Hello, everybody, and welcome to our quarter 3 report 2026. I'm Anders Mattson, CEO of Sdiptech, and I will present today together with our CFO, Bengt Lejdström.

I start with a short introduction to Sdiptech for any new listeners. Sdiptech acquire, develop, and create a long-term home for niche companies within attractive infrastructure segments.

Today, we consist of 35 companies, that's two more than last quarter, and we operate in a decentralized structure, and each company is responsible for the day-to-day operation. We divide the group in our four business areas, and each business area has clear underlying growth trends for the future.

On a rolling 12, Sdiptech as a group has 4.9 billion SEK in revenues, roughly 1 billion SEK in adjusted EBITA, and an adjusted EBITA margin of close to 21%. These are numbers excluding all companies being divested during the last 12 months.

Coming into the third quarter, I start with some highlights. On a strategic level, we experience a continued solid demand from our diversified portfolio.

Our focus on the infrastructure segment is truly a strong driver for us as a group. We work actively with our businesses to balance the growth opportunities with the working capital requirements, and also the CapEx requirements when we are growing at this pace.

We have a continued good M&A pace, two acquisitions in quarter 3, and last 12 months, we have acquired five companies. Looking at the financial, the strong demand resulted in an organic net sales growth of 13% and a total net sales growth of 19%.

We also see a positive momentum for the profit development, with an adjusted EBITA growth of 11% and organic adjusted EBITA growth of 6%. Cash conversion of 62% in the quarter and last 12 months at 81%.

We have fluctuating cash conversions over the quarters, but it's important for us to stay between 70% to 90% for the rolling 12. We had a little bit lower cash conversion in the quarter, it's primarily due to inventory build-up for a good order position.

We will come back to that later as well. On a final note, it's positive that all our four business areas are growing organically in Q3.

Looking specifically at our net sales development in the quarter, net sales came in just above 1.3 billion SEK, which is 19% growth in the quarter. We had a strong organic sales growth of 13% in the quarter.

We had a positive currency effect for the first time in a while with 1%. Then approximately 5% of the growth is coming from our M&As.

In the quarter, all our four business areas showed a sales growth and a strong demand, especially from Supply Chain and Transportation and Energy and Electrification. Supply Chain and Transportation had some specific large orders in the quarter that boosted the sales figures, and I will talk more about that under the Supply Chain business area.

If looking at a company level, the majority of our companies showed organic net sales growth, which is a positive indication of the good demand overall in the portfolio. If we're looking at our geographic distribution of the sales, it's no significant change there.

It's UK our largest market with around 49% of the sales. Proprietary products is 68% of the total sales, and the service and installation are then, as we always say, primarily on our own proprietary products.

Continue to our profit development in the quarter. Adjusted EBITA amounted to 261 million SEK, which is 11% growth in the quarter.

It was a solid organic growth of 6%, and the currency effect was flat, approximately 5% is coming from the M&A growth. In the quarter, all business areas showed adjusted EBITA growth, and especially strong development in Supply Chain and Transportation and Safety and Security.

The growth in Supply Chain is mainly driven by the acquisitions. Water and Bioeconomy reported a minor growth, and it's positive with an improved performance from this business area as well.

Coming down to the margin, adjusted EBITA margin amounted to 20.0%, that's down from 21.3% last year, and there are primarily two reasons for the decline in the margin. The first one is our sales mix.

With a high net sales growth, the mix has changed quite a lot in this specific quarter. The second reason is specifically in Supply Chain and Transportation, where we had the largest decline of roughly 2.5 percentage point.

The main reason is a large drop in margin from a specific company in the business area, and I will talk more about that as well later when I come into the Supply Chain part of it. By that, I hand over to you, Bengt.

Thank you, Anders. I will continue with details on the cash flow to start with.

Sorry, here the slides are jumping. Cash flow generation.

We have, as Anders said, then we are in the middle of our preferred span of 70% to 90% on the last 12-month basis. However, it was weaker in the quarter, 62%.

The main effect are two, you could say. We paid, in comparable terms, more taxes in Q3 than we typically do, we paid less earlier in the year, but looking at year-to-date or the last 12 months, we're actually lower than last year, but in the quarter, we are much higher, so that affects the cash flow on that line item.

Then the major, though, contributor to the weaker cash flow is the build-up of working capital. We have some strong seasonal companies in the group, our Finnish Hilltip with their snowplows and salt spreaders, and they are, of course, building inventory in order to sell as much as possible now when they are in season, and they also had some big orders coming in, building up both working capital and accounts receivables.

All in all, we have a good momentum in the sales, especially in the later part of the quarter in September, and that built accounts receivables as well. That's really the main contributor to this weaker cash flow, but the good thing about that is that it's because of increased sales in the group.

Looking then at the free cash flow, and the difference is that then we also consider the CapEx spending and the leasing amortizations. That free cash flow a bit lower than last year, and that's because of what we saw on the previous slide, lower cash flow from operations, but also slightly higher CapEx.

We have said previously this year, and we repeat that, that we are investing in a number of companies, not the least in the Water and Bio, but also in other companies in other business areas, for operational efficiency and to meet a higher demand. Also, like many others, I guess, we invest in IT systems to keep up with that as well.

That has been driving CapEx. We are slightly above our level of roughly 3% of sales in CapEx.

Far this year, we are at 3.8%. A little bit high, but still it has its reasons.

Looking at the earnings per share, that improved compared to last year, but one which is obvious in the chart, as you see, is that quarter 4 last year was pretty high, and we still benefit from that. You could expect that last 12 months earnings per share perhaps will not increase as much in the next quarter looking on a last 12 months basis.

Still, we think that's a good development, and it's the profit generating, of course, which is the backbone of that. Could perhaps also say lower interest rates.

Then that all in all affects then, of course, the leverage ratio, which increased a little bit to 2.95 in this quarter, and that's because, again, of the weaker cash flow and the build-up of working capital, but also that we made two acquisitions in the quarter, which we will come back to and present. They represent roughly 40 million SEK in a run-rate profit, which is roughly some 40% of what we have expected for this year, but it's all in one quarter.

Of course that makes a little bit of a hike in these numbers since we only count the profit since they joined us in August and September respectively, but we put the full debt in this equation. We have said that as well, that it may jump a little bit up and down through the quarters, but we have our ceiling of 3.

Looking on the right-hand side of the chart, you see some return KPIs. Can start from the top.

We have the classic profit over working capital, and that has been going down slightly since last year, and again, because of the build-up of capital employed through working capital, but still at a high decent level. Our operational ROCE, which is the return on capital employed in the companies, so that's excluding any goodwill or other immaterial assets at the acquisitions, it's 60%.

Same reason there why that's a little bit lower. Then finally, at the bottom, we have the total capital employed and the return on that one, and that's increasing.

We said already a year ago when we announced that we should divest a number of companies that the return on capital employed will increase because of that, but also to have a stronger, more stable portfolio. That's slightly improving and will continue to improve slowly but steadily.

As an extra note, you could say, on the balance sheet's debt items, since we have done some activities on the debt portfolio during this year, how that has changed in this chart since 2021. You could say that as you see fields in this chart that the earn-out debts, the provisions for future earn-out payments, have lowered, both because we're a little bit low on acquisitions a few years ago, but also that we reduced the use of earn-outs in the acquisitions, and have them in a shorter term than 5 years, which we typically have had, but now perhaps more 3 or 4, but also to lower amount.

That's good, but it has been a very good tool for us to fund our acquisitions through the years. Now we have the capabilities of financing so that becomes a bigger part of it, and pay them upfront instead.

We have reduced that. Then, as you remember, in March this year, we redeemed the preference shares, 175 million in nominal value, which, of course, means that the earnings dilution becomes less, more earnings per share.

We also repurchased some of the outstanding bonds at that time, 250 million of the 800 in total. In September this year, we redeemed or bought back the remaining part of the bond, 550 million.

That has affected our profit after interest rates paid in this quarter since we had to pay a penalty fee of doing this early redemption. Pure mathematics said that that was rational to do since the interest rates are much lower on the new bond that we issued, and we also issued a lower volume, only 400 million.

We could reduce the margin on that bond from 490 basis points on the old bond to 200 basis points on the new bond, less than half. That was easy math to make it a value for everyone to make an early redemption and then come up with the new one instead.

All in all, that means lower interest rates for the group going forward. Right.

Then I hand back to Anders.

Yeah. Thank you, Bengt.

I will go through then our business areas. Start with Supply Chain.

It's been a lot of happening in the business area. Was a good momentum with 27% growth in and 12% growth in adjusted EBITA.

Several of our largest companies in the BA, including GAH, who's making the transport refrigeration units, Elman, making the specific attachments for forklift, Certus, our port automation company, and Hilltip, winter snow maintenance products, all of these four had a very good development in the quarter. From a sales perspective, the growth of 27% is, of course, high, and we have two main reasons for this.

The first one is four new acquisitions coming into the business area and adding top-line growth. Then we have another reason is in Hilltip.

Hilltip has during the year entered into a new product segment for highway salt-spreading equipment. Primarily they've been working a little bit more on the smaller roads, parking lots, etc., and now entering the bigger products for the highway segment.

That segment is growing quite a lot. Hilltip partly delivered a large order, including salt-spreading equipment and the truck itself, and that, of course, boosted the sales number in the quarter.

These big order will continue to be delivered in quarter 4, but long-term we don't foresee to always include the truck as part of the equipment sale for these kind of highway salt-spreading equipment. The margin, if we look at that, it declined from relatively high 21% to 18.5%.

One reason is the large order in Hilltip is way affecting margin down slightly. The main reason is Mecno.

It's our Italian company, and one part of the business model is to sell fully equipped train, including a specific unique and tramways. These trains, they are big and complex, it takes usually 1 year to build, and the cost for these key components has increased significantly during the year.

Unfortunately, we have not been able to charge that to the customer, it's been affecting the margin a lot. The company is, of course, learning from this, taking action to improve the situation for the future.

That's affecting the margin in the quarter. As Bengt also mentioned, we have had an inventory build-up, and this is specifically in this business area.

Hilltip has been building inventory, and that is not only for the new segment, but it's also for a strong order book in general for Q4. Certus, our company within the port automation, they have also increased inventory for future deliveries, and that is a specific reason for that because it's a risk of a component shortage of a specific camera, they needed to buy that for stock in quarter 3.

I'm also glad to present that we have welcomed two new companies in the business area, AUT and Vale Engineering, during quarter 3. AUT is a company based in UK, annual revenue of approximately £7 million and a stable profitability.

The company design and offer customized wheel and castor solutions for many different specifically logistic applications. An example in a cold storage, you need a specific solution due to the specific material for frictions on the floor, for example.

They do all these kind of customized specification and solutions. They have a strong position in the UK, and they are primarily selling domestic.

Another good thing about the company is they have a pretty stable revenue and profitability pattern over the year, and that is good for us as a group. Another company then was Vale Engineering that we welcomed into the group, also based in UK, annual revenue of approximately £5 million and a good profitability.

Vale, they develop and manufacture equipment for road and infrastructure maintenance. The good thing here is both for the winter maintenance, but also for summer needs.

They also have a strong position in the UK, and primarily they are servicing municipalities all around the UK. We got to know Vale thanks to our ownership of Hilltip.

They offer more summer products, and they also have primarily a trailer-mounted solution, as you could see on the picture, and that is different. It's a different application what Hilltip sell today, so that's a good thing as well.

Then we're leaving Supply Chain, coming into Energy and Electrification. They have had a very strong development over the year, and they continue to perform good in the quarter: 17% growth in sales and 9% growth in adjusted EBITA.

We experience continued strong market drivers, which creates this good momentum for growth. For example, Phase 3 continues to perform very strongly, and they are benefiting from increasing demand for reliable power distribution.

They also, of course, have a little bit of a positive effect from the data center growth, but overall steady growing in other applications areas as well. Rolec is also performing good.

They are supported by the ongoing electrification of the infrastructure and the vehicles, and primarily selling their business-to-business solutions, the product, the service, the software attached to the business customers. The decreased margin in the business area in quarter 3 compared to last year is mainly due to one company.

Our Swedish company, Unipower, had a one-off product last year with very high margin in that specific quarter. Then we're moving into Water and Bioeconomy.

That was a positive quarter with a net sales growth of 6% and adjusted EBITA growth of 2%. We have had a number of quarters with declining profits, it's positive to see that we now return to a profit growth in the quarter.

A company that is performing well is our largest company in the business area, Auger. Auger is a specialist provider of drainage, water mains services, primarily towards insurance customers in the UK.

As we reading and we see a lot, the challenges with the water and drainage systems in the infrastructure today continue to raise, and we also see that. We have a 12% growth in profit for this company in the quarter, which is very strong.

As we have said previously as well, we have invested in several companies in the business area to strengthen their foundation for the long-term growth. It's too early to say that we now from this quarter 3 and onwards only will see growth, but we are in a much better situation now compared to 1 year ago, and the companies are much more healthy to explore and take advantage of growth potentials in the market.

Then we're moving into the last business area, Safety and Security. They continue to deliver very strong results even in quarter 3.

They have done that for the full year. In quarter 3, we have a 9% sales growth and a 31% growth in adjusted EBITA.

We experience a strong demand in pretty much all safety verticals. Our products within clean air applications in hospital is doing good, so that's Medicvent.

Our perimeter security for data center, but also for airports and other government building, it's doing very good, that's Eagle performing strong. Secure communication is also developing strong for Cryptify.

The strong margin at high 36% and improved profitability versus last year is due to a number of reasons. One is that we actually see scaling effect here in the business area.

When volume growth, we actually see that the margin is growing as well. A favorable sales mix between the companies.

We have companies with more recurring revenue as part of the sale, and that has been increasing in the sales mix. Another reason is actually that all companies in the business area is performing at a good level, we have no poor performer at the moment.

That, of course, is also important. Having that said, it's important to mention that these high margins will not be sustainable in the long term, but for the full year now, it's looking strong.

If looking at the return on capital employed in the business area, it's continued to be high as margin, both margin and capital efficiency, are managed in a very good way in the business area. Then we're coming into M&A.

From an M&A perspective, we are on track, and we are clearly increasing our M&A activity in the year. We have now made five acquisitions.

One thing that is very important is, of course, the strengthening and working with the pipeline, and that has definitely been strengthening over the last 12 months, and are now in a position that we want to be to be able to reach the growth numbers we would like, both for this year and then, of course, going forward for next year. We respect our leverage target.

We want that to be below 3 in total net debt divided by EBITDA, and therefore we need to be disciplined in how hard we push for new acquisitions. We have to make sure that profit continue to develop, and of course that is needed to fund the coming acquisitions, not only for this year, but also for next year, of course.

Then moving into the final slide in the presentation, I would like to summarize the quarter. We achieved a solid growth of 19% and also in net sales, and 11% adjusted EBITA growth, including organic growth in the business areas.

We are slowly increasing our return on capital employed, which is a very important long-term target for us. Our ambition to increase M&A activity for the full year 2026, we are on track on.

I also added this last quarter, and I do it this time as well, to repeat our current strategic roadmap that we are working on, and we are very much committed to deliver on. We said in 2025 was a year when we put new priorities in for us as a group, and we decided to streamline our portfolio.

This year, 2026, we wanted to come back on the growth track, and we wanted to improve the balance sheet, and put in new priorities around our growth targets and also our leverage target. From next year in 2027, we should be performing according to our full potential to reach the 15% growth, and also at the same time increasing the return on capital employed.

Looking now at our first 9 months in 2026, we definitely look forward to continue on this roadmap that we have a good performance at the moment in. By that, the presentation from me and Bengt is done, and we would like to open up for questions from the audience.

Good morning, and thank you for taking my questions. On Supply Chain and Transportation, on the margins, when do you expect to be able to offset the higher material costs, you think, and in general get back the margin, align the EBITA growth with the sales growth?

Yep. It's the two specific reasons for the margin, as I described a little bit.

The Mecno, it will be continued for the year. They are actually performing at a decent level year-to-date, but still the margin will be continued to be affected in Q4 for Mecno specifically.

Hilltip, they will continue to deliver on those larger orders, which is including the truck itself, which is driving down the margin. We foresee that for Q4 in Supply Chain to be affected.

Then coming into next year, our aim is definitely to increase the margin again. Again, we need to mention that where companies that we are adding to the business area, we acquire companies between 15% upwards in margin, we need to think of that as well, that potentially new acquisition might not be about 20% in margin coming into the business area.

All right, and those acquired companies too, are they contributing negative right now as well to margins, or more talk about future acquisitions having lower margins?

No, I think if we look at the companies we acquired during the year, they are a little bit lower compared to the average margin in the business area, they are affecting in that perspective right now.

Right. Thanks for that.

Then just on the cash here, can you maybe elaborate a bit more on the specifics holding back the free cash flow in this quarter? Last year maybe you had some low-hanging fruit, and now it sounds like you are investing a bit more, building a bit more inventory and so on to drive growth.

Is that fair, and what does that mean for Q4? Do you think that you will still offset the declines here with stronger Q4?

Yes, and we definitely foresee that the cash flow will be better. Q4 is typically very strong because of these seasonal companies, then selling and getting paid.

That's the main reason. Exactly how much of that will be released in cash during the quarter is hard to specify right now, but definitely it will be stronger.

As Anders mentioned, we have also done some preemptive type of procurement to avoid shortages in some components, but the major effect is the inventory build-up for sure and the accounts receivables build-up. That should go back, the numbers of the working capital.

Let's see, again, on a rolling 12-month basis, we aim to be somewhere around the 80-ish percent, a little bit up or down, and we are 81% right now. That's really our goal, our aim to stay in that level.

I could perhaps also mention that when you read our cash flow statements, it's always difficult on which line item different activities and costs or incomes are eventually showing up. The best is to look at the cash flow from operating activities after working capital, really, and that has decreased, of course, since last year, but because of the things I just mentioned.

All right. If we just look into maybe next year, then, and think about overall cash generation and how you prioritize investments and so on, do you think it will look fairly similar, or are there plans to maybe hold back investment in growth a bit and prioritize higher conversion, or how do you think right now about prioritizing volume growth and cash flow for next year?

I think it's a relevant question. As Bengt said, that we are a little bit high on the CapEx, and I think it's working quite good with our model how we look at the portfolio, where we have companies that accelerate where we need to invest for future growth, but we have companies in strengthen, for example, we need to fix something before we really see that we need to invest in them, and then we have our harvest companies, to say.

That model, that framework, we are applying to the companies. Definitely we are more careful about how to invest and where to put the CapEx in which companies for the next year.

We are in that budget, strategic planning process right now. Again, it's a balance, of course, with potential very strong growth opportunities, but we would like to come down closer to 3.

That's the aim in CapEx. Working capital is a continuously discussion with the companies: how can we improve, can we use consignment stock, can we buy in smaller batches, everything.

Yes, we can be better there, and we are working with the companies in regards to that, and that's something we definitely see we can improve for the next year. We would not like to holding back too much on growth potential at the same time.

I see. Thank you for that.

That's all for me. I get back into the queue.

Thank you.

Morning Anders and Bengt. Just a follow-up on the cost inflation, as we have seen quite a hot print on inflation of late, do you foresee risks in other companies that, yeah, it happened now in Mecno, but do you foresee risks in other companies as well where you're not able to offset cost increases with price adjustments?

It's a good question. We talk a lot about that we foresee a second wave of inflation coming in now into the raw material situation.

The majority of our companies foresee that, and they are on their toes, to say, to price that into the projects. We have a few companies where we have those bigger projects, and Mecno for this, setting the price last year, working 1 year without a good indexation of cost in specific project, that's not best-in-class.

Of course we make sure that our companies, when we have the longer projects, the bigger projects, we need to have indexations in the bill of material for the bigger projects. Yes, we definitely learn from this as well and make sure that it's not going to happen in other companies, and I would say the risk is quite small that we will experience this kind of situations going forward.

Very good. Secondly, on the working capital, it's very positive to see that you post solid organic growth, and it's natural that you have some working capital build-up because of that.

In order for you to reach the return on capital employed of 15%, how much do you think you will need to decrease your working capital to close in on that target?

That's, of course, a million-dollar question, but on one of the slides, you can see the working capital in relationship to the sales, and it has been varying between 19% and 22%, and now it has been going up. Our aim is to push that down to probably around the 20%, we think absolutely we need to work on that and lower it to a lower level compared to sales for sure.

That's one component in reducing the capital employed. Then, of course, also to be disciplined with the acquisitions, we don't add too much goodwill and other items when we acquire companies, and of course then to increase profits.

All of these three together then, the working capital, what we pay for companies, and the profit growth, will all together work for an increased return on capital over the years.

Do you have any internal targets for the working capital in relation to sales?

As I said, around 20% is an aim, but we work individually with every company because they have different situations, of course, with their working capital depending on if it's manufacturing or not, etc. On a group level, that's a decent level to be at, so that's our long-term vision for that.

Very good. That was all for me.

Thank you for the questions here. If it's no more questions, then we thank you for listening, and we looking forward to see you after our Q4 report again, then.

We continue to work on our side on strengthening Sdiptech further. Thank you, everybody.