Good evening, and welcome to this conference call that Sandvik is hosting in light of the morning's news, the intention to Acquire U.S.-based company, Cambrio. Speaking is Louise Tjeder, Head of IR, and present in the room is, of course, our CEO, Stefan Widing, our CFO, Tomas Eliasson. We also have Mathias Johansson here, who is the President of the Division Design and Planning Automation within Sandvik Manufacturing Solutions. We will spend this hour listening to Stefan, Tomas, and Mathias taking us through some key facts and figures, and rationale for this acquisition. After that, we will open up for questions, and you can ask your questions on the conference call as per instructions from the operator. Next slide, please. Before handing over the words to Stefan, just shortly on safety first being priority, of course, and we hope that you are aware of the safety regulations to follow wherever you are at this moment. With this, it's time for Stefan to kick off the presentation. Next slide, please. Thank you, Louise, and hello, everyone. Thank you for joining the call, allowing us to give you some more information, context, and also answer some questions related to the announcement from this morning. I would like to start then by going back to our Capital Markets Day in November of last year, where we showed this slide. With SMT in the process of being spun out next year, Sandvik will then comprise of four main businesses, Mining Rock Solutions, Rock Processing Solutions, Machining Solutions, and Sandvik Manufacturing Solutions, with the two latter still then being reported as one business area, Sandvik Manufacturing and Machining Solutions. Overall, we expect growth of over 5% through the cycle, and in Sandvik Manufacturing Solutions, we have a market growth in the double digits, which is, of course, one of the reasons we are focusing on that business. This acquisition will be part of Sandvik Manufacturing Solutions. Next slide, please. This is a summary slide of Sandvik Manufacturing Solutions as it looks today, meaning prior to this acquisition. As you know, it is still a small business. It's less than SEK 1 billion. In 2020, it was around SEK 800 million. Around 600 employees, but there is an addressable market of, in total, SEK 120 billion, so there is plenty of potential here. We have structured this segment into three divisions: Design and Planning Automation, Additive Manufacturing, and Metrology. Again, Cambrio will be part of the Design and Planning Automation division when this deal is closing. Then we will also add, of course, under product offerings, a key offering around CAM that we will get through this acquisition. The geography split will also change a bit, with more emphasis on North America after this acquisition. Overall, this is a sizable acquisition in the software space, I would say, for us at least. For SMS, it means that we get closer to about SEK 1.5 billion in revenues, and close to 1,000 employees. It's a very good step towards the ambition then to grow this into a SEK 4 billion business no later than 2025. Next slide, please. This is also taken from the Capital Markets Day, when we talked more about the split we have done into Manufacturing Solutions and Machining Solutions. This we did to ensure more focus on each of these two segments. If I look back now, we announced it about one year ago. The implementation started really October 1st, and fully implemented January 1st. I'm very happy with what this split has given us so far. We have much more focus on the core business in Machining Solutions to drive growth and achieve the 4% CAGR that we are targeting between 2019 and 2025 in Machining Solutions. Also here, good progress in terms of pipeline development on the M&A front. In Manufacturing Solutions, we now have a dedicated team that is sort of waking up every morning, living and breathing, and succeeding with this business. I think the announcement this morning is a testament to that. This was not a simple transaction in some ways, and I think only nine months ago, I questioned if we would have managed to cross the finish line. I think we have learned a lot also on how to do these transactions in the past year. With a dedicated team, we managed to pull it off. Let's take the next slide, please. You have seen the workshop picture as well. Here, just to remind you where these three divisions are operating. Design and Planning Automation is focusing on the value chain steps prior to the component manufacturing step. CAM, tool data management, and shop floor logistics in particular. Additive Manufacturing, of course, a substitute or complement to machining. Metrology coming after and increasingly or starting to go into the workshop with more inline Metrology as well. If you do a click, yeah, thanks. This acquisition, again, will be part of Design and Planning Automation. This is a SEK 26 billion addressable market. Even more important, I think, through this acquisition with Cambrio having three distinct offerings, not only in CAM, but also die and mold and metal sheet manufacturing. We can really service the whole part of this addressable market as well. It's a good entry point for us. This is a market that is expected to continue to grow around 7% CAGR over time. Next slide, please. We formed the Design and Planning Automation division October 1st of last year. We have talked about the strategy we have here a bit, but of course, we have continued to refine the strategy, make it more concrete and more actionable as we go. The mission for this division is really the first bullet point here, which I think is the most important statement here, to automate the manufacturing value chain for small and mid-sized manufacturing companies, and then deliver competitive point solution for large OEMs. What we're saying with this is that Sandvik today has over 100,000 customers in the component manufacturing space. Many of them, most of them are relatively small manufacturing companies and workshops. Most of them have a very low level of digitalization and automation. We see a great opportunity to be a solution provider to them in terms of the component manufacturing value chain. For larger OEMs, we do not intend to try to compete with the larger integrators. We rather want to provide point solutions such as CAM, or as we have in Metrologic with a hardware-agnostic metrology software solution. Of course, we also want to deliver products here that are open and agnostic because we know there's a large installed base, and you need to be able to interact and integrate with overall ecosystem. The third mission here is to increase our recurring revenue base through then a position in CAM designed for manufacturing and production logistics. This is, of course, to ensure that we do not only have margin resilience, but we gradually also shift towards more top-line resilience in the business. The strategy for DPA is to build an offering around CAM designed for manufacturability and production logistics, in primarily metal component manufacturing, but also now to some extent, injection molding. We have seen the CAM market as the most important of these to enter. That's been our focus, and the outcome today is because of this. This is a market with attractive growth rates. It is very close to our core business in Machining Solutions as well. It has relevance for Additive Manufacturing as well. It is also a market that is relatively sizable but not huge, which means we still have an opportunity that we can see that is actionable to take us to a number one and number two position in this market. CAM is, for us, the most important step in terms of building an automated solution suite from component design to machining. CAM has been our focus, and that's why this step is so important for us. I will now hand over to Mathias Johansson to take us through this in a bit more detail. Before I let him start, just a brief introduction of Mathias. Mathias has been with Sandvik for about 15 years in Sandvik Machining Solutions. He came to this role in October 1st, and prior to that, he was the CIO of Sandvik Machining Solutions. Good both digital and IT background, and long history and knowledge about Sandvik and Machining Solutions. Mathias. Thank you very much, Stefan. If we then look at CAM, as I said, building a little bit on what Stefan said earlier, why is this important to us, breaking it down in three different steps? First of all, we think it's a great complement to our premium tooling business. We think that tool selections and productivity improvements are made here, that's a trend that will only increase. We also see that the market is consolidated at pace, taking a position for us is important. Of course, all of this means that cross-selling tools through a CAM position will be something that will be increasingly important moving forward. Entering the software space, both in terms of growth rates, it gives us the opportunity of having more attractive share of recurring revenue and growth rates. We think that there is a very good leverage on a strong software position, given our footprint in the tooling market. We also think to be able to automate and offer to small and mid-size enterprises, CAM is vital. If you look at step three, CAM is also an extremely important position for us to be able to enrich with the knowledge and data we have around tool and cutting data. I think that is a centerpiece, both in data capture and data use. As Stefan also talked about, we think it's a really good way of growing into a broader segment, being able to address both productivity and quality gain for our customers. Next slide, please. If we then look at Cambrio as such, and we can go over to the next slide. They have a company profile of headquartered in Ohio, U.S. The President is Robert Payne, current revenues for 2020, roughly $68 million. As we talked about earlier, employees around 375. That gives us a really global footprint. Regional sales, America being the strongest one, closely followed by EMEA, also a footprint in APAC, which we also think is very important. If we look at the product portfolio as such, it entails three product offerings. The first one, GibbsCAM, for production milling, turning, and mill-turn operations. Particularly competitive in the Swiss machining space, which is mostly into the five-axis machining, which we think is an area that will have quite a healthy growth moving forward. Cimatron, for mold and die. Mold and die is heavily used by the automotive industry, that's also a position which we think is very strong. SigmaNEST for sheet metal fabrication. SigmaNEST also actually has a material requisition plan into it. It is a broader suite of solutions that provides more of an end-to-end portfolio, which we think is essentially very good. moving on to the next slide then. If you look at the Cambrio value proposition, as I talked about, we think it's comprehensive, fully integrated solution suites. We're able to address a growing addressable market, and it gives us a loyal customer base. The financial model is obviously compelling, recurring revenues, and very strong retention. We also get the largest independent solution provider of agnostic solutions that is capable of interfacing all major machine types and brands. The agnosticism is also very important, because that gives us the opportunity of creating a larger manufacturing ecosystem, and it gives us the opportunity for further organic and inorganic expansions. Next slide, please. Just to sort of summarize what we've said, we think it's a great strategic fit. Number one, gives us access to the CAM market through a single acquisition, gives us the global reach within the market, is a good complement to our current know-how in the machining process. Gives us also a healthy, profitable customer base, gives us the opportunity to use the CAM position to improve further offerings. We think in essence, that's a perfect strategic fit. Next slide, please. I hand over to you, Tomas. Thank you, Mathias. Next slide, please. Let's take a quick look at some of the transaction highlights here, starting with some of the basics. As you have seen in the press release, we are not disclosing the enterprise value. The seller is Battery Ventures, closing is expected to be during the second half of 2021, subject to customary regulatory approvals, which basically means antitrust processes. We move over to the financial impact, the financial profile, the margin will be slightly diluted to Sandvik Manufacturing and Machining Solutions. We should also say here that if you would take out the PPA amortization, it would be slightly accretive. Earnings per share impact on the full group is neutral. Of course, if we look at the group balance sheet and talk a little bit about capital allocation, this is a software acquisition and it comes with software multiples. Of course it will have some impact on the debt. If we go back to the latest published information, which is by March 31st, the group gearing was actually -0.02, meaning a net cash position and net debt over EBITDA was not measurable. This is a 100% cash deal and will of course have some impact on the net debt KPIs, talking about the gearing and the net debt over EBITDA, but they will remain well under control after the closure of this transaction. If we look at what has happened during the second quarter, we've also had a dividend of SEK 8 billion, and we will soon pay for the DSI acquisition as well as we close that transaction. Even including all of these, the net debt will be well below the financial gearing target of 0.5 or 50%, and we will not be anywhere near the net debt EBITDA level of 1.5. With that, I'll hand back to Stefan. Thank you, Tomas. Take next slide here, yes. Just to summarize then, this is our first step into the CAM space, and it's a very strategic acquisition for us. The strategic fit is strong. It gives us a decent market share in the CAM market through a single acquisition. I would say in terms of our strategy execution, this gives us the minimum level that we needed to be able to execute on our strategy. It doesn't mean that we will stop here, but it means that the risk in our strategy execution has gone down considerably through this acquisition. The product portfolio of Cambrio is broader than just CAM. It gives us a good additional step then in terms of our broadened offering within Industry 4.0 type solutions. Again, just re-emphasizing how important CAM is for us in terms of building out our offering from component design to machining. It's really the key part that we were missing. Thank you, and with that, I hand over back to you, Louise, to open up the Q&A. Yes, thank you. We can open up for the first question. Operator, please. Thank you. Just as a reminder to participants, if you do wish to ask a question, please dial zero one on your telephone keypads now. And if you find your question has been answered before it's your turn to speak, you can dial zero two to cancel. Our first question comes from the line of Klas Bergelind of Citi. Please go ahead, your line is open. Thank you. Hi, Stefan and Tomas. It's Klas at Citi. Great to see that you're accelerating in your building presence on the CAM side. I wanted to ask you, Stefan, if you look at further opportunities in the space, considering your target SMS at around 10% of revenues in the medium -term, how quickly can you close the other gaps now, both through M&A in CAM, but also in the other areas of SMS? Also separately, if you could update us on the other ambitions, so other areas where you can acquire, such as round tools and outside SMM. You obviously did DSI, which was great, also keen to hear a bit on the progress looking at the broader pipeline. Yeah, sure. As you of course understand, I cannot really comment on anything that is not announced, so to say. Of course. Coming back to my comment in the beginning with the fact that we did this structural change, we split it into two segments with dedicated focus on both Machining Solutions and Manufacturing Solutions. We structured Manufacturing Solutions into the three divisions, and have put in place a team now, driving the strategy in each of the three divisions, and I'm happy with the progress it has given us. I can just say that I'm very confident on our ability to deliver on the 2025 target. If anything, I think we will be able to show a front-loaded execution profile, in basically all the areas you mentioned, including the SMS side and round tools. It's never over until it's over, so to say, but I'm happy with the progress and confident in our ability to execute. No, that's good. Yeah, exactly. My point was, obviously the previous management decentralized the business from an organic point of view, you can say, but you have focused a lot on getting the organization ready for M&A, that's good to hear that this is a sign of more to come, basically. Yeah. My second one is on the synergy potential. Obviously, by integrating CAM together with Metrologic and then with CGTech, you're creating, as far as I can see, a bit of a competitive edge versus your peers, which could sort of accelerate market share gains on the broader insert side, looking at the conventional SMS business. With CAM being the back, if there's a big step versus your peers, do you feel that this is really taking the total SMM business sort of well ahead of the conventional peers? We don't have any peers anymore, Klas. Okay. That answered the question. No. It was a joke, of course. Yeah. No, I think the reason we have a strategy that sometimes you could call it premium plus, if you want. Meaning, for many years, decades, we have led the industry through. First, purely hardware innovation. Maybe 10, 15, 20 years ago, we led the industry through service offerings, overnight delivery, et cetera. I think this is the next step. The value creation and the differentiation will continue to come, of course, from hardware, from high service levels, but this is the next step, to differentiate through also software. It starts with the design, with CAM, with the ability to, when you're going to decide how to machine or print a part, incorporate all our knowledge around the tool performance, tool data, and optimize the process even further. I think you will get gradually more and more gains in that step than you will get from the actual tool selection itself. Use the simulation optimization, which we have through, for example, CGTech, where you ensure that you will have maximum productivity. No broken tools, no collisions in the machine, optimize the paths even further based on the actual machine. Still a little bit further out from a timeline and vision perspective, you want to measure every part and see what actually happened, how can we optimize further, where do we have tolerance issues, and et cetera. I think this is the next evolution of the industry, and I think quite happy that we can. As I said, this was the final piece that we had to have to fulfill this loop. There are still plenty of other things, with tool logistics and so on, that we also have, and that is good. This was a requirement to have to tie everything together. As Mathias said, the industry has been consolidating already for a while. I think we are a little bit jumping on the last train. Good thing is that it's still a good train to jump on. As I said, we still have a window of opportunity to become number one or number two. I don't think there are that many other opportunities. If you wake up and start now or next year or two years from now, I think the window is closed. Clearly our ambition is to create some distance here and allow that to be a competitive edge for a long time in the future. Yeah, very clear. One quick final one for you, Tomas, on the multiples. These deals used to be 5x sales, then over 10x sales. I guess there was a lot of competition for Cambrio. I guess, not sure if you can answer this, I guess, yeah, the upper end then, over 10x sales. Is there anything you can say on the potential outflow, or it's just no comment? Maybe let Stefan say something about this. We cannot, as we said, we have an agreement with the seller to not disclose anything. We can say a couple of comments. First of all, if you look at the multiples, you of course have both, there's a sales multiple and then an EBITDA multiple, and in this case, this is a very profitable company, which means that the sales multiple is sort of in the higher end of the range, but the EBITDA multiple is actually in the lower end of the range. Okay. I think at the end of the day, with all the benchmarks and everything we can do, I think we paid a fair price. We didn't get it for cheap. I don't think we overpaid. I think it was a fair price. Very helpful. Thank you. Thank you. Our next question comes from the line of Max Yates at Credit Suisse. Please go ahead, your line is open. Thank you. Just my first question is around the customer crossover, and I just wanted to understand, of the sales that Cambrio have today, how many customers does that span over and what is the customer crossover that you have? i.e., what percentage of your customer base do you think use their software, and how applicable and kind of where can that number go to? Is this software relevant for the majority of your customers? Is it half of your customers? How do you see that penetration within your own customer base of this software evolving? That's my first question. Do you want to give it a try, Mathias? Yeah, I can give it a try, for sure. I think if you look at the portfolio and break it down and look particularly at Cimatron and Gibbs, if you're using Gibbs and Cimatron, you're using some type of tooling. That, I would say, is a general rule of thumb. If you look at the SME space and look at our customer base that we have, there is still a number of workshops that are programming their machines through consoles, i.e., not using a CAM software. In general, if you're using a CAM software, that means that you're tooling up your machine. What type of inserts you're using, I think that's a thing to look deeper into. I think that gives an indication of the overlay. In theory, it's 100%. In practice, of course, it's definitely much lower than that. Okay. Just then, if I think about future acquisitions, I think you mentioned SMS today is about SEK 1.5 billion. You want to get it to SEK 4 billion. I would assume with a bit of organic growth, you probably need another SEK 2 billion of acquisitions. When I look at the split that you gave of SMS, so Design and Planning Automation, Additive Manufacturing, and Metrology, do you think that additional SEK 2 billion of acquisitions will be particularly geared into one of those areas? Or do you think we should think about it as the next couple, two, three acquisitions will be evenly split across those? Just wondering if there's one area in particular where you think you need to build up. I think you're a bit conservative on the OG, if you say SEK 2 billion. If we assume double-digit growth or high single digit, with a SEK 3 billion base, you add SEK 300 million per year. I think maybe SEK 1.5 billion is a more reasonable additional acquired growth need, assuming we don't do everything in December of 2015. That's my first comment. The other one is, I would say probably a bit more emphasis on DPA and Metrology and slightly less on Additive, would be my comment. Almost fully equally split in terms of the acquired growth focus. Okay. Thank you very much. Thank you. Our next question comes from the line of Maddy Singh of Bank of America. Please go ahead, your line is open. Yes, hi. Thanks a lot for taking my questions. The first question is, just understanding in terms of disclosure requirements, is there a limit in terms of the size of deal, like a dollar number or a krona number above which you have to disclose the price of the transaction? There is no such requirement? That's the first question. Secondly, in terms of the strategy going forward, I understand that you have looked at the Additive Manufacturing risks, but you don't think that's really a immediate threat as such. What all are you thinking in terms of preparing yourself, if at all, that becomes a risk, let's say, three to five years down the line? What we have seen generally is that when technologies do take off, they may take a very steep path upwards. Yeah. I think we'll have to get back to you on the first question. All we can say here is that it's, of course, below that number. No one in the room here has the number when we have to disclose. We'll get back to you on that. In terms of additive is growing quite quickly as you could see on one of the slides we had, but it's still from a very low base. There are still a number of things that we can see that is a barrier for using it really in more mass production environment. It's still very much prototypes. It's advanced aerospace, defense components, some automotive companies have started a little bit, but not really for any significant mass production. Medical is another application, but there are many barriers, primarily cost, the time it takes to print, quality. To get a consistent quality between the material and powder mix, and the process itself is very hard for the quality components that you typically use it for. The process steps are typically still quite disconnected. There are companies like Oqton, who are trying to pull this together more, but it's still far away from being a consistent, seamless process. There are a lot of barriers. We have, in our additive strategy, the ambition to try to overcome a number of these, through powder knowledge, through software, through process knowledge that we have. We are trying to overcome some of these. This is why I've said that I don't really see it as a big threat at the moment, because we are in a broader part of the value chain in additive than in machining. If we lose a dollar on machining, we have the potential to gain two on Additive Manufacturing. That was not a true example, that was just to illustrate. If it starts to take off a little bit more, I think it's an opportunity for us, not a threat. Maybe to add on that, if you look at a future workshop where you have Additive Manufacturing, you're also going to have subtractive. You're going to have machining to perfect the parts. Yeah, the post-processing. Yeah, the post-processing. I think that's also an important thing to remember. If I look at the profile of the couple of acquisitions you have done so far, CGTech as well as this one, would it be fair to think that you are trying to get more and more exposure towards software side, and whether that means you can become more of a software and solution provider in future at all, or these are just the tools which are just going to help you in your current equipment and services value? Yeah. I understand since we have done CGTech and now this one, it might look like that's all we're looking at, the software companies. I just want to emphasize that's not the case. This is a space where there's been a certain scarcity of targets and ongoing consolidation. We have put some priority on these targets to make sure that we don't lose the window of opportunity to enter this part of the market. Even with the ambition we have for Sandvik Manufacturing Solutions, I would still say that for a long time, this is more complementary to the core than equal to the core. The target, as been said here, is that it will be around 10% of SMS in 2025. Obviously from there on, it will continue to grow at a higher pace, but I still think we're quite far out from saying that we have become a software and solutions company first. Thanks. All the best, and thank you very much. Thank you. Our next question comes from the line of Gustaf Schwerin of Handelsbanken. Please go ahead, your line is open. Yes, thank you very much. Good afternoon. Two questions from my side. Firstly, is there any sort of cannibalization on your core tooling business from an acquisition like this? Do you increase tool life from GibbsCAM, for example? Is it so broadly used already that we should just view it as an opportunity given the broader value proposition you can now offer? Secondly, if you can just say anything about historical growth rates pre-2020. Thank you. The historical growth rates are basically in line with markets, high single digits type of growth. In terms of cannibalization, I don't really expect any cannibalization. I think there might be the odd case where someone refrains from sourcing the CAM or our tools because they have competitive solutions as well. I think that's the rare case because I think the industry is used to mixing and matching these solutions anyway, it's ultimately the end customer that will decide on what they want to buy and the most productive solutions for them. Our aim is, of course, to make sure that they will see that our software and our tools are the most productive combination, I don't think anyone will deselect us for that reason. Okay, thank you. Thank you. Sorry, before we go into the next question, we have now the answer to the disclosure numbers. Yeah, just a quick one to the previous question here from Bank of America. When it comes to disclosure obligations in the transaction, there are no specific rules on the consideration or the price for the shares as such. What we are obliged to do is to inform the market how this transaction impacts us, and we're doing that by giving you a number on the impact on the EBIT margin with and without PPA. We're telling you about the impact on earnings per share, and we're telling you the impact on the balance sheet and the debt ratios and how we move forward and whether it's a problem or not for us. That is what we do. Thank you. Thank you. We have one further question in the queue, so just as a reminder to participants, if you do wish to ask a question, please dial zero one now. That question comes from the line of Gaël de Bray of Deutsche Bank. Please go ahead, your line is open. Yes. Good afternoon, everybody. The first question is about the margin profile. Could you just clarify the comment according to which the margin is lower than that of SMMS? Is it really after PPA? I'm just checking this. If that's the case, I suppose we are talking about a 30% type of EBIT margin business, or is it even higher on an underlying basis? The second question is about the share of the recurring business. How much is it for Cambrio? Maybe perhaps more broadly speaking, how much is it now if you put together Metrology, CGTech, and Cambrio? How do you envisage the transition to SaaS? Where are you in this respect? I guess by rather focusing on small and mid-sized companies, you will have to offer them SaaS, right, in the future if you really want to grow that business. Tomas can start on this. On the first question on the margins, now we have not disclosed the margin as such specifically on this transaction or on Cambrio. The answer to your first question is yes, it's dilutive if you include PPA, and it's accretive if you exclude the PPA and to SMM. SMM, as you know, is running on 23-ish or something like that, percentage margin. Yeah, now I don't remember all the questions, but I guess the SaaS transformation was one of them that you picked up, and I think obviously that's a good one. I think what we're seeing in the space is bundling. I think that's the first step of bundling licenses and maintenance together, doing a soft transition into SaaS modeling. You're absolutely right that that's going to be part of the journey the next coming years, and I think that's something we've also sort of modeled into the case. I think that goes hand in hand with a cloud transformation as well. We know that going full on cloud into the manufacturing space is going to take a couple of years. It's definitely something we have on our radar, and we're going to do it, but we need to move at pace with the market. I think that's the important signal to make. With a couple of years, we don't mean 2. No. More likely well over 5 - 10. Gaël, do you want to ask any more questions? You had quite some questions on the last one. Yeah, sure. The other part of the question was to understand the share of the business which is recurring today for Cambrio, but also overall for your various software businesses if you put them together. I know for Cambrio it's somewhere around 65%. It's pretty consistent across the board. That's about where you end up with if you have a service or maintenance that is around 20% of your license sales, and then you sell some new licenses and some services every year. It's fairly in line with both CGTech and Metrologic. Okay. All right. Thanks very much. Thank you. No more questions on the line? No, no more questions on the phone for this time. Good. That concludes this conference call. Thank you all for listening in, and stay safe and have a good rest of the day. Thanks, everyone. Thank you. Bye. Bye.