All right. Good morning, everybody.

It's half past and I think it is time that we start this morning session regarding Teleste's first quarter 2026 results. I'm double checking now through the participants here.

I believe we have some here who would prefer us to speak in English. Can somebody confirm first of all that you can see and hear us okay?

Yes, hear you okay.

[unclear]

Very good. Then I suggest we start and we run this session in English language.

As usual, I have Mervi Kerkelä-Hiltunen, our Group CFO here with us, and then I will start by going through some of the highlights of the first quarter, and then Mervi will continue slightly deeper into the financials, and then we reserve time at the end for some questions. Mervi, if you kick us off and move us to the next slide, and the one after this.

Just one kind of remark here, as we have started the new financial year, probably all that we are reporting two different separate reporting segments related to the two businesses we have. The top one here used to be called Broadband Networks, and we have now just slightly adjusted the terminology here, this segment from now on will be called simply Networks, whilst the other one remains Public Safety and Mobility.

All the references that you will see in the presentation as well as in all the release material are referring to these two reporting segments, simply a terminology change, nothing else has changed. The scope is exactly the same as before.

Then just very quick glance into the two businesses we have before we go to the actual first quarter happenings. Our Networks business segment is related to providing fast, top-quality broadband and also TV services for telecom operators and cable network operators.

Majority of our customers are here in Europe, but we also have an increasing number of customers in North America. The products and services we are offering relate to both cable infrastructure access network products as well as fiber infrastructure access network products.

We are also providing intelligent management software, which is becoming increasingly important as the operators want to manage these networks remotely and automate some of the operational procedures they are running in the networks. In addition to that, we also are providing linear digital TV headend products under segment we call video services platforms, and then we are providing a range of professional services ranging from network planning and network implementation to network maintenance and also operations of these networks.

You see some of our public customer logos here on this slide. I will not start to go through them in detail, but we sometimes are referring to our customers by name, and these are the ones that probably are the most important customers we have, both in Europe and North America.

Then if we move on to Public Safety and Mobility, here we also actually have a very large group of customers. In fact, we counted that we have more than 200 customers today in this segment, and we have divided this business roughly to three different categories simply to highlight slightly the different solutions we are offering in these segments.

The first one we are here referring to as rolling stock manufacturers and integrators. Essentially, this is about providing passenger information solutions and security solutions for train manufacturers, moving public transport vehicles which have our passenger information displays, software, audio announcement systems, video security systems, internal communication systems, and so on.

The second group is then what we here refer to as public transport and rail operators, which is essentially similar products for their stationary infrastructure. We are talking about train stations, platforms, where we are similarly providing passenger information systems as well as video security systems.

The third category is then what we here refer to as safety and transport infrastructure operators. This is a collection of different kinds of authorities, including airport management, motorway management, rail management, certain critical public infrastructure where effectively in particular the product focus is on video security solutions, both for the public authorities as well as other similar critical public infrastructure management companies.

All in all, this business has become part of Teleste through acquisitions over the years, and, but including the time that the acquired companies have been in this business, we do actually have more than 30 years of experience and legacy in this business. Then if we move on to the first quarter results, we announced this about an hour ago today.

The first quarter of the year, I would say started very much in line with our expectations, and overall in a very positive manner. Our orders received, here we had a slightly slower start to the year.

There was an element of seasonality there. The year end was pretty strong for us, and especially the accumulation of orders last year, but we are expecting orders to level out in line with our revenue outlook for the year, simply a slightly slower start to the year.

There's one notable topic worth mentioning here also, which is that one of our so far largest customers in North America is actually going through an acquisition process at the moment and they are limiting quite significantly their capital expenditure prior to that merger closing. In terms of our net sales, we were pretty much exactly in line with our comparison period here last year, revenue was flat.

Our profitability, here we had a nice boost. This was a combination of many many different elements, everything from us protecting our gross margin, where actually our gross margin was improving year-on-year, to managing our product blend and the customer mix, as well as then being very vigilant on the fixed costs we have.

Combination of all those resulted in the fact then that basically all the profit lines here that you are seeing were very nicely improved year-on-year. There's a slight difference between the two reporting segments we have.

Mervi will then cover that a little bit later. Cash flow, after many many positive operating cash flow quarters, now this year started with a slightly negative operating cash flow, but we are expecting this to level out as we move through the year.

There are a number of reasons behind that one, including buffering inventory for certain components where the prices are increasing, etc. Then just a slight look into these different segments.

As I mentioned here, our orders received, they declined compared to the comparison period. However, our view is that this decrease was coming from pretty well identified sources, and these are not long-term factors, and our long-term market drivers have not changed, and this is simply a question of certain inertia at the beginning of the year, which may continue also into second quarter, I may add.

We're expecting the orders to be more back-weighted this year, as well as the overall performance. The pie chart here shows you the breakdown of the two businesses.

Here you can see the kind of breakdown between Public Safety and Mobility and Networks orders. Especially when it comes to Public Safety and Mobility business, one individual quarter is not really a good indicator of that business.

It's much more better to look over longer-term trend over quarters, which we actually are separately also showing in the details of the reporting. Then moving on to the net sales, as I mentioned, this was flat year-on-year.

I would say this was resilient overall performance in a pretty mixed and turbulent operating environment. On the pie charts here, again on the bottom right, you can see the segment breakdown of the revenue.

On the top right corner, you can now see then the geographical distribution of this. Here, for those of you who are paying more kind of close attention to detail, we have somewhat now adjusted the way we are from now on reporting the geographical distribution.

We are always using a rolling 12-month view, which is in our view a better way of indicating trends rather than what was previously a cumulatively building up view, which then now would have started just with one quarter view, but looking at the kind of 12-month rolling, sliding window principle here moving forward. Then if we go to the adjusted EBIT here, here you can see basically in the bar charts also two previous reporting financial years, you see the trend of how the profitability is coming together.

As I mentioned earlier, there were a number of factors behind this, not any single incident. It was the product and sales mix, it was gross margin protection, and it was our fixed cost management, which basically then helped us to achieve a very good profitability improvement, in the Networks segment, whilst in this Public Safety and Mobility segment, there was certain seasonality there.

In the comparison period, we had relatively speaking slightly higher software project revenue recognition, there the year started a bit slower in terms of profit accumulation. Overall, I would say that we have continued our investments as we had planned, our execution is very much on track, and we have a strengthening confidence in our strategy, and also in our long-term targets, which we basically are reiterating at the bottom left of this slide, where our long-term goal by 2030 is to be growing on average 10% every year and reaching 7% to 12% adjusted EBIT bracket by 2030.

I think now just to recap once again the full-year outlook we have, we are estimating that our net sales this year will be in the range of €140 million to €160 million, and that our adjusted operating profit will be in the range of €7 million to €10 million. If and when we are reaching these brackets, both the revenue as well as the profitability will be improvement on a full-year basis year-on-year.

We are expecting this profit to be weighted more towards the second half of this year. Then what I would say is pretty customary disclaimers of this world situation where we are, as we are in a very turbulent operating environment, including many geopolitical tensions, most recently also Middle East, which has also impacted us in the first quarter.

We are basically then, if this will start to have material impact that would mean that we would have to deviate from our guidance, then we will obviously get back to you, but as things stand at the moment, the outlook that we have given for the full year is certainly holding. All right.

I think I will stop here and then, Mervi, if you would take us through some of the details, and then we will take some time for questions. You are muted, Mervi.

Thanks, Esa. Very good morning everyone also on my behalf, and very nice to have you all here in this call.

Let's have a look on more detailed where we are and when we look at this quarter. As we spoke, this net sales was pretty much flat as Esa mentioned, and there was kind of a deviation between segments.

We will be looking at kind of Networks side increasing 4.3%, while kind of then in PSM side, it was more kind of then due to project timing coming a bit later their kind of net sales growth for this year. Related to adjusted EBIT, I think that it's good to highlight that when we look at adjusted EBIT improvement, which is quite nice compared to last year as well, we can definitely see a lot of improvements in material and manufacturing cost side.

We have been able to keep kind of improving that one with 1.1 percentage points, as well as then kind of being able to make sure that even there's certain kind of personnel expense cost increases, we have been still able to focus those investments in North America for Networks side. When we look at then about this earning per share, when we go down to that line, we can see nice improvement compared to last year.

There's also in addition to operative elements which were actually improving, we can see that our financing costs were lower compared to last year, and there was kind of several things, a bit lower loan interest cost, and then also FX impact was not so high. We were also able to kind of then book some deferred tax on the quarter due to improved and changed kind of provision outlook for certain legal entities.

That was kind of taking us also a bit upwards for compared to last year. When we look at then cash flow, so as also mentioned, this was first quarter sometime that we were having negative impact, but we had to also make sure that considering the component price increases and tightening situation for critical components, we wanted to make sure that we have enough the right components for the rest of year, and we tried pricing and so on.

Also one of our key customer was also taking somewhat kind of breaks in their kind of payments due to the fact that their financial year was closing in the end of March, so that was temporarily then impacting also for the cash flow. That's why we are expecting our cash position and operative cash flow improving in the end of the year.

Then when we look at the next slide, here are the bar charts for the group. I do not repeat the same stories as you all already kind of heard.

One topic which also is impacting to orders and net sales which was not maybe mentioned so clearly was this geopolitical uncertainty impacting to Middle East area where we are having slowness and uncertainty impacting to certain deals to close and deliveries to be kind of made. I think that that's also kind of now a bit pending, and it's more timing than kind of changes in the outlook.

When we look at overall our this kind of net sales by geography, here we can see that in rolling 12 months period, we have been able to pretty much see the stable kind of position in group level when we look at North America and rest of the world, and there's kind of the mix that Networks side was growing in this kind of geography, while on PSM side, it's about the projects that different projects are then kind of impacting to different geographies, and that's why kind of it was then decreasing this kind of segment in PSM side. I think that this kind of cumulative adjusted EBIT which we are presenting in this bar chart, so that's of course very nice to see how we have been able to improve compared to last quarters and first quarter even though kind of we were pretty flat on net sales, we were able to still kind of make sure that our margins were pretty okay due to mix, as well as then kind of tight cost control in both variable and fixed cost.

I think that there's good work done, for example in sourcing team to negotiate pricing. Of course, when we have been doing this one kind of quite a lot of this cost control in earlier years, it's kind of coming visible here on the numbers as well.

Here you can see the segment split, Networks and Public Safety and Mobility. In Networks side, there was 4.3% growth in net sales, and that's of course pretty much led by Europe and DOCSIS 4.0 zero kind of implementations in our customers.

Then when we look at this adjusted EBIT, there's the big improvement visible. A lot of good work and product mix behind the improvement of €1 million when we compare year-on-year.

Looking at these orders received, we already spoke about those kind of different levers behind that one, and we see that it's more temporary postponement from our customer who is then kind of at the moment having this merging situation, let's then look at that one. While PSM was then kind of having a bit slower start on net sales, it's pretty much related to different project phases.

I think that this PSM side we will be just having then later quarters the growth and primarily towards also rest of the year. When we look at the adjusted EBIT, even though kind of we were kind of having now a bit lower kind of adjusted EBIT for PSM, we know that there's kind of of course the top line was lower, but also kind of product mix was a bit different.

Those are impacting then also on the PSM side. There we can see that orders received were slightly higher compared to last year, and in that sense order book remains pretty much kind of on the similar level like last year or slight growth on there.

Here's the bar charts for Networks side. When we look at this one, we can see especially on Networks this cumulative adjusted EBIT growing, there we can see coming to €1 million up from last year first quarter, and hence we believe that we are on track in that sense that our cost control and cost consciousness, as well as then efforts to kind of drive the business are then on the right track.

Here also maybe one could mention about this geographic mix, when we look at this rolling 12 months, our North America and rest of the world is increasing compared to last period for the same. Maybe one topic which we haven't been speaking yet earlier was also related to integrated video systems.

That area has been also nicely continued to grow and there we can see good order intake as well among the numbers. There's good things happening under different business areas also in Networks side.

About Public Safety and Mobility, we spoke already about backgrounds and what's going on with orders and net sales. Here we can see, when we look at this geographic mix, there we can see that these projects what we are having in different time period so they can vary a lot then kind of on the geographic side as well.

That's of course good to notice. When we look at adjusted EBIT, last year we had certain kind of quite a nice software project which was recorded in first quarter 25, compared to that time period, when we didn't have the specific larger project this time, we can see lower numbers.

Still kind of we have been doing quite good work on truly on the cost side, we are maintaining good kind of I would say cost control and keeping the profitability levels okay. About balance sheet, we can see that our balance sheet is strengthening and our interest-bearing debt has been decreasing.

When we look at overall and comparison this kind of last year situation, our net working capital remained about on the same level like last year, but we already kind of know that we have been doing quite a lot work kind of on 2025, for example in different accounts receivable side. We have been utilizing different elements on there, and when this time we are seeing that we had operative cash flow negative and it was because of our customers holding back the payments, there was kind of also a bit double impact when certain factorings also caused kind of us some kind of invoices coming back to our accounts receivables.

When we look at overall our kind of cash and unused credit facilities, we were having €20.8 million available, which is okay. Looking at then kind of our kind of cash flow overall, here we can see our kind of cash position was €9.1 million in the end of last year and we ended to €7.8 million end of quarter, and there are as mentioned these kind of different levers related to critical component sourcing and then the customer receivables which were pending.

Typically kind of when we look at this investment activities, we were kind of continuing on certain R&D projects activated into the balance sheet, while then on financing activities, we were kind of paying about €1 million bank loans back and then kind of using short-term credit facilities to kind of then take certain funds to make sure that we have good kind of cash position and available funds. Then when we look at the return on capital employed, we have been improving this one now year-on-year quite nicely, we ended up to close to 10% in the end of Q1, and then our equity ratio improved to 49% compared to last year's.

Then kind of I have one more slide here related to net gearing, it was 30- 38.6% and it has been also improving year-on-year. Of course one important measure for us, which is one of our covenants, this interest-bearing net debt of adjusted EBITDA, it also improved year-on-year and it was 1.9.

I think that we are in that sense also in good track to make sure that our balance sheet is getting healthier each kind of year. That was pretty much from finance side, maybe I'll open for questions and for Esa and myself.

Thank you, Mervi. Let's take then some time for questions.

I think, Atte, you had a hand up already, go ahead.

Thanks and good morning. Maybe we could start with the Networks side and the strong profitability and overall strong gross margin.

Now we know that the growth came from Europe basically, as you said that the North America was down, is it that you have better margins in Europe because, of course, we know that you have very strong market position here in Europe, can you open up that a little bit?

You probably cannot draw direct conclusion like that. Until now, our margins in North America in Networks have been at a pretty okay level as well, but yes, there was maybe a combination of European customers, and then we also had certain part of the revenue coming from segments like video platforms where the gross margin levels are higher, there was a product mix element in that as well, even though we did have high volumes in our DOCSIS 4 rollouts as well, and those DOCSIS 4 rollouts in Europe are actually on a pretty good margin level as well.

Not a direct consequence on that one. Maybe one notable point I would like to make there is that we have been able to protect our gross margin pretty well despite the situation with the increase in component prices in the world.

It has actually been impacting our Networks business much less than our Public Safety and Mobility business. On the latter side, we have seen much more impact coming from the increasing component prices.

I think it's a combination of many of these things, including also the fixed costs which have been kind of contributing to it. I would not say, maybe, Mervi, you can correct me if I'm wrong, but I don't look at this as one quarterly performance element.

I think it's more like a steady improvement in our profitability in Networks business.

That's nice to hear. How about then the DOCSIS 4.0 rollouts in Europe as to how's the outlook?

Is it the same as last quarter or is the investment rates picking up different operators?

It has been actually very nice to see that, even though Europe has started later compared to North America, we got off to a very good start, probably around mid last year when the first rollouts started in Netherlands with our customer VodafoneZiggo. Those deliveries have been progressing pretty steadily and we already have together with the customer many paying subscribers in the network that are benefiting from higher network speeds.

We are also providing the telemetry solution to VodafoneZiggo at the same time and they have been able to further improve their operational expenditure. We are now seeing that there are some other customers who are moving to DOCSIS 4 rollouts in Europe as well.

I hope that we can soon announce our second customer, which we already have secured in Europe for this as well, there's another rollout starting later this year, but more about that later. All

right. Then about the North America and Cox and Charter situation.

Now it seems like the closing of the deal has been a little bit postponed. It should have been already on summertime and now it's somewhere in the H2, what is your visibility with the Cox investment levels and have they indicated that right after the deal the investments level will normalize or how's the visibility there?

Yes. This merger closing is now effectively pending California state competition authorities approvals, and I guess it's anyone's guess how long that will take in the current political climate in North America.

We have had a full-year demand outlook from Cox Communications for the rollout, the visibility within the Cox network has been good. Cox did cancel many of their capex projects quite soon after the merger announcement came last year, but they did not cancel the DOCSIS 4 rollout that we have been doing with them, but the volumes have been at a lower level than what was the peak we already achieved mid last year.

The visibility has been okay. As for what happens after the closing, obviously nobody can tell.

The people themselves do not know of their future positions in the new newco organization, our expectation is that the volumes will start to recover, but how quickly and how, time will tell.

How about the other North American customers? How's the volumes developing on those?

You probably remember we announced in our previous full-year report that we have now more than 20 customers in North America. We have a lot of good activity with many of these so-called Tier 3 Tier 2, Tier 3 operators there.

We have well-working value-added reseller arrangement with a company called Megahertz Places, who are helping us a lot in reaching out to multiple smaller operators. We also did announce that we had secured supplier position with Rogers Communications, who is the largest operator in Canada.

That Rogers deal is starting pretty slowly. We did already deliver some amplifiers at the beginning of the year.

In fact, I think we delivered the very first ones already in December, but they are still wearing out their old inventory in their own balance sheet, I would expect the volumes to start to pick up probably only towards the end of this year, but it will be significant rollout once it eventually gets started. Then

about the Public Safety and Mobility. Now, there's always variation between quarters, but if we think the full year, are you still expecting that the revenue will increase this year on that business?

Although we have probably not quite said it this way, we are expecting both businesses to grow in terms of revenue and improve profitability. The short answer is yes.

How about the Middle East situation, what kind of impact that had in Q1?

It has had quite direct impact on us. We've had some projects in the Middle East in our Public Safety and Mobility business, and we had anticipated that one new project would have started already during the first quarter, but now obviously everything is on hold, it did have an impact.

In the current situation, quite unsure, of course, yet how the situation will stabilize and when these new investments will start to move forward. It has had an impact, yes.

All right, thank you. I'll let Kimmo to ask some questions as well.

Okay. Thank you, Atte.

Good morning everyone. It's Kimmo Stenvall, OP Markets.

Maybe I can continue with the Atte's question on the North America and Cox and Charter. We saw that the Charter had I think they had quite terrible Q1 numbers because the subscriber losses were quite huge, and in your this kind of core business area, the broadband subscriber were down quite heavily, and it has been hurting them couple of quarters, what kind of business opportunities do you see with Charter, and do you have discussions with them?

I guess they would really need a better, or faster broadband network on their core business, or how do you see it?

It's a very good observation, Kimmo. Yes, they have been losing subscribers in their fixed broadband service.

Basically I think the biggest churn is actually coming not from fiber, but it's actually coming from 5G-based fixed wireless broadband, which is a product that was relatively recently introduced to the North American market. We have this, I guess here in Finland, this kind of mobiililaajakaista is very kind of common service availability, but has not been the case until relatively recently in North America.

Those subscribers who are satisfied with probably less reliable service and lower speeds, they actually have been partially shifting to that service. Now, having said that, it's very clear that many of the networks in North America, including that of Charter, is somewhat outdated compared to what kind of technology you have available today.

Charter has made public announcements probably already 2 years ago about their plans on how they are planning to roll out DOCSIS 4 technology into their networks. Those plans are pretty similar to what Cox Communications has also indicated themselves.

I don't expect their capex expenditure on the DOCSIS 4 rollouts to be negatively impacted by this bad financial results they have. This is more like my personal opinion now.

I'm just observing it myself. I would probably more be geared towards your thinking logic, which is that they definitely need to upgrade their networks to be able to be competitive, especially at the higher end, where they are competing in some areas with the fiber service.

Thanks. Then do you have some kind of speaking partner or connection now with the Charter, or you're only communicating with the Cox?

We are communicating very regularly with Charter as well, even though we are not currently one of their contracted suppliers. We will become an incumbent once the merger closes through our master supply agreement with Cox.

Currently, we are not yet there, but we are talking with them, obviously, on a very regular basis.

Thank you. I have no further questions.

Thank you, Kimmo.

I could still ask a little bit as a reminder about your Mexican capacity, now when it's up and running, then you basically serve all of your North American customers from that site, or are you still shipping some products from Finland?

It's a good question. Yes, we actually as part of the announcement today, we did mention that we have started now what we call serial production in Mexico.

We are shipping products from there now to North America. Not all of it is coming from Mexico.

Our intention is to retain in-house manufacturing capability for the North American products, which means that we will probably always do some volumes from our factory here in Finland. However, the plan is that majority of the volumes would be shipped in due course from our Mexico factory, I don't know, some kind of a 80-20 rule or 90-10 rule probably in the end.

All right. Maybe then still about the component prices and the shortages.

We know that couple of years ago the situation was really bad, but how would you compare the situation at the moment to those years in 2022?

I think the post-pandemic time, which I guess is what you are referring to,

Atte,

yes, it was extremely turbulent time. For different reasons, I think now the reason is obviously the data centers that have been built by the hyperscalers that are sucking up all the factory capacity in the world.

I think it is quite similar. Reasons are different, but the consequences are quite similar, which is that some of the component prices are increasing significantly.

I think the biggest impacted part as we see it are actually the memories, different kinds of memories, memory chips, or even hard disk drives, that's where the biggest shortage is now, and those prices are going up. Some other semiconductors are also being impacted.

The order of magnitude probably has not yet been as severe as it was then. One positive thing that I see as a difference is that as we are mostly now being impacted on the Public Safety and Mobility side, and that's basically coming from the fact that there we are using a lot more memories in the products, almost all those passenger information and video security products have memories in them, our customers are much more I would say open to discussing price increases now than they were 2, 3 years back.

Then the industry was built around relatively rigid fixed-price contracts, but I think all us suppliers, including our train manufacturer customers, we kind of learned our lesson then, which meant that into all the new contracts, we have built pricing elasticity and certain pricing increase formulas, which are being applied now, and we have actually been able to shift a significant part of that increased cost to our customers, in line with the principles that have been established, in that sense, the situation is actually quite a bit better now than it was after the pandemic phase.

Maybe I can

continue related to that one. We also made decisions to make sure that we can secure certain kind of price points for those components.

That's then why it's then visible in our inventories, but we want to make sure that we are then maintaining kind of our cost level.

It's a good addition, thanks, Mervi. I very quickly referred to it earlier, but it probably kind of was so quickly that maybe you did not note, but that was one of the reasons why the cash flow looked a bit worse.

We actually did buffer certain components quite a bit because we wanted to secure supply for this year, but obviously that also then came at certain cost.

Yeah. Last question about the competitive landscape and I think CommScope has done some pretty major deals now and there's new companies around it and so how's the situation from your point of view?

CommScope has a new name now, it's called Vistance Networks, and I wouldn't be surprised if it's soon called Aurora Networks, which is the only remaining part of that network after the second divestment they announced. I think it was last week.

They are one of our larger competitors, they are probably the largest competitor in this field. The moves they have made are in a way quite logical.

They had a relatively diverse business portfolio. They have divested away everything else except what relates to this hybrid fiber-cable business, which is the unit that they nowadays call Aurora, and they are focusing on this one.

These divestitures enabled them to effectively pay back all their debt, they are currently a debt-free company, which obviously gives them much more room to invest and move forward, I treat them as a very admirable competitor in the market. They have a strong position, especially in North America, maybe slightly less so here in Europe.

All right. Thank you for all the questions.

[unclear]

Thank you. Would anyone else like to comment or question something before we close?

If not, then I think Mervi and I, we thank you for your participation today, and we wish you a good rest of the day and have a nice weekend.