already have a contract with a certain customer that there are. It is already regulated what type of increases we can make so that the list prices will implement itself over time, and for new customers and when we can renegotiate pricings and so forth. It will be a running process throughout the year. Thank you. Do you think that we will see these large orders like acting out in terms of sales before, like, second half of 2022 or before, or is it the second half that we should look into? As I normally say, is it possible? Yes. Will it happen? We don't guide on that because again, there is still high uncertainty on deliveries and components and so on. We can see that also some of our manufacturing partners have very high inventories on components, so they are prepared to 95%. Sometimes it is one or two small components that can delay the whole process. The only thing that we can say is that the activity level is very high. We had our first large trade show in the U.S. in January, and the attendance and the activity level, the customer interest was, I would say, almost back to what we saw before the pandemic. We are definitely convinced that the activity level is going to be high. Our main focus now is to get orders, close deals, get business, and then we will have to deal with deliveries, which of course we are trying to plan at the same time, but our first priority is to get orders. Thank you very much. Thank you. Welcome. Thank you. The next question comes from the line of Erik Karlsson from CapeView Capital. Please ask your question. Hi, it's Erik again. Thanks for taking another couple of questions. Just on market shares and your market position. You were clearly gaining market shares pre-COVID. Would you say that anything has changed? Have you accelerated that or there's no real change during COVID, how your competitors are acting, investing in new products or focusing on this business? That would be interesting to understand. I think I do not have any numbers to support either a yes or no more than we can say that I think that the market is still dominated by a few players. As we have mentioned many times, I think 3M Peltor has been a large player in this industry for many, many years. Then there is INVISIO, and then there is a couple of helmet manufacturers that also now are offering headsets and other things that you can mount on helmets. There are a few local players in Europe and U.S. that has been in the market for years but do not have a global outreach in any form or shape and is more simpler products. I would say the competitive landscape has not changed much. Anyone is of course, or everyone in the industry is of course bringing out new generations of their products, but we have not seen any leap in technologies or any new solutions or anything that our own launches has been the most advanced that has happened in the industry, especially with our new generation two platform. Also in the area where regular products are, the new Magna is by far the most advanced vehicle headset in the market. The intercom has very little competition because it is a new category. On the law enforcement side, only I would say local competitors around the globe. INVISIO is the first company here trying to claim a global position and being active in all of the regions. No, I would say it's pretty much an unchanged competitive landscape. Now do you have a sense of order of magnitude of your market share, perhaps military and military law enforcement and in intercom globally? Maybe military is the most meaningful, at least. Yeah. No, we actually don't measure that because we do not find it really meaningful. Also, it is hard for us to obtain real details about numbers from our competitors and so forth. We do not ourselves measure our market share in that sense. Do you think that the market share in military, for instance, is below 10%? Or is it, you know- I would more say because the way we look at it is more in terms of the addressable market and how big a part of the addressable market we have. Yeah. We would say that the addressable market, as we've said for dismounted soldiers, is about 2 million users, and we have sold about 234,000 systems. We have only sold to 10% of the addressable market. There's a lot of potential for us. Okay, that's helpful. Thank you. Another company, another competitor might define the addressable market differently depending- Okay. on how they are set up. I don't know about that, but that's the way we Sure. Sure. Decided to define it. Okay. So that's the way to look at it. Okay, that's helpful, thank you. Maybe one quick question. Given that, Racal has turned out to be a very successful acquisition, you know, both financially and strategically, are there other acquisitions out there that you may consider? As we've said, this industry is not one that is screaming for consolidation and has a lot of players in it. It is a smaller industry. I also think that we have a very advanced technology and product positioning. It's not, there are not many that are relevant for us. It could be interesting technologies, but it could also be as we of course advance into other areas. Now we have gone into law enforcement and security. There are other opportunities out there, yes. We do not intend to live off acquisitions. It will be select acquisitions. Okay, very good. Thank you. Good. Thank you very much. If there's no further questions, Mrs. Operator, I think we will close the session for today. Thank you, everyone, for calling in and listening today, and look forward to speaking with you again soon. Thank you all.