Good morning and welcome, everyone, to today's earnings presentation by Inission. My name is Henric Hintze?]

, I'm an equity research analyst covering Inission, here to moderate today's Q&A. Before that, we'll start off with a presentation from CEO Fredrik Berghel.

If at any point during the call you think of any questions, please type them in the chat, and I'll read them out for Fredrik to answer after his presentation. With that, please go ahead, Fredrik.

Thank you very much, Henrik. Welcome to Inission Q4 presentation.

My name is Fredrik Berghel. I'm one of two co-founders and one of two principal owners of Inission.

Myself and Olle Hulteberg, we started this company for over 18 years ago, and we are still both active. I am the CEO, and Olle is the chairman of the company.

Inission Group consists of Inission EMS, contract manufacturing of industrial electronics; Enedo, which is a company developing, marketing, and selling power supplies. Both these businesses areas are operating with customized, high-end, and high-mix, low-volume industrial electronics.

I will go through the financial performance of the quarter, comment on the highlights of the quarter, and then also mention or go through our financial targets. As Henrik said, we will end this with an Q&A.

Please come in with your questions. Reported sales increased 23.7% to 657 million SEK.

However, adjusted for Seltek, 49 million, sales increased 77 million SEK, or 14.5% organically. I think it's important to point out here that we, despite very high sales, still have a book-to-bill ratio at 1.1, which indicates that this higher speed can be maintained.

We are also really happy that Enedo are back in black, at least on EBITDA level for the quarter. To explain the numbers on a high level, our net added value—turnover minus direct material—was 35.9 million SEK higher.

If we adjust for Seltek, take away their part at 29, the material share was somewhat lower compared to last quarter, partly due to Seltek, which have quite low material share. Cost level was 11.3 million higher, Axxos adjusted for Seltek.

We also have restructuring cost mainly in Enedo during the quarter of 5 million, and we have also restructuring cost at Inission EMS on 1.8. To me, this indicates now that we are down in cost level.

If we can keep this volume now, we have a cost structure that corresponds to our income level. All in all, this gives an EBITDA of 38.6 million SEK, which is 20.8 higher than last year.

Seltek in the quarter contributed with 2.1 million. We have quite a high financial cost in the quarter, which makes the earning per share dropping 0.5 SEK from 0.4 to -0.1.

This is explained by the acquisition of the last 49.9% of Seltek—of Axxo that we made in the quarter. Compared to the original acquisition analysis, since Axxo was performing better, the earnout made the company valuation coming out higher.

We had a financial impact there, financial cost of 20.9 million SEK in the quarter, which is non-recurring, of course, and it's also non-cash. This is quite in detail described in the press release 14th of November.

The rest of the difference here in financial cost are currency, that we had a small plus last quarter, now we have a small minus. If we look at the interest cost itself, comes out very, very close to last quarter.

Year-on-year, as the last picture illustrate, shows that we are back on the growth track, which was, of course, we are very happy for. If we look at the quarter in sequence, as this picture shows, it's even clearer that turnover and profit are recovering.

Far, our cost-cutting actions have been eaten up by restructuring cost. From Q1 this year, we will have a clean situation.

If volume stays now on this level, we have a good chance of even further recovering of our profitability during 2026. Clearly improved net working capital.

We have stock coming down, receivables going up a little bit, and payables going up. If we net all this up together with the profit, we have an extremely strong cash flow in the quarter: 101 million SEK compared to 70 million last year.

This gives a lower debt, and now with this improved EBITDA, have taken down the net debt/EBITDA ratio to 2.3, well below our targets. Also thanks to this strong cash flow, the board of directors have decided to propose a dividend of 0.6 SEK per share to be proposed for the shareholder meetings that we have in early May.

If we look at the full-year numbers, sales increased with 56 million to 2.206 billion. Then, of course, Seltek and Axxo—Seltek contributed six months, and Axxo contributed one month, and that sums up to 106 million.

Organically, we have a small decrease. We decreased with 50 million, or 2.3%.

If you look at the explanation of the EBITDA result here, we had a really slow start for both business areas. Then we had also losses for the Enedo business area, the first three quarters, which brings down the EBITDA result to 111 million, which is then 14 million lower than last year.

Then as explained earlier, the profit per share here, or the profit after tax, is clearly affected of this 20.9 million re-evaluation of Axxo, the last 49.9%, as I just mentioned. Looking at the year numbers, on the long picture here, it certainly doesn't look like a recovery, but I think I proved my point with the previous pictures.

Net sales coming out at 2.2 billion, EBITDA amounting to 111 million, or 5% as a margin. As I said last quarter, I think this picture really illustrates our long-term performance and growth here.

Then you can clearly see the overheated market, generally the overheated market, '22 and '23. Then we have destocking, and our customer had too much on the shelves, '24 and the first half of '25.

I think this is a good picture illustrating that. Then it also illustrates Inission-specific situation where we actually were eating or taking high amount of Enedo losses 2021 and now also 2025 here.

Looking at the long trend, EBITDA level, looking at the growth here, if we extrapolate numbers from pre-COVID, you can see that 2025 was quite okay. Looking at the business areas separately, all in all, I think the EMS portion performed decent considering the quite slow start.

Then now we have had a strong increase in both Q3 and also now Q4. Here in Q4, we have an organic growth of 19% for the quarter.

The margin here has been affected of the very unbalanced first half-year and second half-year. I'm thinking, with this higher speed, and if we also have a better balance in loading over the year, that we should have good chances of improving the margins further.

Comparing with our midterm target, we are only 2.4% away compared to the last two years now, ending up at 6.6% EBITDA margin. Enedo, of course, different situation.

Also this quarter, we are shipping lower volume compared to last year, but we are very much closer. Now it's only 6 million below, or 6%.

As explained earlier, we have taken down cost level both in Tunis and also in Italy at the Enedo side. Now we are in balance.

It has been offset also for the last time now in this quarter by 5 million in restructuring cost. Still, even having that included, we have 3.5 better EBITDA in this quarter compared to last year.

If we put this five—five back, we will be at an EBITDA level of 6.2, or 6.7%, which happens to be very close to the EMS or the same as the EMS result. From this quarter on, there will be no extras for restructuring, and if volume stays here, also Enedo will be able to produce decent margins forward.

Then some main items from the quarter. We have applied, and the board of SOFF have accepted our application, being a member of the SOFF.

That is an association for companies within safety and defense. We have, as I have said now, acquired the last outstanding 49.9% of the Axxo shares, and this have hit us with this financial impact that I've talked about.

Then, of course, what is better: acquiring a company that goes better than you think, and then you have to pay a little bit more, or that it goes worse than you think, and you have to pay less? One can be philosophic about that, but still, we are very happy about the Axxo performance so far.

We have also employed a new managing director for our company Inission Syd, Torkel Skoglösa. He has a background from Hexpol and Nolato, and his latest was from Bona down in Skåne.

He has a very relevant industrial background from similar industry as ours, same setup here. We are really happy that we have Torkel on board.

Over to our financial targets. The board of directors for Inission have decided the financial targets for 2026.

Sales for the full year to be between 2.3 and 2.5 billion SEK, compared to last year of 2,206. Also, EBITDA margin is expected to be above 6%, to be compared with the actual for 2025 of 5.0%.

We also want our net debt over EBITDA to be between 1.0 and 2.5. Looking at our midterm targets, thinking about our historical performance, we have always have good growth.

Now we are talking about having 15% annual growth. That is our target, and the dividing here: 10% organic and 5% by acquisition.

Actually, then compared to history, slowing down acquisition speed and focus on organic growth. EBITDA, EBITA, we think we over time should be able to be among the best in class.

So 9 is our target there. There, of course, if we are home with our growth in volume, we have more to prove when it comes to profitability.

Historically, five-ish has been our standard. Our strategy however brought the EMS portion of the business up to even 8, 2023, and as shown here now, seven-ish the last two years.

Enedo, we have turnaround twice now under our ownership. Now Enedo is a smaller, more focused company, and they should be able also to produce decent margins.

All in all here, we think we are in a good industry. We think our shifting from acquired growth to organic growth will be helpful for our profitability.

We also think that the megatrends that I have talked about many times, they are still super-duper valid. We see this regionalization and nearshoring.

We also see that robotization, automatization, and digitalization, and now also Internet of Things with machines talking to other machines, and this will be even more driven by AI. Then not the least, we have electrification here as a strong driver that are a driver for electronics.

Just to sum this up, a few takeaways before the Q&A session: we had a really strong sales in the quarter, increase of 24%; the last of the restructuring cost has been taken in the quarter, 6.8 million; order taking follow positive trend and comes out at 1.1; we have a very strong cash flow at 101 million SEK; we have also the board of directors have decided to propose a dividend of 0.6 SEK per share to be decided by the shareholders in our meeting in May. That was all from me.

Do we have any questions, Henric?

I'm sure we do. Please, everyone listening in, go ahead and type your questions in the chat.

While we wait for that, I'll ask some questions of my own. I thought we could maybe dig a bit deeper into Enedo here.

In the quarter, you achieved an adjusted margin of 6.7% EBITDA, and you say there will be no more restructuring costs going forward. Is that sort of a reasonable level to expect in coming quarters in the near term?

What do you say to that?

If volumes stay there, absolutely. I don't think we will go from minus to plus 6.7, we don't have the target setting there as shown.

We are thinking for the full year we should be about 2%. That is what we target for.

That is how we have set it up. Under these circumstances, it's clearly shows that also this business area can produce decent margins, as I said, yeah.

Then also, it was a good quarter, and then we have the restructuring cost, and things are happening. We have lower expectations on the business area because they are still on a improving journey.

We have to be a little bit humble there also. Yes.

Okay. Maybe on the medium-term financial targets as well, no big changes there.

I was just wondering, if we assume for a second that you achieve the 15% annual sales growth that you target, 10% organic, 5% from M&A, how long do you think it would take for you in that scenario to get to a 9% EBITDA margin?

It has been shown earlier, and as I started to say, I've only been doing this for the last 18 years, I have a little bit of experience. If we are growing, it's extremely helpful.

Organical growth is extremely helpful for the margin. In that combination, two, three years might be my assumption.

We should actually reach there. Having a group of company, Inission EMS is organized in 12 factories and 10 companies, and some of them are doing double digit already.

It's not that we don't know how to do it. It's a matter of all the companies is doing it.

Then you will perhaps always have some slower performer and some better. Very much due to loading.

Our company Inission Syd, they have performed very poorly over a few years. Now when we see that that factory are loaded, and as we write in the report, we have had coming customers there for many, many years in the defense area, and now when they are loading up our factory in a good way, even to the extent that we came behind a little bit.

We were not even able to produce as fast as they wanted to. Then it is like turning a hand, then also Inission Syd is earning good money.

Two, three years would be the short answer.

All right. Moving on to some question from the chat.

Any news on the strategic options for Enedo that you talked about previously? No.

I think we have to communicate those extremely carefully. The management of Enedo together with the Enedo board and also Inission board are looking through our strategic options.

When we have decided where to go, we will, of course, communicate that extremely carefully. The main track is our business plan.

All our daughter companies and our business areas are doing business plan, and that is actually they have sold the factory. Now they are a focused product company: product development, marketing, and selling their products.

In a smaller scale, but also much more lean and much more focused. Having a turnover of 300, 400 million SEK and earning this year a few percentages EBITDA and then grow up to where they should be, 9 as the long-term target is, or medium-term target is.

That is our base plan. We should, since the history has been as it been, we have carefully looked through strategic options, but not anything decided yet.

Apart from actually doing exactly what we are doing. That is the main track.

Very good. Also, were there any write-downs of inventory impacting the Q4 numbers, as there has been in some previous years?

Nothing substantial. No.

We do that every month. We have a system that every month we are looking through the list, and material is not moving.

If it's not been moving, it's our customer's material. We should sell it back to the customer.

If we, for various reason, don't manage that, then we write it off. That we do continuously.

We don't have any extraordinary. We always have small write-offs here and there in the factories, but not any particular.

No.

Okay. Approximately what EBIT margin is Axxo generating at this point?

We don't communicate that. I'm sorry.

That is easy for me to say because I don't know the number even. They are above average.

They are above average to be safe side. I should be careful.

They are doing very well, and they Axxo have Yeah, the background here, I said we decided to acquire Axxo, the last portion earlier than planned. We had a three-year earnout plan with Axxo, and they were doing well.

The management, together with the main owner, the previous main owner was also the managing director of the company, they felt that they wanted to be a part, a real part of the Inission family earlier because they saw at our ERP system and the difference compared to their own to marketing and sales in Norway, them being together, they saw a lot of opportunities there. It was actually a request more or less from the management that we should do this earlier.

Looking at their trajectory also when it comes to the valuation of the company, okay, we paid a little bit more than anticipated from start, but that's because they performed also very much better. We think they will keep on performing better.

Closing the deal now, I think the seller made a good deal, but I also think we at Inission made a good deal at this level. If we look at average price that we paid for the company, because we paid not too much for the first half, now paying a little bit more for the second half, all in all, I think that was an excellent example of how we can actually acquire medium-sized EMS company and build out our group.

Very good. Another question from the chat here: encouraging to see Enedo delivering improved profitability.

Are you considering any more acquisitions of OEM companies, or will you avoid such acquisitions going forward?

Back to questioning about strategic alternatives. If we really make it black and white here, you should say one end, we looked into actually, can we acquire something to make this sizeable?

That would be one one track. The other side, or if we call it the black track, just sell it.

That are the two extremes here. Then we have evaluated all the options in between—not all the options, but some scenarios in between, to be yeah.

There are the power supply industry are not as fragmented as the EMS industry, but it's fragmented. Our original plan was absolutely, if we have solid ground under our feet at Enedo, if we are growing, earning money, positive cash flow, of course, we will go out there and look for add-on acquisitions also to Enedo.

That was our original plan. It's still our base case.

Yes. It could be interesting.

It could be really interesting.

Yeah. All right.

Another question here asking: the revenue target of 2.3 to 2.5 billion seems a little bit cautious if we add the acquisitions and just a few percent organic growth, it should be quite easy to reach the upper end or even above that. What do you think of that?

I think we have discussions. I'm very optimistic, and I'm looking forward, and I want to have stretched targets, and we have internal stretched targets.

Then also giving out targets to the market, we think we should be really careful, and we should really achieve those. I agree with you.

To set the turnover target there, if nothing extreme happens, that should be really doable. That is the whole idea with the targets we put out here.

They should be really doable. Absolutely, I agree with that.

Very good. Maybe the same question on the margin then.

You say a margin above 6%. Should we see that as a lower limit, or where you sort of expect to end up?

To put it simple there also, we have higher internal ambitions, absolutely. For us to do 6%, if we have that turnover presented, it should be very careful, but it's almost a no-brainer.

If things goes right, it should be better. This should be seen as the base.

Then, of course, being humble, we have not been able to do the base earlier years. We said 6 and we ended up at 5.

Now we had a difficult year, we had a very difficult start last year when it comes to volume. Again, it all comes back to volume.

Then what will happen with the world around us, this insecure things that is happening all the while. There is also a lot of signs.

It's not only me in this room reading the pink paper. I'm quite confident that the economy will move towards the better for our customer and their customer, and there are a lot of these indications.

We are quite optimistic.

All right. Very good.

Those were all the questions in the chat for now. If anyone has a final question, please type it in now.

While we wait for that, maybe another question on Enedo. A lot of the drop in sales was due to customers reducing inventory, if I remember correctly.

Book-to-bill has now been very strong in Enedo. Has this been those customers coming back mainly, or something else driving the strong book-to-bill in Enedo?

No, that is correct. We have on the Enedo side, we have much smaller customer base.

Top 10 customer there is really building up the main portion of what they are doing, and even top three, four is extremely important. There you will find companies as Daktronics, American company; you will find National Instruments.

Those two are the really, really the big ones, and they had these structured things, especially National Instruments early '25. We actually visited them a few weeks ago, myself and Kalle and some other Enedo representatives, and National Instruments, they are also really optimistic, and their shelves have the right level of inventory now.

They are now buying at the same pace as they are shipping their own instruments. They're buying power supplies from us that goes into their instruments and out.

Now we are selling what they are selling. We have a good situation there, and they are also optimistic.

Right. Some more questions from the chat here: which activities are underway to increase participation in the defense industry from your side?

We have quite a few leads among existing customers. Kongsberg, not the least.

Kongsberg is Inission's biggest customer. We have been selling to Kongsberg Maritime, and we have been selling to this other division, Discovery.

We have also started now with some test orders, and we have a small business to KDA, as they're called, Kongsberg Defence & Aerospace. It's a slow industry.

I've heard some of my colleagues complaining that, yeah, they put a lot of orders, but they don't call off so much because they are growing so fast, they have problems actually growing as fast as their needs are. Since all of this is physical, it's not really scalable as in IT, you have to have houses, you have to have machines, you have to have materials.

All of this, the ramp-up in this real world is slower than a lot of people has anticipated. We also experience that.

That is what we are doing. We are really looking into that.

Then we have new customers that we are also trying to be close to then, and starting to make business. I think I talked about also one of our biggest customer now in Inission Syd, biggest on Inission level, and absolutely the biggest for Inission Syd: Danish company doing defense equipment, nothing that you can hurt other people with.

It's a communication equipment. We have been working with these since they were a startup 2016, step-by-step-by-step.

The sky is the limit for these people. Now they start to move, now they get substantial orders to the US Army and so forth.

Then we sitting there and shipping, and even to the extent that it goes too fast for them now. Another example here what we are doing, being a member of SOFF.

We think we can be there, and in that association, we can get closer to other companies that also want to be sub-supplier to the defense sector and help them, because we perhaps will not be in the first tier 1 here. We will be tier 2 or even tier 3 suppliers.

All right. One more question here: is the book-to-bill that you report including or excluding acquisitions?

No, it's all in all. Yes.

Since we compute it over total sales, it's Axxo orders and Seltek orders, absolutely. We are not, of course, counting pro forma here.

It's only when we have been owning them, it's very clean.

Yeah. I guess the question might be if you sort of include the order book that you acquire in the order intake figure, as some companies do.

No. It's incoming orders in the period.

New orders, absolutely. Okay.

Very good. That's all then for today.

I hand it over to you, Fredrik, for final remarks.

Yes. Thank you to all of you that have been listening in.

I think we did, as I have said a couple of times now, a quite good quarter, and we are optimistic about the future, even though we have, of course, to be humble and play the ball where it lies since we are now in a world that is changing fast. We have customer, of course, experience exactly the same here.

We are optimistic, and thank you for listening in.