Good morning everyone, and welcome to Kitron's Q2 2026 results presentation. I'm Peter Nilsson, and as always, I'm joined by our CFO, Cathrin Nylander.

Thank you for taking the time to be with us today. The theme for today's call is on the slide in front of you: resilience by design.

Across our markets, customers are reorganizing their supply chains around resilience and origin rather than lowest cost. That shift is structural, and it plays directly to the platform we've spent the past decade building: distributed, disciplined, and close to the programs that matter.

Q2 is what it looks like in numbers. I'll cover the quarter highlights, our operational position, the sector and order backlog picture, and the strategic outlook.

Cathrin will then take you through the financials, including a cash flow story we're particularly pleased with this quarter. I'll close with the case for our medium-term ambition before we open the floor for your questions.

Let's get started. Next slide, please.

Q2 extended the longest run in Kitron's history: revenue of $296 million, operating profit over $28 million with an EBIT margin of 9.6%, the order backlog $794 million, up 56% year-on-year, and an operating cash flow of $47 million in the quarter. I'll let Cathrin tell the story, but I'll say this much now: the cash engine is turned on.

The real story isn't in any single number. The real story is breadth.

All five of our market sectors grew year-on-year, and all three of our regions did, too. Defense & Aerospace more than tripled, and now represents around half of group revenue.

Connectivity grew 18%, Medical 16%, Industry 13%, and Electrification 7%. The diversification we've been talking about for several years keeps showing up in the numbers.

One thing to flag up front: our Nordic and North America region delivered margin slightly below target. I'll explain exactly why when we get to the regional picture.

It's a supply timing story, not a demand story. With that, let me walk you through where we stand operationally.

Next slide, please. Four points on operations and growth.

First, execution, and it starts with our teams delivering customer ramp-ups across every site. In Central Europe, that discipline showed up as 14.7% EBIT margin, as capacity expansion converts the defense ramp into profit.

In Asia, Malaysia reached break-even in June for the first time. What matters more is what comes next: a significant volume ramp through the rest of the year.

The outlook is stronger here than the rearview mirror. This is a volume story.

In Norway, we're building for what's ahead. The Longum site came into service early in the quarter, and now we've largely completed the production transfers from Kilsund.

The two sites will specialize: Kilsund on electronics and PCBA, Longum on high-level assembly and systems integration, we can scale defense work without losing focus. Second, the supply chain, because that is the defining condition of 2026.

The electronics supply chain tightened further in the first half, and we expect allocation conditions to persist into the second half. This cycle is different from the last one.

AI compute is structurally reallocating memory, substrates, and board capacity, and industrial manufacturers now compete directly with data center demand for the same certified high reliability capacity. Our response is discipline: long-horizon purchase orders, inventory commitments backed, in many cases funded, by our customers, dual sourcing, and early escalation.

Late supplier decommitments and push-outs remain part of daily life. We planned for them, and we're managing this, not absorbing it.

Third, new business, and this is a point about the quality of demand, not just the quantity. During the quarter, we booked a broad set of new programs across all five market sectors, split evenly between new and existing customers, while extending business in competition.

We welcomed new customers in autonomous defense, 5G connectivity, and solid-state power units, alongside new programs in ruggedized edge computing and quantum security. Individually, these wins fall below our threshold for public announcement; collectively, they're exactly the diversification we've been building for.

Fourth, our 2026 outlook. We're now trending towards the top end of the ranges previously communicated: the $900 million to $1,050 million in revenue, and the $84 to $108 million in EBIT.

Our task in the second half is converting demand through a tight supply chain. The capacity keeps expanding where the demand is.

Further expansion is in early planning, in some cases together with our customers. Let's look at the sector picture, next slide, please.

The chart tells the story at a glance. Defense & Aerospace is the headline: $154 million in the quarter, up 234% year-on-year, now around half of group revenue.

European rearmament, unmanned systems, missile programs, combat vehicles, and naval hardware—structural demand that shows no sign of cooling. The point I want you to take away is that every single sector grew, again.

Connectivity was up 18%, driven by industrial IoT and smart sensor solutions. Medical was up 16%, led by critical care.

Electrification was up 7%, with data center demand intact and a large grid customer program moving into serial production. Industry grew 13%.

The industry sector deserves a more nuanced read than the headline number. This sector spans a wide berth of customers, from large tier 1 operators down to tier 3 and 4 specialists, and they're not all living in the same cycle.

Mining and construction is very stable in outlook. Our robotics and automation customers are in a genuine growth cycle.

Many of the smaller customers that are indirectly exposed to semiconductor manufacturing and data center construction, energy solutions, and maintenance are benefiting strongly from new rising demand. Sensitivity to rising component costs varies between these end-user segments.

The sector average hides more than it reveals. What aggregates the truth is the order intake: 1.4 times book-to-bill ratio to date, the strongest ratio in the group.

We now have two quarters in a row with every sector growing. At some point, the pattern stops being a quarter and starts being a portfolio, and that's the point of this slide.

Defense carries the headline; the other four compound beneath it. Breadth is one of the reasons we have so much confidence in the year ahead.

Now to the order backlog and forward visibility. Next slide, please.

As I said, order backlog stands at $794 million, up 56% year-over-year, and about a 1.5% below the record we set in Q1. I want to spend a moment on the sequential move because it's exactly what a healthy backlog should do.

The decline sits at two sites where our largest defense and industrial programs are shipping. That's backlog converting into record revenue you just saw.

Year-to-date book-to-bill is 1.15, and it keeps refilling the book: $653 million of order intake in the first half, $1.25 billion on a rolling 12-month basis. Defense & Aerospace now represents 60% of total backlog, up 45% from a year ago.

Our R6, which is the forward-looking 6-month demand communicated to our customers and in our system, stands at approximately $609 million. As always, two things are to keep in mind when you read it: first, R6 is intentionally front-loaded; we deliberately build in roughly 10% of flexibility so that supply variability can be absorbed without disrupting customer commitments.

That doesn't mean that we're looking at two quarters around $300 million. Second, Q3 is seasonally softer for us, and that's a normal feature of our calendar, not a sign of demand weakness.

What matters the most is the structural shape: a record-level book, broad sector distribution, intake ahead of billings, and customer relationships that are deepening. We've never entered a second half with this kind of forward visibility.

With that, I'd like to hand over to Cathrin for some financial details. Next slide, please.

Thank you, Peter. Let me walk you through the financial picture in more detail, starting with the headline numbers.

Revenue of close to $296 million, up almost 72% year-on-year. EBIT of over $28 million, up almost 89%.

EBIT margin of 9.6%, 90 basis points higher than Q2 last year. EBITDA of $35 million, up 79%.

Net income of $21.4 million, more than doubled. EPS of 10 cents, double from 5 cents.

Operating cash flow was $47 million in the quarter against $19 million in Q2 last year. That's the number I'm most pleased with, and I'll talk more on the cash flow slide in a moment.

On the balance sheet ratios, ROC on a rolling 3-month basis at 39%, up 16 percentage points from a year ago. Net working capital at 15.4% of sales, down from 26.8%.

Cash conversion cycle at 60 days, down from 104. Net interest-bearing debt over EBITDA at 0.3 times, down from 1.4, and an equity ratio of 39%.

Let's take a look at what this means for the first half of the year. Next slide, please.

The half-year view puts the quarter in context. Revenue of $568 million, up close to 69% on the first half of last year.

EBIT of almost $54 million, up 96%, essentially doubled. EBIT margin of 9.5%, 130 basis points higher year-on-year.

Net income of $41.4 million, up 135%. EPS of 19 cents, up 111%.

A line I would like to draw your attention to: operating cash flow of over $52 million for the half-year, close to our strategic target of 80 80% of EBITDA. At the half-year mark, profit is converting fully into cash even while we fund close to 69% revenue growth.

Very few companies growing at this rate can say that. Capital efficiency ratios you see on this slides are the same rolling measures as the previous slide.

They describe the business as it runs today: ROC at 39%, working capital at 15.4% of sales, 60-day cash cycle, and leverage of 0.3 times EBITDA. Let's move to the regional breakdown.

Next slide, please. Three regions and three takes.

Starting with revenue, CEE is now our largest raven region at $140 million in the quarter, up 147% year-on-year. This is the capacity expansion delivering, supporting the major defense customer ramps.

Nordic and North America came in on $131 million, up 36%. Asia at $28 million, up 25%.

On EBIT, CEE delivered $20.6 million, a margin of 14.7%, well above the group target. Asia delivered close to 10%.

Nordics and North America delivered $10.6 million and 8.1% margin, slightly below target, and this is where the supply-gated phasing showed up. Defense deliveries at specific Nordic sites moved to the right because boards and components arrived late, not because demand changed.

June's exit rate points the right way, recovering this region's margin, a clear second half execution priority. In Asia, I want to highlight a milestone: Malaysia reached break-even in June for the first time since we started the greenfield operations there.

With a significant volume ramp-up projected for the rest of the year, the outlook is stronger than the rearview mirror. The site is maturing exactly as planned into a non-China alternative for Asian manufacturing.

On headcount, we ended the quarter at 3,359 FTEs, up 36% year-on-year, but actually down slightly from Q1 as ramp proceeds to serial production. Locked in place, the focus now is productivity, and sales per employee is recovering.

Now the organic versus inorganic split. Next slide, please.

Kitron Eltec, formerly Delta Nordic, was consolidated as of 1st of January with no prior year comparables, this slide splits the quarter into organic and inorganic for a clean underlying read. Here the headline: even excluding Eltec, revenue grew 62% year-on-year.

Defense & Aerospace tripled organically, up 214%. Connectivity and Medical are essentially pure organic growth.

Industry shows small organic dip against a strong comparator; the Eltec contribution takes reported growth to plus 13%. On the order book, organic backlog is up almost 45% year-on-year to $737 million, record-level visibility even without the acquisition.

Eltec adds $57 million on top. One note on book-to-bill, because the quarterly figure will attract questions: organic book-to-bill was 1.05 in the quarter; organic backlog is still building.

Year-to-date, group book-to-bill stands at 1.15. Now cash flow and working capital, the slide I've been looking forward to.

Next slide, please. The short version: the cash engine has turned on.

The quarter delivered $47 million of operating cash, and year-to-date operating cash flow $52.1 million, and close to our strategic target of 80% of EBITDA. Where did it come from?

Receivables were collected at the record deliveries of the spring converted to cash, thus keeping receivables stable. Payables were built in step with the growing purchasing volume.

This is the customer-funded working capital model doing what it's designed to do. Even after all that, working capital still absorbed $11 million in the first half, which is remarkably little for growing to close to 69%.

Net working capital ended at $158 million, down almost 13% from a year ago in absolute terms, even though revenue's up two-thirds. As a share of sales, that's 15.4%, from 26.8% a year ago.

Want to be straightforward about one thing: Q2 was exceptionally strong. The structural story is the trend.

Our cash conversion cycle has come down from 117 days four quarters ago to 60 days today. The improvement is discipline, not timing, and it's what we intend to sustain through the second half.

On the investing side, capital expenditure reflects our capacity and footprint expansion: deliberate investment against contracted demand. Let me close the financial section with the ratios.

Next slide, please. The ratios on this slide are the cleanest summary of how the business is performing.

Three things stand out: first, return on operating capital is 39% on a rolling basis, up from 23% a year ago. This is operating leverage on a stable cost base, and it puts us at the top of the industry.

Second, balance sheet strength: net interest-bearing debt at just $30 million, 0.3 times EBITDA, with net gearing of 0.08 and an equity ratio of 39%. We have ample room to fund the growth in front of us, including further M&A if the right opportunity appears.

Third, earnings per share: 10 cents for the quarter, doubled year-on-year; 19 cents for the half. Revenue growth is translating directly into shareholder return.

The headline I'd leave you with: every important capital efficiency and balance sheet ratio improved year-on-year, and cash conversion now matches the profit growth. With that, back to Peter for the strategic outlook.

Next slide, please.

Thank you, Cathrin. Encouraging numbers, and something to be really proud of.

What does our medium-term outlook look like? Why is $1.5 billion that we're talking about of annual revenue credible in the medium term?

Let's start with some arithmetic. From this year's level, $1.5 billion is not a moonshot; it's just a few more years of compounding what you've already watched us deliver on demand that is largely booked or in structured evaluation rather than imagined: $794 million of backlog and above $1.25 billion of order intake over the last 12 months, and a pipeline that has changed character.

It's no longer a list of opportunities; it's a schedule of decisions: named evaluations where we're shortlisted in, requests for quotation with dates on them, programs with production slots attached. Then the structure underneath: European defense rearmament, where EU instruments are now dispersing real money into multi-year program cycles, and where eight of our sites build defense and aerospace today; grid and data center electrification, a demand cycle with years to run as Europe rebuilds its energy and compute infrastructure; and industrial digitalization, where industry's 1.4 book-to-bill tells you the recovery is being ordered now, not forecasted.

The honest framing: the constraint on that path is not demand; it's conversion, which is why you'll hear one word from us all second half: convert—backlog into deliveries, pipeline into orders, right? Profit into cash, and capacity that follows the order book, and the order book keeps growing.

Let me summarize with a few takeaways. Next slide, please.

Five things to take away from Q2 2026: 1, strength: record revenue, broad-based growth, $296 million, up almost 72%, 62% organic; all five sectors and all three regions grew; Defense & Aerospace tripled, and is now around half of group revenue; 2, profitability above target and converting to cash: EBIT of $28 million at 9.6% margin, and $47 million of operating cash in the quarter; year-to-date cash flow close to our strategic target of 80% of EBITDA; 3, record-level order book and visibility: backlog of $794 million, up 56%; year-to-date book-to-bill 1.15; R6 demand outlook approximately $609 million, intentionally front-loaded for flexibility; 4, Kitron Eltec delivering: footprint is expanding; $16.5 million contributed in the quarter; 5, on the road to $1.5 billion: we're currently trending towards the top end of our 2026 outlook of $900 to $1,050 million in revenue, and the $84 to $108 million in EBIT; and the task for the second half is converting demand through a tight supply market. The demand is on the books, and the platform is funded and standing, and what defines the rest of 2026 is conversion: backlog into deliveries, pipeline into orders and wins, and profit into cash.

That's the work we have in front of us, and that's the work this company was built for. With that, Cathrin and I, next slide, are ready to take your questions.

We have quite a few questions. Let's start with Martina: supply chain, which specific component categories are most constrained, and how much revenue do you believe is delayed and deferred due to supply-demand?

How much for customer-funded inventories on the balance sheet, and on what terms? Those are some very specific confidential questions, but let's start with the component categories.

Right now, I think the memories, for example, and high-level processors are constrained and on allocation. We're seeing a lot of constraints on the PCB market, and we're talking about high-reliability PCBs, advanced PCBs for across the type of products we build, and, of course, the defense part of the PCB market, where you're very much restricted to certain suppliers.

That's in general, right? I'm not going to go into detail.

We have specific webcasts that we review the smart component market and about every six weeks or so. Do we want to talk about the customer-funded inventory on the balance sheet, Cathrin?

What we are mentioning in the quarterly report is as well we have deposits from customers of about $125 million, which is in the same level as last quarter. In addition, of course, we have customer consigned inventory, which is not in the balance sheet, for instance, as well.

Therefore we don't need to mention the sums.

Martina follows up with: last quarter you mentioned results would probably end up between 9.5% and 10% EBIT margin, not above 10%, is that still accurate? I'll let you take that one again, Cathrin.

I would say that's a reasonable as accurate statement still. It requires a lot to grow this much, and also we need to prepare for growth coming into next year, meaning that some costs will increase slightly.

I think 10% is the high end of it.

Torbjørn has then three questions. The first one is regarding our guidance for the year, and that we're at the top end and R6 is above that, obviously.

Even adjusting for front-loading, this appears to imply revenue above the current top end, and what is preventing a formal guidance today? The tight supply chain, right?

There's risk to increase an outlook, and at this point, we're looking all the time at what is our clear to build for the rolling 6-month horizon, and what's our clear to build for 12-month horizon, and what's our clear to build for what we have on order for the next month or so. Those are numbers we're following, and we see what's possible to execute, and what we thought was possible to execute and what was actually executed.

All those parameters weigh in when we talk about our guidance forward.

When we have more clarity in that, we will be likely to reassess, but not until then. Right.

More clarity, when we report Q3, then we're into October, so that then we should have a really strong picture of what it looks like.

It's not about the demand. It's just about what we are able to source, basically.

Within D&A, to what extent are PCBs required to be sourced from European suppliers, and is European PCB capacity currently limited to your ability to convert orders into revenue? First question, for all of the defense primes in Europe, they are sourced from European suppliers.

For some of the new defense tech, they can be sourced either from Taiwan or South Korea, probably. I'm not sure exactly where we buy everything, but the scope is a bit wider there.

Depends on the classification of the product and the end customer. Often, the end customer here has validated and chosen the PCB supplier also, the manufacturer, not the supplier could be a distributor, right?

We use two of the large European distributors for a lot of our PCBs. On the back end there, they would have 1, 2, 3, or 4 that are qualified for each of the programs.

Is European PCB capacity currently limited to your ability to convert orders into revenue? The answer is yes, right?

That's what we said in the Q1 report, that we were front-end loading, we had some possibilities to play around, but, yes, there was more demand loaded. Do you have an estimate for the portion of 2026 revenue you expect to be related to data centers?

That's been very stable for us. It's about $120 million with a couple of pure plays that are about 90% or so of that revenue.

We see a lot more going on on that, and I spoke a little bit about this on the lower-tier companies and customers we have, really across all of the other market sectors except Medical, right? Within Connectivity, there's customers that are being driven to have a lot of on very short lead time horizon, constantly increasing demand.

The same thing within the industrial sector: customers that I never thought was part of data center or AI demand now specifically stating, 'Okay, we have an order for this,' or 'We're building this or that,' and, 'What can you do to help us on pretty much immediately?' The answer was $120 million.

Then Martina comes back: a major grid program into serial production, is that already in the R6? Yes, it is.

Overall outlook? Yep, it is.

Olav then comes in here with, 'Can you give some color on the gross margin development, being slightly down year-on-year and quarter-on-quarter? Is this a reflection of current supply chain situation, or is this a mix effect?

How should we think about this going into 2026, 2027?' Cathrin?

I'd say, yeah, it's a percentage point down in Q2 from last year, that is true. What we're following in general is not material share as a percentage of sales, we follow contribution margin, and that is stable.

Mm. It—

It is a mix effect, most likely.

We're shifting between more labor and less material, or more material. I don't think you need to worry about the mix change in that sense.

Although

we had a large degree here in the second quarter of new defense tech, and specifically on PCBAs, right? The material content can be very high there, shifting the gross margin down.

On contribution margin and profitability, those could even be stronger. Martina again: R6 with even 10% flexibility points to above 1.1, how should we view Well, our outlook is we stand behind our outlook, right?

It could be 10%, it could be 12%, right? Who can say today?

Eirik says, 'Hi, great work and fantastic results.' Thank you so much, Eirik.

Finally, somebody who appreciates us. Øystein: 'You're trending well above guided revenue, but not raising guidance.

Do you expect material supply disruptions in second half second half, or are you just being overly cautious?' We expect the supply constraints to continue and possibly worsen, right?

We've been saying this on our supply chain webcasts over the past 6 months, and guiding our customers towards that, also. A couple of the things we do here is we place long-term orders and push our customers to actually secure the next 12 months of inventory on strategic parts.

At this point, we consider PCBs to be a strategic component. Buy what you need and put it in stock now, right?

We will store it under conditions where it's good for use for the next three years if needed. In some cases, customers are responding.

In other cases, customers are declining to respond or willing to take the risk. There is risk, right?

There were programs that were pushed out of Q1 and most of it delivered now in Q2, but there were some remaining that are in Q3 out of that demand. Eirik: 'Can you give some flavor on customer concentration risk in the reporting numbers, rolling 12 months, year-to-date 2026?

How do you balance building long-term customer relationships with strategic customers and not becoming reliant on a few customers? That would be helpful to understand the balance and how we deal with it.'

I think we see now in the second quarter and through the first half of the year here that the customer concentration is coming down. We had some large part of our Q1 from one large customer.

That's coming down as the other customer bases and the other market sectors grow. I'm comfortable with that.

Johnny says, 'Good morning. How would you assess the PCB prices are up on average?'

I don't have a number on that, but on top of the price, right, there could be an expedite fee that you'd have to pay to get ahead of the line, right, to get your product quicker. That's a part of the PCB pricing.

On average, I expect component pricing and component market, as I've been saying in other meetings this year, 5% to 7% price increase probably, if you're below 5% to 7% on growth, then you have no growth as an EMS. It varies on how the PCBs are designed, what substrates are part of them, what the layers inside the PCBs.

We've seen now that some manufacturers of the raw material components that go into the PCBs, we had one large supplier of a particular substrate that stopped export from the US, they are restricting in export from the US, so that's one part of it. I'm not going to comment specifically on prices since I'm not comfortable doing that.

'Excluding the impact of supply chain constraints from yet back and focusing purely on underlying demand, what would your guidance have looked like?' We're not going into that.

It's not a demand question at this point, which bodes well for whatever we don't deliver this year, that's going to end up in Q1 and Q2 next year.

You have enough information that we've given you to calculate that, Øystein.

Then comes in here, 'Could you talk through the order intake and what has impacted this period?'

When it comes to order intake, I think it's important to look at organic vs. total order intake.

The book-to-bill for the organic is 1.05. In the quarter, we have a 0.96 in total.

That means when we add on Eltec. Eltec has had a minor adjustment in their order backlog in the quarter, meaning bringing the order intake down for the whole group.

I think you should focus on the organic, which is then $292 million and 1.05.

Torbjørn: 'To what extent and/or price increases and component pass-through contributing to growth?' Far, not much, right?

We did a deep dive into this in the beginning of June, and looked at pricing last year on the same type of products or cost last year versus cost this year. On the whole, there's not a lot of notable difference.

On the other hand, right, there could be variances in the products. There could have been more labor in them last year, now there's more material in them.

From a sales price, it's not been significant. At least not year-to-date for the first 6 months.

Again, before anybody took vacation here in Europe, the deadline was June 30th to make sure that Q3 pricing is all adjusted for whatever we see in Q3. We'll have a better number as we exit Q3 and we can look at those numbers, what has happened on the pricing.

Again, my expectation is, probably 5% 5% to 7% when we look at the year. That's more of a gut feeling right now than based on exactly what we see when we run our internal reports.

'How much of the organic growth would you assess stem from pre-buying in the quarter? Pre-buying components or customers pre-buying?'

Pre-buying components and selling them in consignment is not part of our revenue. We never book component transactions into revenue.

Customer pre-buying, I don't think it's—

If it's customer pre-buying, it could be some of the quick drop-in orders we've seen from customers on very short lead time want, but it's insignificant on the total. It could be significant for some sites, specifically we saw a lot of drop-in orders in our Asian facilities.

Again, they grew what, 25% versus last year, and it's all non-defense, right? It is the underlying other market sectors: Medical, Connectivity, and Industry, basically.

A little bit of Electrification also into those numbers. They grew 25%.

Maybe 5% of that growth was quick drop-in orders. That could have been pre-buying, who's to say, I don't know.

From a total point of view, the number won't affect anything.

No. No.

That is it, my friends. We don't have any more questions, and I wish everybody a really, really nice summer.

I know I'm going to enjoy it for a few weeks here before we pick up the pieces and tackle the rest of Q3. Thanks.

Thank you. Happy summer.