Welcome to NOTE quarter three report 2022. Throughout the call, all participants will be in listen-only mode, and afterwards, there will be a question and answer session. If you wish to ask a question, please press zero one on your telephone keypad. Today, I'm pleased to present CEO Johannes Lind-Widestam. Please begin your meeting. Thank you. Okay, how do we summarize this quarter and the year so far? First of all, it's. I've started the last, I think, three or four times that it has never been as turbulent as it is today, and I think it's something that we still have to keep in mind that the world economy is quite, how should I say it? Unbalanced. There is. We're now seeing inflation rates going up. We see currency fluctuations that are probably the strongest we have seen ever. The Swedish krona has lost maybe 30% to the dollar in just three quarters. On top of that, we still have the same, how should I say? old problems like component shortages and so on. A very, very turbulent quarter and when I look at our performance and when I look at the activity levels in our factories, when I walk around them, I become very pleased with what we do. I see that we have good flow. I see that we have dedicated staff everywhere. We are investing in new machines and equipment, and I see the efficiencies that we gain from those investments and the dedication out in the sites. I also see that the customers, to a very large extent, are really appreciating what we do and we are working together, solving problems together and that is making me very proud that we have this cooperation and that we have this very nice customer base that we work with. On the topic of customers, we announced last week that we had to make a provision of a potential customer loss. We have one customer that have went into administration in U.K., and therefore, as a precaution, we have taken all the costs that we can see if they would go into liquidation. Therefore, we had a big hit on this quarter's result with SEK 30 million. If we exclude that and look at how the business is performing, I would say that we still see a very optimistic future outlook, especially if you look only a quarter or two away. It's a bit trickier to look further because now we see that all the activities that the central banks are taking in the world will push the economy into a slower pace. We don't see an effect of that at the moment in our order books. We might see some slowdown in U.K., but in all other areas, we're still running at full speed, and we have order books with full booking for the coming three and maybe four quarters with at most of our customers. Yeah, we see in this very turbulent world that our position is continuing to strengthen, and we see we're very optimistic about the future to come even though we expect it to be even more turbulent, if I can put it that way. One good thing that will come out of this slower economy is that the component crisis that we have been working with and struggling with the last one half year will eventually start to open up. That will boost our sales in a few quarters when that happens because we still have about SEK 200 million that are a direct customer delay and maybe twice as much in delayed startups of new programs. We have a fantastic position to get those program up and running when we get better availability of the semiconductors. We have seen some slight improvements so far, but it's still a very, very challenging market here. If you look at consumer electronics, we have seen that the type of semiconductors that they're using has opened up even more. We expect that will spread over to the industrial standards on the components. With that said, how was the quarter? If you look at the sales, we had a sales growth of 36%. The growth is containing a lot of different things. If we exclude the acquired growth, we were at 25%. If we then exclude the currency was 7% in positive, added positively with 7%, we're down to 18% in some kind of organic growth. We also had this what we call extraordinary material cost increases of about 5%. That means that we have bought components on the stock, on the spot market for a value of 5% of our sales and that has been sold over to our customer at zero profit. That's how we do it. That is adding top line, but nothing else in the P&L. Therefore, we try to show it how much it is to you. If we exclude some of these effects, we see that our underlying profit margin is increased to 10.2%. Our reported in the quarter is 6.2%. That includes SEK 30 million for the provision for the customer loss, and also the currency effect when you calculate the dollar when the dollar is strengthened. What we do here is that we are buying components in dollar and then we book them in at the current dollar exchange rate. When the dollar is moving towards the krona, the dollar is gaining strength, we have to pay more Swedish krona when we pay that amount, and therefore we have a loss. If the dollar would decline in value, we would have a gain in the same way. The dollar as such is not the problem for us. It actually adds some value to us if we have a high dollar price. It's the change that is the problem for us. That is what you see as a hit in our P&L, that we are losing some margin when we have big fluctuation between the Swedish krona and the dollar. It also affects if we have the fluctuation between euro and dollar and so on. We're more exposed to the dollar converted to Swedish krona. With that said, we also see that the year so far we have an increase of 45%. If we exclude these items, we have an underlying organic growth so far at 25%. That is also including those extraordinary material cost of about 5%. If you look at the margin so far, we are at 8.2% year to date. Excluding these effects, we are at 10.2%. This means that this is actually our strongest quarter and strongest year so far. We are seeing that we are on the right track towards our long-term objectives that we have been communicating. If we then go into cash flow, weak cash flow, we have some effects in this that are related to the acquisition and so on, but it's still a matter of the big delayed value that we have. As I said, we are still have about SEK 200 million that we should have delivered that is still in our inventory. We're still waiting on the last component for those, and that ties up a lot of capital in our working capital in our balance sheet. We also have effects of that. We have the acquisition and so on that is reducing the cash flow. We are expecting that this will eventually turn when the component market opens up. We will see that this negative cash flow will turn into positive. We're not that concerned of it as more than that is a high number. We still see that our financial position is very strong, and we also see that our cash availability is still very high. We are not seeing any issues with it more than that. It's frustrating that we don't get this in better shape. Last order backlog up 50% compared to last year, and that excludes acquired sites. Very strong order backlog. We will come back to what we see when it comes to outlook based on that. If you look at our margins, we see that we're still continuing to improve in the Western Europe operations. We're now up to, excluding these one-off effects. We are at 11% in underlying operating profit. We also see that our rest of the world is a bit burdened by this by the weak first quarter in China. We're also seeing that we're running these two sites with a slightly lower level. We are at 7.4%. If we would exclude those issues we had in the first quarter, we would be around 8%. It's still at a good level. 8% is still a level that many of our peers are not reaching for the full group, so we are quite happy with it even though we know that we can do better. Not so much to say. The trend is very clear. We are growing in both areas. We'll come back to more and more details about that. We are also earning a decent amount of money in both areas. Luckily, we're growing the Western Europe faster, where we have the stronger earnings. We should also say that the growth here for rest of the world that corresponds to 35% is also driven a bit by currency. The actual terms are a bit lower. Moving on to our segments, still a very beautiful picture, I think. Good growth in all areas. We are seeing that our largest industrial 42% growth year to date. Fantastic. A lot of good customers there. We're also gaining customers in this area all the time, meaning that we are expecting this to continue to grow in a good way. Communication, I said it before, it was at a lower end in 2020 and 2021. We have seen a recovery, and the recovery is very strong. It is the segment where we see the strongest growth so far this year. MedTech, 34%. Still a lot more to take from this area. We are not ramping up all our nice customers here in the way we have expected, so we're a bit behind. I've said that I expect MedTech to get up to 50% growth, and I still do. This is an area we have a lot of more opportunities in. Green Tech was a fantastic growth last year. I think we ended up with like 180% growth last year. This year we're only 40%. We see that the one market that we have seen that have slowed down significantly is the EV chargers in the U.K. market. We see a quite good or quite strong reduction of sales from our customers there in Q2 and Q3. We have to keep in mind that the U.K. government removed the benefits you got if you bought an EV charger, and they took away that contribution in Q1. Q2 was a bit affected of it. We have seen that the slower economy in U.K. has made people more hesitant to buy a new EV charger. We believe that also delays of EV cars has slowed down the sales of EV chargers. We expect it to be at a fairly low level for the next quarter, and we expect it to slowly come back to volumes that we saw before this slowdown, when the delivery of the electric cars are picking up speed in that market. Overall, really good performance in our segments. It's hard to point out which one I'm most pleased of. I would say that the balance between the four is what I'm most pleased of when I look at the segments. Some highlights. Still quality low. This year we are at the lowest level we have ever been measured in PPM. Last year was the lowest year ever before this year. We're still running our quality at a very high level, and that is also very pleasing to see that all the work we are putting in here are delivering on our objectives. Supply chain challenges. Yes, we have quite substantial delays. We're still running on time deliveries of maybe 92%-93%, given the very tricky challenges. We also know that we have some programs that are significantly delayed, and we are causing some problems to our customers that have the most complex products. This is an area that we are working very, very hard together with the customers to sort out the component shortages. Internally, we don't see that we have any challenges or capacity problems. When we get components, we will turn them into products at a very fast level. Here, we are also ensuring that when we get components, we are working overtime, we are working weekends to ensure that we get the products out as fast as we can when the customers are waiting for our products. Order intake continued to be very strong, 50% up, as we measure it. Totally, we also see that the order backlog for shipments in Q4 is up 20% year-over-year, and that excludes our sales in Herrljunga, our latest acquisition. We don't see that the market has become so much weaker than it has been in the past. We're quite happy with how the customers are placing orders. The order intake in Q3 isolated were also very, very strong, so it's not that we are living on old orders. The customers are continuing to place orders in about the same speed as they did up till the second quarter. If we look at some numbers on the market, Sweden, our largest market, organic growth 30%, excluding Herrljunga. Western Europe, up 20%. Here we see that the U.K. are up with just a few percent this year. We see that the difference between Sweden and U.K. is fairly big. Finland is also growing at good numbers. We see China growing 20%. Estonia, a fantastic year in Estonia so far, 69% growth. Estonia has showed up to be, I think they were the second largest site in September isolated. Estonia is approaching a very good level, also growing with existing and new customers. A very good mix between those two here. We expect a lot from Estonia going forward as well. We talked about CapEx. This year we have a budget for spending about SEK 80 million in new equipment. We are on that. We are gonna be around that number. Our growth is a bit higher than we had expected when we put the budget, so we might actually be a bit above this. We also only invest when we feel a need. We are investing in new SMT lines, we are investing in new automation, we are investing in quality improving activities. It's for those of you that managed to visit us when we had an open house in Torsby, you would have understood what I mean where we try to tie together all the different production steps into one flow. Torsby have this fully automated warehouse now and when you link that together to the line, you get a very good traceability of everything you do automatically. We will continue with more investments in this area. Component market, we have talked about it a lot. We have added a lot of resources in our purchasing departments just to try to cope with the challenges. We are continuing with close dialogues with suppliers and customers to improve our availability. This goes for basically everyone in the company. I participate myself with several customers to ensure that we get the right focus on the activities here. Return on operating capital, we showed our best number ever, I think in Q1 or Q2, we were up to 30%. Now, we're at 24%. This number will improve when we get more better utilization of our working capital, and it's also affected by this provision for the potential customer loss. Without that, it's around 27%. As I said before, strong balance sheet, good equity ratio, good liquidity situation. If we talk a little bit about Herrljunga, it's one of the EMS providers in Sweden. It adds a lot of capacity expansion possibilities in Sweden. They have a facility with around 5,500 square meters. I would say the utilization is less than half of that at the moment. We are expecting that the site will deliver SEK 140 million in sales for the year. They are far above that level. We had SEK 67 million in sales only in third quarter. This was a new record for the last 10 years of the site or eight years of the site. Good margins and very positive outlook. The reason why we acquired this was that we wanted to have a footprint closer to the western part of Sweden. Gothenburg is a very industrial region. We wanted to have a site that were closer to that than Lund and Torsby. We also saw the need to have more capacity in terms of floor space. For those of you that know, we expanded our site in Torsby. We took over the new building in November last year, and we are looking at the capacity expansions in other sites. We felt that we had a strong need of getting more floor space capacity. This was a very good acquisition that added on those terms. Looking at our outlook, very strong operational momentum. We see that we are gaining new orders, we are gaining new customers. We see that the challenges in component market are still there. I said it before that I expected this second half of this year to show some improvements. It's still a few months to go, but I would say that's, I will probably have to push that one or two quarters ahead. I think during Q1 and Q2, we will see drastic improvements when the activity in the economy overall is going down. That will ease up the market. I'm convinced of that. That is how all of these shortages in the past has been recovered, often by slower economy. We expect that will be easier to deal with going forward. We can talk a lot about this. We have announced a few of our new wins. We are seeing that we are gaining more and more customers every quarter. We also track the value of that we are winning per month, and we see that 2021 was the highest year ever. This year, we will exceed that. That means that we will. Our focus is that we will win customers with annual order value of maybe SEK 700 million-SEK 800 million. We also see that the pipeline going forward is very, very strong. Now, we know that it takes us today maybe 12-24 months before we are fully operating with these customers due to the component shortages, but we are seeing that time might be a bit shorter going forward. It also shows that our years coming after 2022 and 2023 will also be strong because we already have those orders in. We also see that the future looks very good. Looking at the short term, we are with our market situation, we see very good potential to achieve quarterly sales of SEK 1 billion in fourth quarter for the first time. This would correspond to growth of around 25%, and it would also put the full year value at SEK 3.65 billion. We also believe that our fourth quarter normally is our strongest quarter in margin, and we don't see any reason to not expect that from this quarter. We are expecting that we will see a strong improvement on the operating margin as well. Also, we believe that we're well positioned to achieve the sales target of SEK 5 billion in 2025 at latest. Moving forward to my last slide, here we try to show if those one-off or other effects will not be here, and here we have taken away the revaluation of our customer or our supplier credits, so we have taken away the strengthening of the dollar. We have also taken away our one-off on this potential customer loss. We see that the underlying margin is continuing in the same trend as we have been doing for the last, say, three, four years. This is how we see it. I wanted to show it to you that we, when we talk about this, a weaker margin, yes, we see that on the reported numbers. If we look at it, excluding those effects that will change it, we see that we are continuing on our pace to go in the right direction. We have talked about this before. It's a lot of very positive underlying trends. We see that, yeah, electrification driving market. We see that the move back from Asia to European manufacturing is very strong. We see that these trends that we have talked about for a few quarters are as strong as they have ever been. Basically all in all, we are expecting that our last quarter will be strong. We are seeing that we are positioned in a very good way to continue our development according to our communicated plans to reach SEK 5 billion at latest in 2025. We are seeing that we're a bit ahead operationally when it comes to our margins. That is very pleasing to see. Currently, we don't see any reason why we would adjust our ambitions going forward to a lower level. Yes, we are looking at an economic slowdown that will also have an effect on us. I'd rather go into a slower economy with the 25% organic growth rather than from a weaker position. I know that if we have 7%-8% organic growth, then we know that we will have a good possibility to continue to increase our margins. That we're on 10% growth. We're fairly in line with what we need to be at the lower end. We have higher expectations on our opportunities, so we believe that we will continue to be a bit stronger than that. We have not made a full guidance for 2023. We are only stating that we will be aligned with our long-term growth objectives. Overall, we look very optimistic upon the future. With that said, I open up for questions. I think I will start with the ones that have been submitted, and then we move over to any questions on the call. I have the first question is, "If you do not have any margin and risk on spot buying components for customer, why isn't it netted in the accounts instead of accounted for in common cost? Have you discussed with your auditors?" Yes, we have, and this has been the answer that we should report it as it is, as we do because it's still sales. So it's a very good question. We have spent quite an amount of time internally to see how we could do this in a more transparent way, and therefore, we try to lift it up in this report instead of changing the way we report. Next question, "How high is the U.K. EV short tail business within Green Tech sales?" Oh, I would say so far this year it is probably. I don't have the number in front of me. I would say 40%, 35%-40%, maybe 30%-40%, is my best assumption. Jonas, if you want to have the answer, you can send me an email and I will give you the number in detail. I don't have it in front of me, but in that range. Next question: "What have you done to make sure not more bad debt in U.K. or other regions?" This is a very good question. This customer that we had to make a provision for here was a customer that we had never had any late payments from. We had pushed over some of the excess and obsolete material, and they had paid for it just a few months before. We saw that they were a loss-making business. We had good transparency in how they were expecting to get cash injections, so we felt very comfortable with them. We were very surprised that they went into administration. Here it was that their main financier chose not to stand by or to support the next round of cash. What we do is that of course we are aware of all the customers that we have that are not yet profit-making. We have close dialogues with those. We are looking at their financing situation and how they expect to do the refinancing and so on. We're working to be even more active in understanding how our customers' cash will develop. We are taking some steps, and we will continue to take even more steps in this. This came. We felt that we had a good grip over this, so we were not very happy with it. Therefore, we will implement even more restrictive ways of how we deal with this. We have to come back to you on exactly how we do that. If we move to the next question here, we have your expected growth of roughly 25% in Q4. That is including everything. To get organic growth, we have to adjust for currency acquisition, extraordinary cost, and components, which in Q3 was roughly 24% mean organic growth. In Q4 is likely to be very low too, the numbers are roughly comparable. Very good question. I would say that our expectation is that we are going to have an organic growth, an underlying organic growth, at least 10% is what we are expecting. We have probably undervalued this extraordinary cost in our guidance. Okay. Next question: Many EMS companies are investing heavily in capacity globally. How do you view the problem of oversupply and hence price pressure in the coming three to five years? Is this a major concern in the industry now? The short answer is no. I don't think that this is a major concern in the industry at the moment. Where this is heading is very hard to say at the moment. We do not see that the capacity is increasing faster than the growth. If you take into consideration that in Europe we will have say the lower end, say 7% volume growth, on average for the coming 10 years, that corresponds to more than doubling of the output needed. I think that the expansion of sites and the increase of floor space and capacity is still not in line with that growth. I would say that the capacity is still growing at a slower pace than the forecasted need. I would say that, yes, I think it's very logical that many EMS companies are investing heavily, but I don't see that that will create a big oversupply in the coming three to five years. We'll need to see some other change of how customers behave, that might be an issue. Say that we get another swing back to that in three years, everyone wants to move to Asia again, then yes, there could be an oversupply in Europe. I don't see that as a big issue at the moment. It's a very good question. Every year when we have our strategic discussions with the board, this is one of the biggest question that we discuss, how to ensure that we don't get into another oversupply situation in any region that we operate in. 'Cause the adjustments is, as you know, very costly to do when you have to start to close sites and so on. That was the last question that have been submitted here. If I then open the call for questions on the phone, is there any questions that are there? Thank you. If you wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two. Our first question comes from Karl Norén from SEB. Please go ahead. Your line is now open. Hello, good morning, Johannes. I have a couple of questions from my side here. Maybe if we start with the Green Tech segment. I think that growth was maybe a bit lower than what we're used to. Is there any specific reason behind it, or would you say that the U.K. EV charging market if that was driving this little bit of, let's say, weaker sequential development, or how should we see this? Yes, definitely. Q3 last year in the EV supply in U.K. was very, very strong. We have a decline of the EV charging market in U.K. in our from us to our customers. That also corresponds to the market. I think the market in U.K. is down from Q2 and Q3 in supplied units is down with maybe 20%-30%, and we see the same from our end. That is clear that the U.K. EV market is lower now after they removed the contribution from the government. Okay. That's very clear. Would you say that the underlying development of your other customers is developing in a good way, so to say? Yes, I would say so. We have a few of the customers here are then of course compensating for the decline in U.K. The other customers are growing at a much better rate than we see in this graph. Maybe just on the communication segment, I think was very strong, at least compared to what I had expected. Yeah. Is it possible to say anything regarding specific deals or what is driving this? How we should think about this going forward? Yeah, I think one of our larger customers in this segment is a company called Maven Wireless, and they have announced a few very good orders, and we are using all their equipment. When they grow, we grow very good in this segment. We also have some other customers here that we're not allowed to speak about. But we see that the order intake is very strong. I think that there has been a gap of installed capacity in the field due to the restrictions of COVID. I think that that is what we see is coming back now. We are also seeing first a catch-up, but also we are moving back to the level that where we should be. Okay, very good. Then just a question on the visibility side. I mean, your current order backlog is up by 50% organically. I'm just wondering what's your kind of visibility into next year? I know you don't give any guidance, but just how much will be delivered into next year, et cetera, and have you seen any cancellations of orders lately? No, we haven't seen any cancellations yet. We're seeing that some customers that we know have been moved back to a normalized level. We had some customers who were very strong last year, and the first quarter this year. Some of those we see that the ordering and forecasts are back to following more the normal trend. Overall, we don't see that. We also see that the length of our orders is a bit longer, and therefore we will. It's not. I don't expect us to have 50% organic growth next year. I expect us to have growth that will be in line with our long-term objectives. That's how. Okay. So far we don't see any cancellations or so. Yeah. That appeared. I was wondering also on the order growth, is it possible to say anything how much of the growth is driven by new customers maybe versus the current customers of NOTE? I would say yes, that it's possible because that's how we follow it up, but we have not reported it, and I don't have the number in here in front of me. Okay. Yes. Just two last questions. I have a question regarding Herrljunga facility. Yeah. Seems to be developing very strongly here in Q3. Can you say anything maybe regarding some specific projects or what is driving the strong demand there? Or what are you producing in Herrljunga as well would be helpful. I don't know if you have disclosed that before. Okay. If I put it like this, yes, they are developing better than we expected. We believe that there is there's two effects of this. First of all, we saw that they had a good customer base where we expected to have growth. That was why we wanted to acquire them. Also we see that since they came into NOTE, I believe that we have managed to get resolution on some of the shortages that they have had in the supply chain. It could be that we have had a bit higher sales this first quarter due to that we managed to get a few deliveries out that have been delayed due to shortages. What we produce there is some communication. We produce some MedTech and we're producing industrial products. We don't have anything in the Green Tech area in Herrljunga at the moment. Okay. There is the final one on, you touched upon it, the supply chain issues and the working capital, which has been building for some time now. Yeah. You stated in the report, I think, that you've seen some signs of the easing of the supply chain. Yeah. I'm just wondering, like, how we should think regarding this, the cash flow here going forward, because I would expect that Q4 maybe won't be the best cash flow either, because you will still grow quite nicely if you meet your guidance. Yeah. You would then expect cash flow in 2023 to be better, I guess. Yes. That is according to our internal expectation as well. Okay. I think that was all for me. Thank you, Johannes, and have a good day. Thank you. You too. Thank you. A reminder, if you wish to ask a question, please press zero one on the telephone keypad. No further questions at this time. I hand over to you, Johannes, for any closing remarks. Yes. Thank you for the questions. Very relevant and good questions. So I really appreciate those. It's easy when you sit at your office and you try to understand what you guys want to know, and then you miss a lot of things that could be interesting. Please don't hesitate to send me questions. You can do it either before the calls and so on. I will answer them on the calls or in any other way. So that's very good. And also thank you for the questions that came from online, so to say, here as well. Closing remarks is that, yeah, I think looking at the numbers, we're still moving in the right direction. We are developing our business according to the ambitions that we have set up. We are delivering upon those activities that we are expecting ourselves to deliver on, and we are continuing to become a better company, month by month and quarter by quarter. What we also see is that we do a lot of things that I don't mention here, but all these small improvements that are happening in the sites, that is what builds NOTE up to the company we are. Those are the activities that we are focusing a lot on our daily work, and that's what build this group so strong, and that's why we can see this development continuing, quarter by quarter. I would like to say a very big thanks to all our sites that are contributing to this in a very good way. Also, I have high expectations for the quarters to come. Yeah, see you next time, and have a very good day, everyone.