Hello and welcome, everyone, to Inission's Q2 2026 earnings call. My name is Henric Hintze, I'm an equity analyst at ABG Sundal Collier covering Inission, and here to moderate today's call.

We will start with a presentation by Fredrik Berghel, the CEO of Inission, and then move on to a Q&A session. If at any point during the presentation you have any questions, please type them into the Q&A chat, and I'll read them out for Fredrik to answer them at the end.

With that, I hand it over to you, Fredrik. Please go ahead.

Thank you very much, Henric, and good morning to everyone. Thank you for listening in.

Welcome all to this Inission Q2 presentation. My name is Fredrik Berghel.

I'm one of two co-founders and also one of two principal owners of Inission. Myself and Olle Hulteberg, we started this company 19 years ago, and we are still both active.

I am the CEO of the company, and Olle is the chairman. For new listeners, I would like to mention that these days, or since a couple of years back, Inission is organized in two business areas: Inission EMS, or Inission Classic, and Inission Power, formerly Enedo.

I will go through the financial performance. I will mention the few highlights for the quarter.

I will also revert to our financial targets and comments where we are vis-à-vis those. As Henric said, we will end this presentation with a Q&A session.

All in all, we had a really good quarter. Reported sales increased 18.7% to 635 million Swedish krona, where Celtitec was contributing with 61 million, which gives an organic growth of 7.4%.

A high-level explanation of the Q2 result: net added value, invoicing minus direct material, increased with 66 million, due to of course higher volume, but also better material share, 53.5% vis-à-vis 56.3% last year. With another factory and also running with higher volumes, cost level increased 49 million, including personnel, other costs, and also depreciations.

Gives an EBITDA of 41 million, which is 16.8 million higher than last year. This gives an EBITDA margin in the quarter to 6.4%, which is 1.9% higher than last year.

We had a similar financial net, 4.7 compared to last year 4.5 million Swedish krona, all including currency profit of 0.4 million. This all in all gives an earning per share at 1.3 krona, which is then 0.7 krona higher than last year, or also more than doubled.

Year-on-year, as the last picture shows, is quite dramatic. If we look at the quarters in sequence, then we can see that volumes have step-by-step increased, and profitability have followed up with the increased volume.

All of this have happened gradually. Our best guess now for the future, judging from order intake and also talking with all of our customer, is that this sort of new speed, 210, 220 per month, that is a speed we should be able to maintain during the second half of this year.

That then would indicate that we will end up in the higher end of our interval that we have given as the financial target of 2.3 to 2.5 billion SEK. Also with the current cost structure, this indicates that we should be able to maintain the profit levels that we have now.

If we zoom out a bit and look a little bit more on the long-term development, we now have a last 12-month sales of 2.5 billion SEK, and we earn 151 million EBITDA. That performance is well in line with our target.

I also think that this indicates that we can actually do even better with the profit margin if we can maintain this organic growth. I think also this graph really illustrate the EMS market in general, where it was really booming '22 and '23, and then we have had a sort of a hangover, especially '24, but also '25.

I think now, '26, we will be back on track and showing sort of underlying growth in the industry. If we look at the business areas in separate, all in all, I think Inission EMS did a really good quarter.

Turnover up 18.9% compared to last year, amounting to 546 million krona. This gives an organic growth of 7.4% if we adjust for the Celtitec contribution in the quarter.

EBIT amounts to 36.4 million vis-à-vis 28.8 last year, and this gives a margin of 6.7% versus 6.3%. This is of course slightly below our target of 7, but for the first half year, we are at 7.2, and the volumes for the autumn looks stable, I think we should be able to maintain EBITA margin level above 7.

Going over to Inission Power, now name changed from Enedo—I will revert to that—they are shipping, or we are shipping, clearly higher volume compared to last quarter, 18%, ending up then with 89 million in sales. All of that is organic.

Organic growth we always know that that is really helpful for our margin. This higher volume, we have the same gross margin, we have cost discipline, all of this have done that the profitability have improved dramatically.

The EBITDA for the quarter became 3.8 million, compared to -4.7 last year, or measured as a margin, 4.3%. Compared to last year, Inission Power are now a focused product company.

Interestingly, Inission Tunis, which were their old factory, now moved over to the EMS business area. They are also profitable, I think this splitting between the product company and production has been really successful.

Volumes for autumn looks promising, we should even be able to do more second half of the year compared to first half of the year at Inission Power. If we have a look at the main items for the quarter, we name changed Enedo to Inission Power during the quarter, mainly for the reason for showing to the surroundings that we are one company, and we work together.

Also from a branding perspective, it is of course a lot cheaper to maintain one brand, Inission. It has been well received at old Enedo or now Inission Power customer.

They feel that now sort of it manifests that Enedo or Inission Power now belong to this bigger group, creates stability, creates trust, I think it was a smart move. We have also bought back, or not bought back, we have acquired the minority stake of the former founder and owner of Simpro in Norway.

When we acquired that company, Olav Sigurd, he wanted to keep a stake in his company, and the Norwegian company has been really growing over these years, but now we have agreed upon on buying those shares back for 5 million SEK, partly half of that we pay with Inission shares, and half of that we pay in cash. Also, Inission Løkken, they have started up an very interesting cooperation with a collaborative robot company, flexible collaborative robot company.

We will work together now in a real factory environment, and we will benefit from having the last, newest technology there, and they will benefit from actually having not a lab environment, but a real factory environment. We are also really happy to announce, we have announced during the quarter that we have the first, no, not the first, but we have added one, because our factory now in Tunis, it's mainly Inission Power factory, but now we have brought in the first substantial contract there, starting small, but we have all the possibilities to grow that further.

It's a Danish customer within the energy sector, we are really pleased that we see the first small steps of converting Inission Tunis to a, yeah, you can call it a normal EMS factory. As a base for our financial targets, I like to show the historical performance, where we have outperformed the market in growth.

Either way you measure, we have been growing quite rapidly. Our EBITDA has been 5-ish, stable 5-ish except for 2021 when we consolidated in Enedo, or Inission Power was fully consolidated.

After now the second turnaround of Inission Power, we are back on 6-ish EBITDA margin, even though Inission Power is still diluting margin for us. Looking at EMS alone, extremely stable.

If we have a good year, we earn a little bit more; if we have a bad year, as 2024, for example, we earn, yeah, just slightly less. Now we are on these running 12-month, and we are on 7 in EBITA margin.

From this base, I will revert to that, but we really think step-by-step that we will be able to improve from that level. Mentioning our target for this year, or what we think going to happen, I already have said this 2.3 to 2.5, thinking from where we are, LTM at 2.5 already, we think we will end up in the higher end of that region.

Profitability, we also think we should target EMS above or around 7, and so far Inission Power has shown that they can earn more than 2, we think we are well on track there. We also have a order book now for the autumn that we feel confident with.

Given our LTM at 6.1 and H1 at 6.6, we feel confident that we should reach the margin target. When it comes to our capital structure, we are now at 2.1 net debt over EBITDA and feel also confident with that.

When it comes to the more midterm, 3, 4 years down the road, we really want and we really have the ambition to close the gap from our 7 to or 6, 6, 7 to best in class that is actually double-digit, but we are reaching for 9. Then, of course, Inission Power have to step up, and that is a longer journey, but they have shown now that they are able to do that journey.

On Inission EMS portion, we should also be able, with our strategic thinking here now actually turning over to more organic growth, in the quarter we have 7% organic growth and 13 acquired. If we look at the LTM numbers, we have 13% organic growth and 10% acquired growth.

Far, we have stuck to the new strategy by slowing down the acquisition speed and focusing over to organic growth. Then also we are, of course, helped by the megatrends.

You have heard me talking about that before, but we have the nearshoring, we have the regionalization. Work that formerly were sent Far East, they are now staying in Europe, and they are even staying in the northern part of Europe where we are active.

We have the automization, robotization megatrend, digitalization, also Internet of Things is still there, proceeding. Then of course, electrification, which is a driver of electronics big time.

We are also now, for sad reasons really, we have a booming defense sector where we have growing contracts, and we also have ambitions to improve there even further. That was all from me.

Have we got any questions, Henric?

Yes. I will start off with a couple of questions of my own and give people a bit of time to type their questions in the chat, and then I'll move on to those.

I would just like to ask on the guidance, which you leave unchanged, but at the same time you flagged that the run rate in H2 should be 210, 220 per month, which when I look at it would put you above the top of your guidance range, how come you don't raise the guidance here?

Prudence, to be really confident. We also think that what we are stating now is that we will reach these 2.5 and feel confident with that looking at our book.

Then to, then we also have to remember that we have Nordic factories, July in my world is a half month. If you correct for that, I think 2.5-ish is very close.

We also know that we have a good book, and so the chances of overshooting this goal is good, put it like that then.

Very good. I just quickly wanted to ask about the data breach that you press released earlier this month.

Will there be any costs associated with that in H2 that we should look out for?

No. This was very unfortunate, and it was, yeah, it is a sad story.

I can talk long about it, but we actually had our security consultants in Italy to improve the system, and while doing that, the door was open for a short, really, really short time, and someone sort of slinked in in Italy and got the information in our Finnish servers. All of this is, to be very clear, and I think our press release also states that, it's all Inission Power, Enedo, Efore information.

We have been working with this during the summer, contacting, because it's personal data, we have contacted all of our employees, of course, easy, but former employees, more difficult. From operational point of view, we were down hours.

We didn't lose anything when it comes to operational. Still though, our personnel data ending up at darknet, that is a loss, and it shouldn't happen.

It shouldn't really happen. When it comes to what we learned now after summer, however, and that is really what triggered the press release, that is also Efore, Enedo shareholder data have been leaked.

That's, and we can't get hold of these people, so that's why we did this announcement so that, yeah, those that are reading the paper and getting the news and if they have had Enedo or Efore shares, they will be aware. It stays on that level.

No, there is no cost associated with this. No.

Very good. Then it would be interesting if you could talk a bit about the situation with PCB lead times and the general component shortage situation that you're seeing.

You mentioned in the report that it affected the phasing of sales within the quarter a bit. What should we sort of expect in H2 because of this?

Difficult question, really, because so far we have longer lead times on some items, and that of course, if we can place orders on 6 or 9 months, and then sort of we need it, and we think we're going to need it then, it's easier than compared to if we come on a year, 12 month or even an 18 month plan, it becomes more difficult on the component side. On the PCB side, we have had, yeah, we have had deliveries not coming.

That is better now, but the situation is constrained. We are of course trying, and that you can see that also from our inventory, our factories are trying to protect their deliveries by actually bringing home more than they are actually needing.

That is also a very difficult game, since a typical bill of material in our industry is 100 rows, and it's difficult to know what you're going to miss since lead times are long. Far we are quite optimistic, even though we are really aware of that things can change to the worse quickly.

That is how we play this.

Okay. You flagged in the report that there was quite a bit of inventory buildup ahead of the autumn in the quarter.

Was any of that, or how much of that maybe is the right question, related to these shortages?

Partly the buildup of inventory is that we have a order book building up. We have good deliveries coming up during the autumn, and we have brought home material for that.

Then you could argue, "Yeah, but you brought it home too early." Yes.

That is part of that. Then also the other thing, the share of that difficult to judge, because we have a decentralized organization, and they are sitting there factory by factory and looking at this.

Could be mentioned that most of this inventory buildup is for our Norwegian factory in Løkken, and they are really connected to Kongsberg. Kongsberg have actually, after summer now, they have lengthened the horizon, they are back now where we were during the last component crisis.

They are giving us orders now for 18 months. That is part of the psychological atmosphere.

They are afraid. They are pushing and pressing, "Bring home material."

I think perhaps that's also why we see more than half of these extras you will find there, and a lot of that is Kongsberg related, because these people are afraid of not getting their deliveries, because in that industry, Kongsberg is absolutely booming. I visited them during the spring here, and they have, yeah, they have three years order book.

It's a ridiculous situation. It's more a matter for them now how to ramp up production in their whole supply chain where we are only of course one one small part.

All right. Let's move on to some questions from the audience then.

First question here: "Is your target ahead focused more on increasing the EBIT margin or on growing with acquisitions, and what do you think your EBITDA level would be today if you did not acquire businesses?"

Good question. No, as I just said in the presentation, we have the idea of shifting over.

We will keep on growing by acquisition, but we will do that slower, and we try to do that with the acquisitions also with higher quality. I think, or if we have decent organic growth, 5, 10%, or if we have, let's play with the idea that we have 10% sort of consistent organic growth, for us to move in the EMS portion here now from 7 to 9, I think it would be difficult to not do that if I put out my cheek a little bit.

It's because if the system is growing, the difficult part for all industry, but also for us, is of course when you have this up and down, and especially if you are shrinking a lot and you have to downsize because you still have the square meters there, you still have your investments there. We also have all of our coworkers that are skilled and loyal to us, and we want to protect them also.

Then we are a subcontractor, of course if volumes go down, we are adapting our costume. We do that, because that is part of the game, but we don't do that lightly either.

The answer on the question would actually be, yes, we would absolutely have 2, 3, perhaps even 4% higher EBIT margin if we totally stopped acquisition and just focused on EBIT. We think everything, a road always have two ditches, one to the left and one to the right, and it's a balance game, and we have decided to shift over, but not totally, because we think, and we are proud of our growth journey with the actual profitability level that we have had.

If you take Enedo, Inission Power out of the picture, as I showed you, I think we are proud of what we have achieved, even though we know that our colleagues, some of our colleagues, I would say, because not all, some of our colleagues are doing even better.

All right. Next question: "Are you working on any defense contracts that may lead to higher volume in the near future, and if so, what sort of impact could they have?"

We are working. Kongsberg is one of our top five customer, and we are working with these people, and we are not into the defense sector there that's something that explodes, but Seatex, Kongsberg Seatex, that became Discovery, they now when they splitted Kongsberg in shipping division and defense and aerospace division, Discovery belongs now to the defense division.

We are doing a lot of business with them, but we are also quoting, and we have test orders. In Halden, we have real business, not substantial, but we have real business in Løkken to KDA, Kongsberg Defence & Aerospace.

We have good hopes that these contracts will improve in volume. That will, of course, we are not there yet, but we are very positive for that, absolutely.

Then we also have our top five customer as I have talked about, Falcom, this GN Hearing Danish company, INVISIO colleague. They have become from a startup, they are also now top five customer of ours, growing rapidly.

That is communication and hearing aid hear protection devices. That is nothing that explodes.

Still though, it is the armies around the world that is buying from Falcom.

All right. Could you give any further comments on the underlying demand from customers outside the defense and data center sectors?

I would say stable, and yeah, it has been stable, and you can see it almost from our regions where perhaps our Norwegian colleagues are more Kongsberg related and they are coming up quicker. Swedish companies then that have more perhaps old-fashioned industry customer, we see tendencies clearly now that demand is coming back.

It's not shooting through the roof or anything, but after this back and forth, Liberation Day, this April thing, and the war in Hormuz, and Iran and all of that, it's a lot of uncertainties created out there, totally unnecessary, of course, but we see signs of that the underlying demand in our sort of general industry is improving, absolutely. The answer is yes.

Long answer. Could have been short, could have been yes also.

All right. Another question on the defense sector: "Absent any large defense contracts for Inission directly, do you think the boom for peers like Kitron, etc.

will spill over to you? Are there any volumes competitors are lacking capacity for that you could bid for in the near term?"

Not near term, but long term we have seen long term that some of our bigger colleagues in the Nordic, but also in the world, when they have what they call entry ticket, and they are these people that having 50 million SEK or even 100 million SEK as an entry ticket. If you have less volume, they don't let you in even.

For us, a 50 million contract, and then also for Inission it's a big contract, but for an Inission factory, it's a fantastic contract. There are possibilities for us, perhaps not directly related to defense, but when everybody is doing well and the biggest one are moving upwards, it's creating a room for us medium players here, absolutely.

The question is interesting and relevant, but then it's, of course, really difficult to quantify it, but there we see those signs, absolutely.

I'll give the listeners a couple more minutes to type in their final questions, and while we wait for that, maybe you could give us an update on what share of your sales are now related to defense and data centers since these sectors have been performing well?

On defense, we increased from 7 to 12, 13 last year, and keep on growing. We don't have any of our segments that is data center, but that is very much connected to electrification in our world.

ABB, I've talked about our top five customer here, and we have Kongsberg, we have Falcom. ABB is also top five, and these people are also doing extremely well.

I don't have a percentage there in my head, sorry, but they are doing well and they are one of our biggest customers, we are growing together with ABB, absolutely. Also we have new contract coming up since a few years back with Eaton, that is, if you talk electrification, ABB sort of colleague or competitor even.

We have good chances of being a part of that ride.

Okay. You mentioned also in the report that the M&A pipeline is growing quite a bit.

It sounded like you've seen a bit of a shift there. I was just wondering if you could say anything about if you think there's any particular driving force in this.

Is there anything going on with the sentiment among sellers, or why is this?

I have talked about our pipeline, or we call it "the stove," where we have our projects, and we have the cool, and the lukewarm, the warm, and the hot. We have record-high number of on the hot plate, and the definition on the hot plate for us, that is this case is concrete for sale, and it will be sold.

It has piled up there to the extent that we have, with our limited top resources here, actually cope with this. We also then prioritize and do the ones that we really think are interesting, and that is Nordic, and that is, of course, profitability, it is EMS.

The reason for that, yeah, maybe it is really that the economy is coming back, activity is higher compared to so '24, '25 when a lot of EMS companies were shrinking. Then it's, of course, difficult to go to the M&A market and say, if you have a downward trend, to say, "Hey, but this will be much better," because all seller I meet, they always talk about the fantastic next year, and the year after that.

Now when you can see an improving situation, then it's, of course, easier to sort of try to argue for that this trend will continue. Maybe that is really the reason.

Then also, we are a small player here, and yeah, I think, yeah, that might be the reason. They think they can sell for a decent price now.

We are also a cautious bidder, and we have been bidding and losing. We have our idea of 4 to 5 EV value, EBITDA debt, cash-free.

Going down in Europe, this 4 to 6, it doesn't hold. We have increased our multiples, but, yeah, we are still not there yet, but, eventually, we will close something.

We have good hopes for that. I have talked about Denmark, I have talked about Finland, and there are also opportunities in these areas that we are scouting on, yes.

Very good. I don't see any new questions in the chat, I think it's time for us to end this call.

Fredrik, maybe you want to say some final words?

Yes. Thank you all for listening in, all of our listeners and viewers.

I think, all in all, Inission made a good quarter, and also the message for H2 is that what we can see now, we have a decent, even a good and stable order book, and we will be able to deliver on our financial targets. That is my message.

Thank you.