MilDef Group Stock

Okay. Do we have audio? We're doing a minute ahead of the broadcast. Let's see if we have audio. If we can get a thumbs up from one of our friends. So we have audio. Thank you for that, Jen. We're at 10:00 this morning. So a warm welcome to this investor call with MilDef. With a special focus naturally on MilDef's reporting on the third quarter of 2026. This quarterly call will, as always, be presented by Daniel Ljunggren, President and CEO; and Viveca Johnsson, CFO at MilDef Group. We expect approximately 30 minutes to be sufficient for the presentation and Q&A.

At this time, all the guest are muted, I will open up and allow individual microphones for the Q&A. So if you wish to state a verbal question, raise your hand or write in the chat. Naturally, you can write your question in the chat and I will moderate it for you. Also for information, we record this meeting.

So now with no further ado, please take it away, Daniel Ljunggren and Viveca Johnsson.

Thank you very much, Olof, for that, and welcome to all of you joining this con call today around MilDef's achievements in the third quarter here in 2026. For those of you that are not so familiar to MilDef and may be new to the MilDef case, we will just try to give you some short flavor and introduction to the company. We are a rugged IT solution company delivering tactical IT into defense and security, founded in 1997, so we are almost 30 years in the business. We are today a capability company delivering tactical IT solutions for the forces.

Our core market is the Nordics, DACH, U.K., U.S. and selected NATO countries. Employee-wise, we are today roughly around 580 people, and we were listed on Nasdaq Stockholm in 2021. And on the numbers side, we can see now that the last 12 months net sales is almost reaching SEK 2 billion, where we also have an adjusted EBITDA last 12 months of plus SEK 500 million and order backlog that is record high, SEK 5.6 billion and the adjusted EBITDA margin here rolling 12 months 18.7%. So that is just to give you a flavor into the MilDef of World and set the scene for the rest of the presentation here.

This is the agenda that we would like to share with you today. We will start with some of the highlights for the third quarter. And after that, I will leave the word over to CFO, Johnsson, who will deep dive a little bit more into the financials and the numbers. And then, of course, we will have a summary before we move over to Q&A in the last phase of this presentation.

So let's start with the highlights for the third quarter. When we now summarize the third quarter, we can state that this was a very strong quarter for MilDef. Order intake, net sales and margins all reached record levels for a single quarter, and they all did this in the same quarter here. Order intake was, of course, supported by strong business momentum with some major contracts awarded in Q3. One of the important contracts in the third quarter was an extension of a new 7-year strategic framework agreement with the German Defense Material Administration, which goes under the name Bundeswehr in our book at the moment.

The agreement has a potential value of up to EUR 527 million. And the first call-off order that was worth EUR 95 million was also placed here in connection with the signing of expansion. So that also really boost the order backlog and the order intake.

And further here in Q3, we saw a clear margin expansion as well, driven by high operating leverage. Net sales grew by 54% purely organic and operating profit grew with 131%, which is a clear evidence of the operating leverage and the scalability in the business model that we have stated before. The EBITDA margin in this isolated quarter was high at 21.8%, and that is compared to 15.7% in the comparable quarter previous year.

Our investments also in additional delivery capacity are still at a high level. At the same time, as we are delivering growth and improved margins, we also invest to be able to meet future long-term customer needs. In the third quarter, we announced an additional expansion in Rosersberg, which entails a doubling of the production area and also strengthen, of course, our capacity to handle the increased volumes, which is very important, not least in the light of the recently signed framework agreement with Defense Material Administration FMV. And at the same time, we continue to strengthen our organization also in order to support continued growth and meet the long-term demand.

Another bullet worth mention here as a highlight is our integration of Roda Computer GmbH, company that we acquired 18 months ago. It's now formally adopted and rebranded to MilDef. As you know, the name is MilDef GmbH instead of Roda Computer GmbH. The name change reflects our long-term strategy of fully integrating into the MilDef Group. And by bringing our businesses together under one brand, we create a stronger and more unified platform for serving our customers while we maintain the expertise, the products and the relationships and the good people we have in Roda, we keep that as a trusted partner for many years on the German market.

Also, it comes to the record high order backlog, by the end of Q3, we had a record high order backlog, indicating a good chance to continue our long-term net sales growth. The backlog by the end of Q3 was more than SEK 5.6 billion. And by that, we have grown that at 61% in the last 12 months, and that is despite that we have performed a really strong top line growth as well with 76% the same 12 months.

We continue to see a long-term demand across our entire portfolio. The demand for advanced military IT solution is increasing, and we have an offering that clearly meets the requirements set by the customer, geopolitic drivers behind this increased defense investments are long term, I think, and the demand for MilDef are delivering, which is the robust digital infrastructure continues to grow.

And also worth mention on the challenging side that we still see challenges in the supply chain for electronic components, both in terms of lead times and also price levels. We try and we are continuing to take proactive actions to secure access to these critical components. Mainly this is done through a range of activities such as we are building inventory. We have a close collaboration with suppliers to ensure deliveries, and we also have a frequent dialogue with our customer regarding the price absorption. And so far, I think we have been able to meet these challenges in a good way, but we also know in the long time, in the long term, this could be an issue that will continue.

Now I will move on to Page #5, which includes some of the key figures for Q3. If we start with the net sales, it ended up on SEK 829 million, which, as I said before, is an organic growth of 54% year-over-year, and it's also on a record high number. And it was mainly driven by the Nordic and the German market if we break it down to geographic areas. And this is also due to the scalability and the operating leverage in the business also created a strong adjusted EBITDA in absolute numbers, SEK 180.5 million, and that is a growth of 113% year-over-year.

When we come down to the gross margin level, we saw a solid level, 45.4% compared to 45%. It's very similar to the comparable quarter. OpEx side, I think the development was according to plan. We increased by 21% year-over-year, excluding nonrecurring items and FX. And OpEx to sales ratio improved from 33% to 26%, also indicating the operating leverage in the business. But probably the biggest number and the strongest number in the third quarter was the order intake increased by 130%. And this, of course, reflects the continued high investment activity among our customers and their growing need for robust digital defense infrastructure. And even if we had a strong growth -- net sales growth, we see that we have some strong book-to-bill ratio, 2.5 here in the isolated Q3 quarter.

Finally, on the cash flow side, negative SEK 112 million mostly impacted by the inventory buildup here making deliveries in the third quarter or in the fourth quarter, sorry, but also impacted by strong net sales in Q3, which is building up your accounts receivable. And this is something that we look forward to improve in the upcoming quarters.

Also mentioned some strategic events in Q3. I have pinpointed 3 of those. One is the -- one of the major contracts that we have that I was mentioning before was a hardware contract with a European NATO country worth SEK 553 million. This order is about the utilization of the armed forces in the country and it is one of the single largest hardware orders MilDef has ever received, and this order is expected to deliver in 2027.

Another major contract awarded, and I mentioned this before as well and really sets the scene for the future and build some comfort in our order backlog and comfort in our continued expansion is the extension of the 7-year framework agreement with Bundeswehr. This agreement in both size and duration is a strong testament that MilDef is going to be a significant supplier in the ramp-up of the German defense capabilities.

And the final here on the strategic event is the expansion in Rosersberg, we will increase the production and office facility. And hopefully, this will be done by the early 2028, and we expand that by 7,600 square meters. So it's quite a large investments into our increased capacity ramp-up.

And by that, I will leave the word over to Viveca Johnsson, our CFO, who will deep dive a little bit more into some of the numbers.

Thank you, Daniel. Let's begin then on Page 8, which is a collection of key numbers for a fast-growing defense tech company. So the order intake just shy of SEK 5 billion. We have a book-to-bill ratio of almost 1.7 on a rolling 12 basis despite the strong delivery execution during the quarter.

We continue with 60%, 70% growth on order intake and net sales, which is also demonstrated in the increased backlog. And of course, we mustn't forget the people that we have brought on board in the last 12 months to be able to execute on the strong order backlog and turning that into deliveries for our customers and their capabilities, an additional 25% in the number of full-time employees in relation to this 76% growth on last 12 months basis for net sales.

The charts at the bottom of the page is further strengthened from last quarter. We are now showing a CAGR of roughly 50% growth on an average then over 5 years. We are, of course, proud of this.

We continue on Page 9 with a deep dive into the order intake and book-to-bill ratio development. The third quarter here was, as Daniel said, a strong quarter, particularly lifted by the 2 press released orders during the summertime, but also the net sales was strong in the quarter, especially the latter part of the quarter, we saw a strong execution of deliveries, which all bundles up to a book-to-bill ratio of 1.66 to be very precise, but let's call it 1.7.

If we further on to Slide 10, look at the backlog duration, which I know is especially after doing the revised profit last week, you were waiting for this number, the 2027, 2028 numbers. As you see on the right-hand side, it's a strengthening of both those years, particularly the 2027 numbers in relation to where we were last year. We have now just shy of SEK 3.3 billion already now for deliveries in 2027. So we're going to need those additional people that we have brought on board to continue the strong delivery execution and the continued expansion of the MilDef Group.

Briskly slipped over to Slide 11. We are talking a bit more about the net sales and the gross margin development. Rolling 12 is a similar composition as the quarter and year-to-date numbers, where we see a strong growth geographically in Germany and the Nordics, especially Sweden is strong in the rolling 12, but also the other Nordic countries are performing well. Germany and the mobile part of our portfolio is also growing well, which is impacting the gross margin composition. We have a slightly lower gross margin profile on the mobile assortment, and we have contradictory to that, the solutions and integration margin, which is strengthening the quarter, and that is also growing. So we have a little bit of both salt and sweet, if you will, in terms of the gross margin percentage, ending us here on 45.9%, which is in line with expectations in the current setup of the MilDef Group.

So we go to Slide 12, where we deep dive into the scalability of the business and EBITA development of 181 percentages for the last 12 months, SEK 553 million on EBITA level. This is proof of the scalability. Those of you who have followed us for some time, you know this is exactly what happens when we have stable gross margins, we have control over our OpEx, we pour the volume on top and this scales through according to our business model and then you get this operational leverage. But of course, that prevents that we do have good control on OpEx and gross margin in terms of percentage, which I think we can see in the former slide.

Let's proceed now to Slide #13, where we talk a little bit about the working capital and our net debt development. So jumping to the balance sheet here from the profit and loss statement. On your left-hand side, you are seeing the development of our working capital in relation to sales as well as the absolute position. We spoke last quarter about it was a particularly strong position. And we then talked about that this would not prevail all the time. It will be also sometimes going back to around the 30%, which is what we are seeing now. And as Daniel mentioned in the quarter, we are building a little bit of inventory, partly to secure deliveries for Q4 and forward, especially Q4, but also to secure some components, which we have deemed critical to physically keep on stock due to the global supply chain strengthening that we have seen over time. So 31.2% is where we have our position.

Net debt continues in an undramatic development. We are on 1, maybe not about -- we will finalize the financial chapter on Slide 14 with the geographic split, which is also not something extravagant. It's something in line with what you've seen before. We have some 45-ish percent Nordics, 45-ish percent Europe and a smaller part in the North American region.

Daniel, I think it's back to you now.

Thank you very much, Viveca for putting some extra color on the numbers. Now I would move over to Slide #16, and that contains the summary from this presentation, Q3 presentation. First of all, the all-time high order intake and sales and margin in the same I said the quarter, we are reaching all-time high on 3 very important KPIs in the quarter. We also see a margin expansion that is driven by the operating leverage that we have talked about before, really puts us in a really strong EBITDA margin for the isolated quarter here.

Order intake, first time in this history in this company that exceeds SEK 2 billion in one quarter, but we have a strong business momentum, major contract was awarded, and I have mentioned them already earlier in this presentation. Also to keep in mind that is our capacity investments are starting to really make a difference. They are driving a solid delivery execution and I think that we are on delivery levels that we have never been in within MilDef. So we have taken this to the next level due to our capacity investments.

And the final one is if we look a little bit in the future here and Viveca also presented the backlog duration. I think we have a strong position for ending this year in a good way, but also in 2027, we feel comfortable as we are a backlog that is in the position it should be for having comfort for continuing investing in the company.

And by that, I think we have reach the station where we have the Q&A session.

So thank you so much, Daniel Ljunggren and Viveca Johnsson for that briefing. We have a lineup of 5 analysts reading up for questions, and I have allowed your mics and you need to open your mics also individually. So we start with Danske Bank and Jacob Andersson. Please go ahead with your question.

Perfect. Congratulations on the strong numbers. As you know, we are stuck in the past trying to solve the equation with what is old Roda and what is MilDef. And it seems that the old Roda was very strong in the quarter, which I guess explains the gross margin. Is that correct? And is there anything else we should bring with us?

I would say that is a correct statement. You are probably looking at the German development. I remind you again that there are sales from Roda even out or old Roda, I should say, MilDef Germany, we say now that is outside of Germany in other parts of the world. But yes, our mobile -- the mobile part of our portfolio, which is strong in MilDef Germany is normally with a slightly lower gross margin profile.

Okay. Also, so we're happy to see that the order intake starts to fill up for 2028, but can you tell us anything of the '28 orders, what kind of character or any softer orders that you know of at this point or?

Hi, Jacob, thank you for your questions. I don't think there is so much to give extra intel into the 2028 numbers. I think that we will start to still in the end of this year, but also, of course, going into 2027, we will start to get more visibility into the 2028 numbers. I think we have, if we look back, increased the visibility, but still if you look at 2028 today, it's just more of the long-term contracts that we have had in the past. So nothing additional to add in the backlog for 2028.

Yes. Okay. Just the last one on OpEx. Should we expect a relatively flat development, excluding the integration facility now until you have increased the capacity in Helsingborg or?

If you take in mind the top line expansion and what that will require in OpEx in absolute numbers, I'm assuming you are then referring to the percental development. Yes and no. As you know, we have the summertime in both Germany and the Nordics, which are our main markets, and that gives us a lower OpEx math in the third quarter. That will not be consistent. So I hope that's enough input for your model.

With Danske Bank from one Jacob to another. Jakob Marken at SEB. Please make sure to open up your mic.

First one on the Bundeswehr order. As you said in the press release, you expected it to start in late '26 and then into '27. And given the order book number that you gave today, it doesn't seem that all that much is happening in '26. So can you just give a bit more color on how much is to be delivered in '26, i.e., Q4 and how much is to be delivered for '27?

Thank you, Jakob. Good question. I think that the lion part will absolutely be delivered in 2027. I'm not going to put exact number behind it, but that's where the majority of those deliveries will be in '27.

Perfect. On the gross margin, just a follow-up there. I mean, this level, given strong German sales and given the strong order intake for next year, I mean, should we expect the gross margin to be at roughly this level going forward?

I do believe that the current composition geographically is something that we will see prevailing also going forward, absolutely. And we, as all of you know, have an underlying and continued work with expanding the fixed network equipment portfolio also in the German market, which will locally then enhance the margin. At the same time, we are, of course, valuing also the mobile part of the portfolio. So I don't see anything deviating substantially from your proposed statement.

Perfect. That's very clear. Then just on that sort of large order, I mean, MilDef Crete is, of course, going to be an important supplier for you in 2027. How comfortable are you with them being able to deliver the capacity or the amount that you need?

Okay. Thank you, Jakob. I think that MilDef Crete Inc., is and has been for many, many years, a very important supplier for MilDef, and we have strategic partnerships and work really closely together. And as you mentioned, of course, it's also strengthen their capabilities. But we are having a good dialogue and we are investing -- they are investing a lot into increasing their capabilities. So we're doing what we can at the moment to make sure that they are meeting the demands that we're seeing here and that they can deliver up on this new high order intake.

Okay. Perfect. Then a question on -- I mean, now Q3 and Q4 seems to be a lot more similar in sort of top line and deliveries. Given your historical patterns, how should we view H1 of '27? Should the whole of '27 be kind of similar? Or should we expect H1 to be a bit weaker than H2? Or how should we view that?

As you mentioned, we have a clear seasonality or have had a clear seasonality if you look back on the historical numbers with strong finish of the year, normally a strong finish in Q4, but we also have now talked about that we have moved into a new dynamic on the market. You know that time is of [ vessel ] in this industry as well. So we see that we could flatten out the seasonality a little bit in 2027. Also the increased capabilities that we have invested in are making sure that we are ready for doing higher volumes already in the first half. But I have said that in a couple of years back as well. And then still, we have the seasonality in the end of the year, but let's see in 2027. But I think that we will have a pattern that is more taking away this major seasonality that we have had with this hockey stick in Q4 at least.

Okay. Fair enough. The last question from my side, just on the component side, as you mentioned in the report and on the presentation. I'm just wondering how do you work on that with the large contracts that you have signed for next year? I mean, are you buying the components already now? Or is that something that could affect potentially the margin in next year?

We are absolutely proactively. We work with trying to secure as much as we can. Sometimes that is by buying and put some stock and sometimes that is securing by agreement. But we are on top of the question, and we understand that this is an issue and could become an issue in the long term. So we are absolutely doing what we can to secure access to these components in the long run as well.

Now I'll travel to Mads Brinkmann with Berenberg.

Congrats on a strong quarter. Just quickly on -- if we just think about the market, I think probably out in the public domain that expectations at least for some bigger vehicle order -- bigger orders for vehicle platforms this year that we haven't really seen. Are you hearing anything? Or how are you seeing the sort of development? And when should we sort of see at least possibly some of these big orders coming through that could feed into your sales as well?

Mads, thank you very much for your question. Of course, we are trying to be as close as possible to our customers and to big platform providers and listening in and what is the time line and things like that. But we also know that this is an industry where time lines can move around a little bit. And sometimes it becomes a very long sales cycles in this industry. But we are very close. working together with them and see how we can support them when they get the big contract, et cetera. But it is also worth mentioning maybe is that it indicates that we are really heavy platform dependency from a MilDef perspective, we have been able to perform a very good first 9 months there without any major platform programs. So I know that is also a strength, I would say, from our side, not being too much dependent on big platform programs.

Yes, that makes sense. Maybe just if we think about the sort of normal seasonality of orders. I mean, I know you just talked about seasonality before. But if you just think about, obviously, normally have a very, very strong Q4 as well in terms of order intake, at least the normal seasonality would dictate that. But given how strong Q3 has been this year, should we sort of expect that the seasonality is less skewed towards Q4 and that maybe even Q4 is going to look a little bit similar to something like Q2? Or how should we think about it?

It's a really good question, Mads. And you know that in the past, there has been this kind of us elusive budget dynamics, especially on the Nordic market. And I think we still see some of that use or elusive budget dynamics and that will indicate that there will be some orders here in the last quarter of this year coming in. But also the volatility in the order intake is still going to be strong going forward. We don't really know exactly when we're going to close one of the big contracts like we did here in Q3. So I expect more of a high demand in Q4 with the running business, and let's see where the numbers ends up when we are at the other side of this year.

Yes, makes sense. Just one last for me, please. Obviously, the services business and the software business, if I look at that software up quarter-over-quarter, I mean a little bit down year-over-year, but up quarter-over-quarter and the services business continuing to do well, flat quarter-over-quarter, but up a lot year-over-year. How should we think about those 2 in the near term? And when should we sort of expect that, for example, software will start to see sort of incrementally or meaningfully more momentum? And then sorry, just adding another one here. But if we look at the services business 1 or 2 years out, do you expect this to be -- to still largely be a Swedish business? Or do you expect that you can start taking or doing more work for, for example, the Norwegian or the Danish Armed Forces? That would be all for me.

Thank you, Mads. Of course, we have a long-term strategy to be able to be more equal in these kind of 3 divisions if we take hardware, software and solutions into that. But at the moment, we have a really strong momentum in the hardware business as well, making the percentage numbers of the software is not being able to grow here and now. But we think in the long term, that will be standing for more than in percentage of what they are doing today. And also the solutions offering is really growing quick, and we are also climbing in the value chain thinking, making sure that we combine different parts of our portfolio to the end customer is also driving. So they support each other in the different product areas and enable stronger sales from the different areas.

We talked about Germany for example, with a strong net sales with mainly consisting of hardware. So that can also play out a little bit different where are we growing the most in the future and how can it impact the split between those 3 product areas.

So thank you so much for that, Mads. We go to next analyst, Thomas Blikstad with Pareto.

A lot of good questions already. So I'll just have a couple of clarification questions. Firstly, based on the remaining delivery value for Q4, you don't anticipate any material product mix changes then?

Nothing dramatic.

Okay. On the input costs, which have been sort of a hot theme lately, I understand that you're currently able to pass these through to customers, but how should we look at 2027 if this continues? Are you willing to sacrifice some margin to win orders? Or what's your view on this?

I think we now are in a situation -- and thank you, Tim, for the question. Sorry about that. But I think we are in a situation right now where we are able to have the price dynamic already when we are closing the deals and making the quotes, so to say. So we can work with like an open book scenario and let's see what the component prices will be in the long run when we are actually delivering or we can increase the prices already here and now. So price-wise and impacting on the gross margin, I was more worried about if you go 9 months back, the orders that we have really already in the order backlog with a fixed price. And then you see a heavily increase of the component prices, then you can be a little bit worried.

I think we have been able to mitigate that situation here, and that is also shown in the numbers for the first 9 months. So no, I'm not so really afraid of when we're talking about price and price impact for this component situation. I think I'm more afraid of the access to the components whatsoever if this would continue for a long time.

Okay. That makes sense. I understand that perhaps your new larger orders, they have more clauses that should sort of offset higher input costs that you can continuously increase prices to reflect this?

Of course…

It can be different dynamics in the different contracts?

Yes, but that is in some kind of way of course, we're working with that. So the end customer also understands that kind of dynamic that we need to either increase the prices here or now or we can have like an open book scenario in the contracts for just those components and then we can have our standard margin on the price we can buy them for when we are making the delivery.

Great. Just very quick on the orders. Could you give some color on the split between products for existing systems and IT replacements versus new platform deliveries?

That is nothing that we really have disclosed in the report. So I think I need to pass on that question.

We go to William Balksten with SB1 Markets.

Congratulations on another strong report. I believe most of my questions have already been answered, but I have 1 or 2 follow-ups here. So just on capacity and delivery, you have SEK 923 million scheduled for Q4 here and approximately SEK 3.3 billion here for 2027. How confident are you in delivering the full Q4 schedule? And for 2027, how much of the SEK 3.3 billion depends on Helsingborg coming online in the autumn? And like should we expect those deliveries to be back-end loaded? Or how does the delivery look?

Thank you, William, for the question. It's a good question on capabilities and capabilities to delivery. We have strengthened our capabilities now for a couple of quarters. And I think we have seen now that we are reaching a new level and getting paid for this investment into the capacity that we have invested in. If you look at Q4 here, I mean, it's always tough to give guarantees because you always know that there's something that you don't really can see around the corner today to come up, and we also have this global component situation. So we do what we can. I think we are quite comfortable that we have strengthened the capabilities in the company. And if we look at the order backlog for next year, we are forced to continue to invest in higher delivery capacity to be able to take on those kind of big numbers that we have there.

At the moment, if we're doing what we can and continue to move in the right direction, and it looks good for 2027, but you will never be able in this step growth be able to put like a ready stamp on your delivery capacity, you always need to be there and make sure that you have the right resources in the right place.

Okay. Great. Also there on Rosersberg, you announced you're building out here and simply opened last year and you're already bring it out. And just what drove the decision to expand it early? And should we look at like system integrations to be the main bottleneck right now?

The expansion on the Rosersberg side was mainly driven by the new recently signed framework agreement with FMV. We signed that here in June. And that was something that we didn't really have on the radar when we started the progress of building the first phase of Rosersberg. But now we are in the middle of a little bit different facilities, and different operations within that facilities. So that is why we have decided to be able to meet our customer FMV. In this case, we need to be able to increase some facilities and fill it in a little bit other way.

Okay. That's very clear. Just a follow-up on that. Would that then mean that you, in some way, expect orders to be called off from these framework agreements?

Yes, that's correct.

So thank you, William Balksten from SB1 Market. The final verbal question comes from Hugo Lisjo with DNB Carnegie. I have a couple of other questions in the chat that I will reiterate, but we're getting closer to the hard close time of this meeting. So final analyst verbal question comes from Hugo Lisjo with DNB Carnegie. Other questions, please state them in the chat.

A little bit more on the OpEx development going forward. When looking ahead, with the production expansion you're doing, do you believe you can maintain the margin levels you have or that we have seen the past 4 quarters?

If I comment on the OpEx level then as isolated, we will expand in the same way that we have done before. This is leased facilities. It's coming in, it's going to be incremental and so on and so forth. And we do the OpEx expansion to be able to deliver on the top line. So we expect to keep over time the same ratios.

Perfect. Then actually, my last question is on order intake and the exceptionally strong order intake in Q3. That was largely driven by the contract with Bundeswehr. Would you describe such order as like a one-off? Or do you see potential for more contracts of the similar size going forward?

Thank you, Hugo. I think we, in the long run, of course, are seeing order intake or individual orders that they are in the same size. Now there is still a large room for additional orders within the maximum amount or potential value of the framework agreement where we see this SEK 1.1 billion falloff, but there is still room for some major additional orders in that contract. And of course, as we move along and also this increased demand for what we are delivering, we see higher and higher numbers in the individual quarters or individual orders as well. So I mean, we work hard to get them into the order backlog. And hopefully, we can be able to have some major contracts during next year as well.

Thank you, Hugo Lisjo with DNB Carnegie, and thank you all analysts for tracing MilDef on such a busy reporting day. Thank you for that. We have 2 more questions later in the chat. And the first one is about the software in comparison to hardware and system integration sales, which we disclosed in the report.

The question is, how is the software side developing? And do future orders to be delivered include more software than before? How should we interpret this result?

Thank you for that question in the chat here. I think we give guidance around that in previous on this call, how we would like to see the dynamics in the different product areas moving on. Of course, we would like to in absolute numbers being able to drive our software sales even higher because it also have a strong margin and also are a strong enabler to continue with selling more of our MilDef hardware. So that is something that we should continue to push for growing our software sales in the future.

Thank you for that question, [ Mel ]. And the final question for today's call comes from [ Eduardo ]. And this is a very exciting one regarding Europe, the Eastern Flank Watch as one of the first European defense projects and to jump to the checks. Should we read the SEK 553 million order from a European NATO country this quarter as part of that Eastern Flank build-out or as a separate national program?

Thank you very much for that question. It's a really good one. And I will say that it's the final one. It's a separate national program around that order, strengthening that country's capabilities in their defense and armed forces. So nothing actually to do with the Eastern Flank buildout.

Thank you for that clarification, Daniel and Viveca. This was a long Q&A with many, many good questions, helping explain the MilDef equity story. So this concludes the Q&A session of Q3 conference. Thanks for joining, everyone, over 40 participants on this journey, and thanks for contributing to the MilDef story. Also put a note in your calendar year-end report is up next on February 4, 2027. Time moves fast. So we'll be soon there.

So now over to Daniel to close the meeting.

Thank you very much, Olof, for that, and thank you all for listening in to this con call here, and we hope to see you again in 2027 when we have the con call for the fourth quarter of 2026. But until then, take care, and have a great day. Thank you very much.

It's 10:00 on this Thursday, the 16th of July, and we have a presentation of the Q2 numbers out of MilDef coming out of this morning. So welcome to this investor call with MilDef with a special focus on Q2. This quarterly call will be, as always, presented by Daniel Ljunggren, President and CEO; and Viveca Johnsson, CFO. We expect approximately 30 minutes to be sufficient for the presentation and the following Q&A. [Operator Instructions]

Also for information, we record this meeting for later publication on the MilDef website later today. So now with no further ado, please take away Daniel Ljunggren and Viveca Johnsson. And remember, to help our audience where we are in the presentation by stating the number on the slide. Please, Daniel.

Thank you, Olof, for that introduction, and a warm welcome to all of you that are here in the high peak summer period in Sweden, joining this Q2 con call for MilDef. This is the areas that we will try to cover today. We will have some highlights for the second quarter. And post that, we will have some more clarifications on the financial side, and then we will have a summary and of course, in the end, a Q&A session.

But let's start with Slide #3 then and look at the highlights for the second quarter. Q2 was a strong quarter when it comes to the delivery execution and with a high operating leverage, indicating that our investments and efforts into increased delivery capacity has now really started to pay off.

Net sales grew by 64%, purely organic and operating profit EBITA grew with almost 300%, which is, to me, a clear evidence of the operating leverage and the scalability in the business model that we have stated before. If we continue, we saw a good market momentum with continued high demand across the entire MilDef portfolio. The demand for advanced military IT solution is increasing, and we have an offering that clearly meets the requirements set by the customers. The slightly lower order intake in the second quarter compared to the same quarter last year should be seen more as a reflection of the volatility between individual quarters.

The gross margin was clearly improved here also in the second quarter. Total gross margin ended up on 51.9%, and we can compare that to 46% in the same period last year. This was an increase that was driven by a profitable sales mix in the second quarter, more specifically driven by a higher share of sales that is related to software and solution in the second quarter. And those items is bearing a higher gross margin than our traditional hardware business. The gross margin level here we saw in Q2 cannot be taken for granted as a new normal.

The gross margin will continue to vary across quarters depending on our products and customer sales mix. We also had -- when we closed the Q2, we had a record high order backlog, indicating good chances to continue our long-term net sales growth. The backlog by the end of Q2 was just above SEK 4.2 billion. And by that is we have grown the order backlog with 32.32% the last 12 months, and this is despite that we have performed a top line growth, net sales growth of 91% in the same 12 months.

Also, of course, worth highlighting is the strategic framework a very important milestone was that we secured this new 7-year strategic framework agreement with Swedish Defense Material Administration, also known as FMV. This agreement has a potential value of up to SEK 1.5 billion. And also when we signed the contract, there was a first call-off order was placed in connection with the signing. I think that this agreement will accelerate the implementation of MilDef software, the so-called OneCIS into the Swedish Armed Forces. OneCIS is today already used operational-wise in several other countries and also within the Swedish Navy.

Our investments also into additional delivery capacity are still at a high level. At the same time that we are delivering growth and improved margins, we also invest to be able to meet the future long-term customer demands. The investments we have made so far mainly consist of onboarding more coworkers and increasing our production areas. The already announced expansion of our current site here in Helsingborg, the Fortress is progressing very well. We expect that new site to be operational not later than the autumn 2027. And by that, we will double our production capacity in Helsingborg.

Also worth mentioning is that there is still some challenges in the supply chain for electronic components, both in terms of lead times and price levels. We, of course, continue to take proactive actions to secure access to the critical components. Mainly this is done through a range of activities such as the inventory buildup of critical components, close collaboration with suppliers to ensure deliveries and also a frequent dialogue with our customers regarding the price absorption of the increased prices. And finally, of course, also worth mention, going back to the volatility in the order intake.

Post Q2 here, we received our largest order to date, an order value of plus SEK 550 million, an order that consists of hardware and that we estimate deliveries during next year in 2027. And by that said, we will move over to Slide #4, which contains the key figures for Q2. And if we take it from your left hand to start with, the net sales ended up on SEK 630 million, and that is a growth compared to Q2 2025 with 64%. And that growth is pure organic and it's also an all-time high number for individual Q2.

And also next one, lower down in the P&L, the adjusted EBITA, of course, SEK 99.7 million, showing a growth of almost 300%. The adjusted EBITA margin is 15.8% and we compare that to 16.5% and of course, driven by higher sales, but also by a strong gross margin. And as I said, gross margin was strong here, 51.9% in total. And on the OpEx side, we think that this developed according to plan, increased the OpEx with 27%, excluding some nonrecurring items and some unrealized FX losses in the second quarter. Order intake is dropping down a little bit. It's dropping by 17% if we compare to Q2 2025.

This decline should not be seen as an underlying trend. It should more be seen as a reflection of the volatility we see in the defense sector between quarters. We also now, as you already know, announced this large order this week. So it could be a little bit variance from quarter-to-quarter. Book-to-bill ratio here in Q2 reached 1.2. And on a rolling 12-month basis, we have 1.4. And also finally, the free cash flow, SEK 7.4 million compared to SEK 32.7 million in Q2 2025. But I would like to zoom out here and look at the first 6 months because the cash flow on an individual quarterly basis could be a little bit up and down. But I think we have really improved the free cash flow in the first 6 months improved by SEK 208 million in absolute numbers. But of course, the free cash flow is impacted by the increased inventory level, securing critical components for delivery in the upcoming quarters here.

And by that said, I would like to leave the word over to Viveca Johnsson, who will give you some more clarifications on the numbers in Q2 and long term.

Thank you, Daniel. Let's take this to a more rolling 12 and long-term view and starting on Slide 6. We're going to do that from the top left on order intake, which is now on SEK 3.7 billion, getting closer to SEK 4 billion. And at this point, we're on a 50% growth, which is, of course, happy to see that, but it's also great to see that our backlog continues to grow and the book-to-bill ratio is on 1.4. We'll get a little bit deeper into that on the next slides here.

Net sales is continuing to develop strongly. And as Daniel mentioned, it's been strong during the second quarter and rolling 12, we are looking at north of 90%. And to deliver that 90% sales growth, we have added around 18% of employees. So we were at the end of June on 553 souls in the MilDef Universe, delivering these strong growth numbers and also increased profitability, which I will get back to in a couple of slides.

If you allow me to zoom out even further on a 5-year basis here, we have since '22, a CAGR of 41% on order intake, 38% on order backlog, which is, of course, strengthening the thesis that there is a good growth momentum in this company, even if the second quarter was slightly softer due to quarterly volatility.

We'll continue on Slide 7, the order intake growth journey, rolling 12, as I said, 3.7%. The growth accelerated with the acquisition in 2025 by Roda Computers and has now also continued. As Daniel said, in the second quarter, we had 64% growth, and that is all organic. The book-to-bill ratio is coming down slightly compared to the full year 2024, 2025, which is primarily driven by the fact that our delivery pace is increasing. We have built out capacity as we have spoken about previously, and that is now showing in the net sales figures of the second quarter.

We'll move on to the backlog and talk a bit more about what there still is to deliver here on Slide 8. So for 2026, this current year, there is another SEK 1.6 billion in the backlog. This is then before the order that was announced earlier this week. So that is coming in Q3. We'll have to wait patiently for that report.

Moving on to '27, there is another SEK 1.6 billion and -- if I'm looking at the graph on your right-hand side, that is a substantial improvement to this position compared to the year before, so where we were in 2025 at the same time. So a strong development here in the existing year and especially in the coming 2 years after this one compared then again to where we were last year. There is a slight decline in the beyond 2028, the year 3 numbers, and that is primarily due to that we had last year more of these 10-year delivery contract that is now getting closer to delivery. So that doesn't concern us in a significant way. We focus here on year 1, year 2, year 3, where we're also seeing that is where the customer would like their deliveries.

We will turn to Slide 9 to dive into the net sales and gross margin development a little bit more. We have the 91% growth on a rolling 12 basis. This we discussed already. So let's focus on the gross margin, where we are on 45.9%, rolling 12 at the end of Q2 2026. This is a growth again after the acquisition of Roda Computers. We saw that the gross margin decline given that their business model was a bit different from the other parts of the group. We are now seeing that all parts of the MilDef Group are strengthening their position, but what is especially boosting this here in Q2 is the sales mix. where we see more software and more solution and integration sales in the isolated quarter, but also in the first 6 months, they were growing well, but especially true for the second quarter of 2026.

On Slide 10, you will follow our EBITA. And for those of you who have followed us more than 2 quarters, you have heard me say this maybe 15 times already. But if we have a good top line, we normally also have a strong profitability. And this is again true. So 219% growth on a rolling 12 basis in terms of profitability. We do have in the isolated quarter in our OpEx, a one-off effects of a redundancy payment. on a program where we are now truly focusing on our defense offering and removing the bits that were more focused on other parts. This is, as I said, a one-off cost, nonrecurring, and we don't expect anything more to come, but that is also included in this EBITA number.

OpEx is also impacted by adverse FX effects during the first quarter -- sorry, the second quarter and the first 6 months, which is also driving into this. So even if the growth on profitability is fantastic, we are also growing our OpEx to support further growth going forward, and we're doing that in a much lesser scale than we're doing the top line as you will see in these numbers.

We'll turn to Slide 11 for a look on the balance sheet side of things. I said last quarter that some 25%, 26% of net sales -- sorry, of working capital in relation to net sales is not a new normal, and I still believe that this is on a lower level and can be expected to increase a couple of percentage points. We have a strong other net working capital with our accounts payable, accounts receivable in this quarter, but we also see an inventory buildup, which is also impacting our free cash flow in the isolated quarter here.

Looking at the cash flow -- free cash flow for rolling 12, we are talking about SEK 175 million. So I think we are in a good base there, even if the isolated quarter is heavily impacted here by the inventory buildup to secure deliveries for the second half of 2023. On our right-hand side, net debt in relation to EBITDA, 1.0, nice round number and also a sign of a strong balance sheet. Our sales footprint, rolling 12 numbers, we are seeing some, let's call it, 45% each in Nordics and Europe. They are comparable sizes now, and we have just shy of 10% over in North America. So even growth geographically and a strong growth development, especially in Nordics and Europe.

Daniel, do you want to summarize this?

Thank you, Viveca, for giving some more clarification on the numbers. And before we move over to the Q&A session, a short summary from my side. We saw in Q2 a very strong organic sales, 64% and I also saw a strong movement in the operating profit, almost 300%, indicating this operating leverage and scalability that we have now stated and talked about for a while. Continue to see good market momentum. We continue to see it across the entire portfolio. It's not just our traditional hardware. We also see it on the solutions side, integration side, software side with a new framework agreement with FNV. So high demand across the entire portfolio. SEK 4.2 billion in the order backlog when we closed Q2, indicating that we have a backlog supporting the long-term growth. So we are continuing to invest in our increased delivery capacity, and we have done that for a while as well.

We have never been on this high level of investments into increase production capacity. And I think we are having a really good progress right now at the moment, and we can see that in the figures here for the first 6 months as well that we have increased the level of production capacity, and then we have taken it to the new level. But that said, I'm not going to guarantee that we will never have production capacity issues again because that depends on the strong demand and a strong order intake, and we continue to all the time build out our capacity. And hopefully, we now have a new level that will work for time going forward here.

By that, we will open up the floor and we will see if we have some...

If I may ask you to go one slide further, Daniel, we are now concluding the presentation segment of the call, and we're heading into the Q&A session. And we have a lineup of questions from 3 analysts. And if you don't wish to state a verbal question, you can write it in the chat, and I will moderate it. [Operator Instructions] So now we are going into SEB's Jakob Marken and I have opened your microphone allowed it to be open. So I think that you can open it yourself. I think you've done so. Take it away, Jakob.

Yes. Perfect. So a couple of questions from my side. Firstly, on the recent FMV framework. So firstly, if you can help us try to understand how you see deliveries going under the framework time? And also, as you mentioned, the software part that was partly delivered here in Q2, is the software part done in this framework, you think? Or do you expect more softwares going forward?

Jakob, thank you very much for your question. If we try to give you some flavor on the deliveries over the 7 years contract, it's hard for us because we don't have the full picture of when the orders and the levels will be. But I know that the need from the customer is here and now. So that would probably indicate at least that we will see here an upcoming 1 to 3-year the lion's part of things coming in. I don't think that they should wait until year 5, 6 and 7. I think we will continue to work already now, and we will see the most part, I guess, on the first half of this 7-year contract.

Software-wise, that was your second question, we have some software revenues now in the Q2 numbers boosting the gross margin. But we will continue to see software revenues related to maintenance and other things related to the software there going forward as well. So absolutely, there will be more software-related revenues during this 7-year contract.

Okay. Perfect. That's very helpful. And on the software part, I mean, you did SEK 31 million in sales here in the quarter. You did SEK 16 million last year, and you also did SEK 16 million in Q1 this year. So is it fair to assume that this SEK 15 million extra is FMV related? Or how should we think about that? Just to get a feeling how boosted the gross margin is.

I would say that the extra part is related to the FMV framework agreement.

Okay. So the sort of SEK 15 million or SEK 16 million that you have been doing for the Q1 and also last year, is that a level where you expect the underlying sort of software demand to be?

I think that is kind of tricky to say. And we will, of course, try to add on more customers and things like that on the software side. So it's not going to be just FMV that is included in the software revenues. We already today cover a couple of the Nordic countries and some other NATO countries as well with the software there. So it's a different development from different customers.

Okay. And just on the OpEx side, as you mentioned, the SEK 12 million related to Norway and part of that is not defense related. Is there any other places in the organization that you see a potential or where you want to do similar actions so that we should expect a similar cost in any other quarter or in any other part of the business?

Not at the moment. Today, I think that was the final puzzle piece that was not related to defense. more related to other critical society infrastructure. So that was the final piece that didn't really fit the puzzle in the defense -- a pure defense company.

Okay. Perfect. And why didn't you adjust for the -- if you see it as a one-off here in the quarter?

Because we deemed it small enough to be taken into the running business, and this was not a large restructuring program. We thought that was the most straightforward way to handle it.

Okay. Yes. Fair enough. Fair enough. And last question from my side on the backlog, as you touched upon a bit, Viveca, on the orders beyond 2028, it's down a bit year-on-year, but it's also down quite a bit quarter-on-quarter, above SEK 50 million here. So just if you can help us understand what happened quarter-over-quarter.

I'm not sure actually, to be honest. But there is probably something that has been pulled back into '28 in the quarter since it's a decline. I would assume that is what has happened where there have been no cancellations. So that is my only outstanding explanation point that it must have been pulled closer. It's not such a large number that I have a deep dive into it, to be honest.

Thank you so much, Jakob Marken from SEB. We go to Danske Bank and Daniel Lindkvist, I believe I have opened up your mic, and I see that you just opened yours. Welcome to state your question, Daniel.

Perfect. So just -- can you hear me?

Absolutely.

Yes. Great. So just Jakob touched upon several of my questions, but just moving on then, I mean, I am one of those living with the model that is in transition from no longer getting the ROAA numbers. So could you give us some guidance on the development in the core business versus the ROAA just to help with this mitigation for the future? It seems like the normal pattern of ramp-up of volumes along the year in ROAA was not in place this year. So perhaps Q1 was a stronger quarter than Q2, and we should expect this to ramp up going ahead. So what can you say about that division?

Thank you, Daniel. Daniel, thank you for your question. As you mentioned, we have now started to not isolate reporting the ROA numbers. They are included. They have now been with the group for more than 12 months. We think it was a good idea to not exclude them, especially in the numbers. What we have done at this is showing the geographic top line net sales in a different quarter. And you can find Germany there as well. You can follow some of the development in Germany, even if that is not 100% Roda, they are also selling to other countries. But I mention too much of the numbers, I think we continue to see a good development of the Roda acquisition, good integration with Roda. And hopefully, there will be a couple of really strong growth opportunities on the German market.

Okay. Perfect. And then just on the cost side again, are there any other costs in this? Is this recruitment quarter that has recruitment costs as well?

Yes, there is recruitment cost. And as you know, Daniel, who have followed us for a long time, we are not a heavy CapEx company. We -- when we invest in our growth abilities, it's in the OpEx side. It's in people and in the facilities that has been announced, which has extended slightly and will extend further given the press release that went out on the extensions in Helsingborg. But yes, absolutely, that's recruitment cost and, of course, additional salaries that has gone into that, more the latter than the first.

Okay. Cool. And then just a technical issue then. So the one-off costs, they are then seen in the admin or are they divided through the cost items?

They are divided through the cost items depending on where the person were allocated previously.

Okay. Perfect. And then just the last one from my side. I had expected that you would tie up even more working capital in this quarter. Was there some deliveries just pushed into the other side of the quarter, and we should expect the tie-up to end up in Q3 instead? Or how should we view it?

The tie-up in inventory was more towards the latter part of Q2, which is giving us a beneficial net of AP and AR, which will not persist once we pay the AP related to the inventory buildup, of course. It's always our ambition to not tie up cash in inventory for too long. But sometimes in this strong growth phase that we are facing, we must do that. So I understand your logic that we should have tied up more, but right now, it's we're trying to balance it the best we can to secure our free cash flow and to secure our abilities to continue to grow on our own dime, so to say. But I wouldn't expect -- since it was the end of Q2 that we tied it up, so then your logic kind of holds together, I would say.

Thank you, Daniel Lindkvist with Danske Bank. We now go to Mads Brinkmann from Berenberg. Please take it away and open your mic. I see that it's still, muted. So there we go. Welcome, Mads.

I hope you can hear me. Just a few from my side. Good. Happy you can hear me. I mean, obviously, the gross margin was very, very strong. It's already been discussed in this call. I mean, let's just put things into perspective, right? I know software was very strong, but it's still very small numbers. Like to me, the biggest standout is sort of the increase in the services business or the share of sales that the services business delivered. And I know a lot of people, including myself, are wondering how we should think about the software sales and how it comes out throughout the year. But I guess, can you help us, first of all, in that gross margin number, just to dissect the sort of proprietary MilDef hardware, how that did during the quarter and whether you've made strides on selling more of that.

But also secondly, just how we should think about the phasing of service revenues throughout the year? Because I guess, very strong quarter in Q2, strong Q1, but obviously, you also won some additional orders earlier in the year. And I think I guess that's what's starting to come through. Just if you could give us an idea of the phasing of that throughout the year?

And then a second quick question on the SEK 12 million in Norway. Maybe this is a silly question, but I just want to understand the run rate of the savings of this, assuming that it is a saving and you're not essentially using that to invest further in another piece of that business. But is it essentially fair to think about the SEK 12 million as split out evenly throughout the year? And then I have another one, but we can do that after.

Right. Do you want to start with the margin, and then I'll take the Norway.

Yes, we can do that. Mads, thank you very much for your question. Gross margin-wise, I would say it's an answer with 2 phases. We have mentioned that it has been extra boosted by the software sales here in the end of Q2. But I will also say on the other side of this answer is that we are now seeing more and more improvements in the sales mix and what we have compared to the last year. We are now -- as we said already in Q1, we are increasing the contracts that we are getting from the System and Solutions business. The software, even if it's small numbers, continue to grow. So it's -- this quarter is maybe a normal high, but the underlying trend in the gross margin is on the right trend due to the demand that we see from our entire portfolio, I would say.

So it's moving more shares to come in that is not coming from just our hardware, so to say. So it's a combination of -- maybe this was a too high gross margin in Q2 and we cannot guarantee that, that will be the new normal, but the underlying trend is supporting a continued improvement of the gross margin. Hopefully, that can give you some clarification on the gross margin. And Maybe, should you give you some kind of clarification on the one-off cost here in Q2.

Just to finalize your words on the margin, I would encourage to have a look on the notes in the quarterly report where you can see the split between revenue categories and where you will also find how the solution and integration business have grown the most out of our 3 categories, and that is motivating some of the transition in the margin. In terms of...

Exactly. That was my point. Sorry.

Yes. No, perfect. In terms of Norway, the savings are not huge. There will be some immaterial levels of sales that goes away. It has been a rather low-margin business. So the savings will also be modest, if I say it like that. In these SEK 12 million, you also have some redundancy paid. So it's not just 1 month, just so you think about that. But I would say that both the sales loss from this activity and the savings are insignificant, and I wouldn't switch to the next gears in terms of analyzing that.

Fair enough. And maybe just a quick follow-up. So obviously, on the order intake, you started off Q3 very strongly with the big order to named NATO country. So very, very positive. If we just exclude that, I know it's very early in the quarter. But is there anything you could tell us? I mean, is momentum sort of continuing based on what you would have expected? Or is there anything positive or negative to call out? And then just lastly, I mean, I know it's limited what you can say, but the balance sheet continues to obviously be in a very tough position. I know net working capital might be a bit too low compared to sales. I mean that's fair. You flagged that. But I mean, yes, what are you going to do with the cash? I mean, are we going to see some kind of transaction this year? Or will you be in a position where later in the year, you can either do a higher divi or a special dividend or potentially buy back your own stock?

Thank you, Mads. When it comes to the order intake, I would say, and we have mentioned this in the call before here that still a good momentum on the market, still a high demand for advanced military IT solutions. So we feel quite comfortable with the demand going forward here, also supported by, of course, by this large order that was announced this year. So I will not put any more absolute numbers around that one, but continue to see a high demand, and that is why we also continue to invest in increased delivery capacity.

I think the next question was around what should we do with the money. Of course, we still have the M&A radar on. We are looking to see if there could be some potential targets that could be a really good fit with MilDef. Let's see when and where that transaction will happen. But of course, as you mentioned, now we have a balance sheet that is in a good health and in a good place to make a move if we want to. So now it's -- let's see what happened here in the upcoming second year, second half of this year or next year.

Thank you, Mads Brinkmann with Berenberg. We segue further on, on the international arena with Cantor Fitzgerald and Finn Kemper. You have opened your mic, please welcome Finn.

Congratulations to a fantastic quarter again. My question would be, you flagged continued electronic component pressure in the quarter. And now with DRAM and NAND spot prices moving materially higher, as we all know, how are you thinking about inventories now moving into the second half of the year? And then second part of this is to what extent can you pass through pricing contractually versus like absorbing it just in the gross margins over the coming quarters?

Finn, thank you very much for your question. As we have talked about the component issues and problems around that. I think we have shown in the first 6 months here that when it comes to the price absorbing of the increased prices around that, we have been able to move a lot of this forward to the end customer, so to say. I'm not super worried about the second half in 2026 when it comes to the critical components. I think we have secured a lot already, and that's in the inventory. More worried about if this continue long term, if we look into 2027 and also if we're going to see increased volumes, there could be a bottleneck there when it comes to getting hold of the critical components or that we get very long lead times. I think price-wise, we have shown that the pricing power is at our side and that we can price absorb a lot through the customers, so to say.

Thank you, Finn, for traveling along with MilDef. Now we have one more analyst questions coming up. It's Hugo Lisjo with DNB Carnegie.

And actually, I only have one question because all the other questions are already asked. So could you tell us something more about the order intake within Q2? Were there any other larger orders that did not surpass the SEK 250 million threshold? Or how -- could you share something about it? Was it only bread and butter orders? Or were it -- did you also see some larger orders?

Hugo, thank you very much for the question. Order intake-wise in Q2, I would say there is more or less the bread and butter business to existing customers on existing markets, no one that we haven't announced that was passing the threshold that we have for regulatory press releases. So back to your expression there, more bread and butter business in Q2.

Thank you, Hugo, and thank you, everyone. This has been a very well populated quarterly call, 50 level guests in the meeting in the middle of the summer. So thank you and many, many analysts traveling along. So thank you for the many good questions. I see no other questions in the chat. We are 40 minutes past the hour. So I think that we are in the final approach of this flight.

So I guess this concludes the Q&A session of the Q2 conference. Thanks for joining in and for your contribution. And also, please put in your calendar, the next exciting date. The Q3 report is up next on October 22, as seen on the screen below. But now with no further ado, please, Daniel, to wrap up and close the meeting.

Thank you very much for taking your time to listening into this Q2. And hopefully, you all will have a great summer, and we hopefully will see you again October 2022 when we release the Q3 report. So thank you very much, and have a great day, all of you. Bye-bye.

Thank you.

Thank you.

Well, good morning, ladies and gentlemen, and welcome to this investor call with MilDef with a special focus on MilDef's reporting on the first quarter of 2026. This quarterly call will be presented by CEO, Daniel Ljunggren; and CFO, Daniel Ljunggren. We expect approximately 30 minutes to be sufficient for this call and the Q&A. [Operator Instructions]

Also for information, we record this meeting. So now with no further ado, please take it away, Daniel Ljunggren and Viveca Johnsson. And please remember to help the audience understand where we are in the presentation by stating the number on the slide. Daniel?

Thank you very much, Olof Engvall, and warm welcome to all of you that are joining this Q1 update here for MilDef today, and we will try to remember to state the numbers on each slide. This is what we will try to cover today. We will go through some highlights for the first quarter. After that, we will deep a little bit dive into the financial numbers. And then we will also further give you an update around the Roda progress, and then we will have a short summary, and then we will open up the floor for Q&A session in the end.

But let us then start with the highlights for the first quarter here. Q1 was a record quarter in terms of order intake, indicating the strong customer demand for our products and solutions, and the demand is still very solid. This is now the second quarter in a row where we exceed the milestone of SEK 1 billion in order intake for an individual quarter. And I think to bear in mind, it's especially strong that is in a Q1 that is normally a little bit weaker quarter during the year.

It is, however, worth repeating that MilDef operates in an industry where order intake, net sales are typically volatile over individual quarters. So for this reason, as stated before, it's very important to assess MilDef's financial development in a more long-term perspective. The second one is a very strong delivery execution in Q1 here. Our investments that we've done in the past here and already started doing in the second half of 2021 has now really started to paying off in an increased delivery capacity. We already in Q1 stated that the delivery situation in the beginning of this year was clearly improved, and that is something that we now see in the net sales numbers as well that we have had a strong delivery execution in the first quarter.

We also saw a clear improvement of the margins here in Q1, as we have stated before, when we see a strong top line net sales development, the margins also increased and following in the right direction. And here in Q1, there was a good proof in the pudding for that statement with a high margin. This also, of course, relates to our scalable business model with a high share of fixed OpEx.

If we continue, we also see another positive trend in Q1 was that we saw a significant improvement of the free cash flow, the cash generation. Here in Q1 amounted to SEK 159 million compared to same quarter last year, where we had minus SEK 75 million, so a huge difference between the different quarters. And this has, of course, improved due to that we have a better margin. We have a strong growth, and we have done this without adding more working capital in the same extent.

Also worth mentioning as a highlight here in Q1 is that we have secured some strategic contracts within our new established solutions offering. So this is an offering where we mainly support our customers around system design, system engineering of tech or IT systems for military purpose. This is a support that we provide that guarantees high availability and quality for our customers throughout the full life cycle of the systems. So this contract, I would say, is also evidence of our capability to delivering turnkey-ready IT solutions to our customers and that our portfolio is not just isolated to the hardware. It's now a wider offering.

From a pure financial perspective, these contracts are mainly improving our margins, but also that the nature of this business have a less volatility over each quarter and also provides a more stable cash flow. And finally, as a highlight here in the Q1 is around our investments into additional capacity expansion, and they are still at a high level. At the same time that we are delivering this high growth rate and also improving our margins, we continue to invest to be able to meet future customer needs.

So the investments that we are doing are mainly consist of onboarding more coworkers, but we're also increasing our production areas. The latest major investments that we have announced is the extension in Helsingborg, where our current operation premises in Helsingborg, will be doubled in square meters, and that is something that we think and expect to be ready somewhere around summer next year.

And by that said, I will move over to Slide #4 and give you some of the key figures for Q1. If we start with the net sales were in Q1, SEK 708 million, and that is a strong growth, 108% if we compare year-over-year. And as I said, this all-time high net sales in the first quarter is due to our strong delivery execution. Organic-wise, the growth amounted to 41%. And M&A-wise, the contribution from the roda acquisition was 67%.

Let us then move over to the adjusted EBITA, SEK 121.6 million. That is also a very strong growth compared to last year in the same quarter. If we look at the EBITA margin here in Q1, as I said, really improved to 7.2% (sic) [ 17.2% ] compared to 4.6% in Q1 2025. Gross margin in total ended up at 44.3% if we are including the M&A from the roda acquisition, but also very pleased to see that the underlying gross margin, excluding the M&A was at the high level this quarter at 53.9%.

If we then go further down in the P&L and also look at the OpEx development, I would say it's according to plan. If we are excluding the OpEx that is coming from the M&A, the increase was around 6% year-over-year, which I think indicates a good cost control within the company. So even if we are growing net sales and order intake really strong, we still continue to have a development according to plan when it comes to the OpEx. And that takes us to the order intake, which I think is a really strong number here in the Q1 169% growth if you compare year-over-year. So this is also an all-time high for an individual quarter.

And I would say that underscores the robust demand we see for our offering on the market. And also indicate even if we have a strong growth in terms of net sales, our book-to-bill ratio is still strong, 1.5. And if we look at the last 12 months, it's 1.6. So that indicates continued growth when it comes to net sales and top line.

Finally, on the key figure slide, the free cash flow, huge delta between Q1 2025. We are improving that with SEK 234 million. It's an all-time high number for the free cash flow in an individual quarter. And it's due to, as I said before, our growth in combination with improved margins without being able to add net working capital in the same extent. That was the key figures for Q1.

Now I will move over to Slide #5, which contains the operational highlights. Just to give you a quick overlook of some other highlights that is not on the financial side. Right here and now, the construction of our new assembly space in Helsingborg is ongoing, where we're adding up to 50% more assembly area. And this is something that we expect to be ready quite in near term here before we move on to the summer vacation in 2026. So ongoing.

And as I also mentioned, the more wider decision and make a bigger expansion in Helsingborg to meet the long-term demand is now taken, and this is something that we expect to be up and running not later than fall in 2027. I mentioned this before in the highlights as well, and it's really important to do it once again, the several large system engineering contracts that we have secured here in Q1 is towards both the government side, but it's also towards the business-to-business customer really puts MilDef in a good position on this market, making sure that we are making the movement upwards in the supply or in the value chain, et cetera. So it's really strategic important contracts that we have secured here in Q1.

And finally, and I will come back to this a little bit later on, our roda progress, but it's now a milestone where we have reached the 1-year milestone together with roda in MilDef Group. But I will give you a little bit more flavor on the progress around roda later on.

With that said, I will wrap up the first session here, the highlights session, and I will leave the word over to Viveca Johnsson, our CFO, will give you some more details around the financials.

Thank you, Daniel. We will be starting on Slide 7, which is quite a busy slide, but the message is quite concentrated. It's a fast-growing defense tech company. We have an annual growth rate all the time here on 40-plus percent, which is, of course, exceeding our long-term target of 25%. We're doing that with a book-to-bill of 1.6, which is, of course, indicating a strong future as well with a backlog of just north of SEK 4 billion, and 514 employees enabling this growth and this continued journey is the main message from this slide, which will be taking us to Slide 8, where we are having a bit more of a deep dive into order intake and book-to-bill where you can see that we are on a rolling 12 basis on an order intake of roughly SEK 3.9 billion. So also here, catching up on the 4.

And you see the book-to-bill ratio remains rather stable over the last 3 comparative periods here, full year '24, full year '25 and the rolling 12. So we are continuing to adding more orders to our backlog than we are delivering out, although we did see a very strong delivery during Q1. Following that on Slide 9, we are looking into our backlog duration, where you can see the deliveries for the current year here, 2026 as well as the coming years '27, '28 and then what we have beyond that.

We do see that we have for the first year here, roughly a 20% growth in what we have already now after Q1 in the backlog for delivery in the current year. So just shy of SEK 1.9 billion for 2026, which we are counting as a strong sign and a good basis for 2026, but we also see good growth in the other period. And the small dip in the last period here is related to our previously announced contract that was going on deliveries for 10 years, which we have now started to deliver on. So that naturally goes down. It's important for us to strengthen our backlog in closer deliveries.

Further this, we're going on Slide #10. So after orders, backlog comes sales, which it also does here on Slide 10, and 84% growth on a rolling 12 basis, again, well exceeding the long-term target in growth. This picture is also showing our gross margin development, where we have on the gray line indicated the group's total gross profit margin development. And you have on the above brownish color, the MilDef without the roda acquisition. And then you have the isolated roda underneath in a more base color.

So what we are seeing in MilDef, excluding roda is a further strengthening of the gross margin, which is, well, completely in line with the communication that we have given beforehand that we see that this is roughly a level where we can be at, where all the stars are aligned, so to say. We are also seeing the roda acquisition delivering on and about the level that we were expecting at the time of acquisition with some 30-plus percentages. And that is, of course, a different business model where you have a lower gross margin, but also a lower OpEx than the other part of MilDef where you have a higher gross margin, but then also higher OpEx. It roughly evens out on EBITA level. But on the gross margin, it differs a lot.

So what could look like an indication of a declining margin is, in fact, not. It's simply a combination issue of the 2 business models here. That will be taking us to Slide 11 and EBITA with the exceptional growth of 133% on a rolling 12 basis. And as Daniel mentioned beforehand, this is yet another proof of our scalable business model where we have a strong top line, we will be having a nice contribution on that on EBITA.

And with that said, we will be focusing a little bit on our working capital and net debt position. We had a free cash flow of SEK 159 million, which is historically a very large cash flow. We have a couple of positions in our balance sheet, which individually are not really significant, but we have a quarter here where a lot of things are aligning on a very good side. So I think this should not be seen as the new normal of 25%, but it will be higher than that. So we have spoken previously around some 30%, possibly a little bit lower, but this is more where we think we are going to be long term. And this is also building on what Daniel said previously, where you have a growth journey, there will be some capital tied up in inventory, in accounts receivable just due to the heavy and quick growth. We are doing our best to balance that. But I think 25.8% is -- all the stars are correct this quarter, and we're quite happy about that, but I would like to remind you of the volatile quarters that we do have -- that you have seen historically.

Net debt, also a very good development in Q1 2026, primarily driven by the strong cash flow. Our payment terms and amortization of our debt and so on are exactly according to plan. So the further decrease in net debt is driven by a strong cash and a strong profitability over the last 12 months and then maybe particularly here in Q1. Yes, we will be rounding off the financial session with a geographic spread. And here, we see 1 year after the roda acquisition, 1 year of integration that our geographic map is looking more or less exactly as per prediction that we have a Nordic and the rest of Europe that is on the same scale.

We have in North America with primarily U.S.A. of the same size, and we have Europe and a Nordic that is in parity with each other, which is giving us a better foothold in the European markets, especially in Germany region, Central Europe region. And this is, of course, giving us a better focus area in those interesting markets, but also balancing out our geographic footprint.

I will be handing back to Daniel now on Slide 14.

Thank you very much, Viveca, for guiding us through the financial numbers and package. Now I will take over again and jump over to Slide #15, give you some update around the roda progress for Q1. This is now really a milestone we have passed when we now had roda within the MilDef Group for more than 1 year. And when we really look back in the mirror here, we can see that roda has been a strong puzzle piece into the MilDef growth journey. And it continue from the roda side with a strong order intake development, showing that the underlying demand and a good market situation on the German market as well.

And as I mentioned before, roda has been a really important part of MilDef growth, but also in the improved profitability in the last 12 months that we have been together as one. So continue to be a strong combination of the 2 companies. Integration-wise, everything goes according to plan, and I'm happy about to see that we are really proceeding in the integration phase. And also, we have talked about our ongoing investments into increasing the capacity. And that is also something that we are really doing on the German oil and also applies for Germany, where we're investing due to also a high customer demand in Germany.

And that is why what we are seeing on the German market when we look 3 to 5 years out in time, very promising outlook for the German market. There is a lot of defense ramping up that needs to be going on in Germany and that roda and MilDef has a really strong saying and a ticket around the table for being able to execute on those business opportunities that we see on the German market.

Now I will move on to Slide #17 for a short summary of today's trading update from Q1. And then I would like to start the summary where we started the full presentation by the record high order intake that is, of course, driven by high customer demand. We also saw in Q1 a strong delivery execution with impacting the net sales and also due to the scalability in the business also give a good boost for the margins in the first quarter here. And that is why the higher volume drives an improved margins. That is something that we have stated before within middle of, and that is something that has been now also an evidence here in Q1 that, that is something that is correct.

Also worth mentioning here in the summary part, the continued investment in capacity expansion. I think we have already during 2025, started this ramp-up in capacity, and we're now seeing that we are getting good paid off from that, but we also need to continue to invest at a high level to meet the more of a strong long-term demand. And also, of course, this continued investment is also supported by a record high order backlog that now exceeds SEK 4 billion. So strong order backlog, strong demand also make sure that we are investing enough to be able to take care of this situation and market needs that we have at the moment.

And by that, we are moving into the Q&A session. So let's see if we can open up the floor and Olof can give you the right to speak.

We now segue over to the Q&A segment of this presentation. [Operator Instructions] And this has been done by Mads Brinkmann with Berenberg.

Congrats on the strong quarter. Just a few quick ones from my side. I mean you already mentioned the order intake. I know you say it's lumpy. But as you also alluded to yourself, I mean, traditionally, Q1 is the weakest quarter of all and the sort of there's quite pronounced seasonality in the business. I'm just wondering whether there's any sort of particular shifts or anything that we should think about in terms of the order intake or whether we should, I mean, I guess, implicitly just get used to you guys delivering above SEK 1 billion in order intake and up to normal Q1, Q2 sort of relationship still exists.

Then on the second one, please. Just on the types of orders that you're seeing, it would be great if you could add some additional color on what sort of end customers or end products you're actually seeing essentially really moving the needle here or if it's just more of the same or if you're seeing any sort of shifts compared to the previous quarters, that would be a great help.

And then last but not least, obviously, strong free cash flow and net debt position in a very healthy space. So just wondering, I know it's only been a year since you've acquired roda, but I'm just wondering if you're essentially on the M&A side of things, if you're already ready for a bigger acquisition again, please? That would be my initial 3.

Thank you very much for that question. I would like to start and give you some flavor around the order intake and the lumpiness on that and if this is a shift or not to be able to exceed SEK 1 billion quarter-by-quarter. But of course, this is driven by a very strong underlying demand in the market and also a relevance in the offering that MilDef has on the market. I'm not sure that we will be able to meet this SEK 1 billion target of order intake for each quarter going forward because we know it's lumpy, but we also see, as I said, a strong demand on the market.

So let's see what's happened here in the continue of 2026 and around the order intake. And you also had a question around the type of orders. I would say we have mentioned this relatively new established solution business area that we have had some good success when it comes to order intake in the first quarter here. Otherwise, I would say it's the full portfolio that we have that are performing well. We are, of course, continuing to be strong on the hardware side, and that is mainly the driver behind the strong order intake here in the first quarter.

And finally, you had a question around that now when we are stretching the cash flow, we are stretching the balance sheet and coming down also in the net debt to EBITDA, our M&A activities forward. We have said this before that we are looking, we are having the radar on, but it also want to be really value-created M&As and acquisitions when we're going forward. So at the moment, we are not stressed about doing any M&A activities, but we are looking into the market. We are investing what kind of value-created acquisitions we can find on the market. So let's see what's happened here in the rest of 2026.

The next question lined up. [Operator Instructions] Thank you, Matt. The question is, can you explain why the Solutions segment is expanding right now? What do the customers order the most of at the moment? And how is it correlated to the current hardware deliveries?

Thank you, Matthew. That is a really good question. If we start with why it's expanding right now, I would say it's down to the lack of resources from our major customers, so to say. So they need support. We have said this before in this defense ramp-up in Europe that we are now seeing that is historically high numbers. The whole ecosystem needs to be able to support each other and help each other to be able to deliver in the high demand. And this is something that our end customer has really asked us to do to pick up around the Solutions segment, where we can help them to design their future IT solutions and systems out in the field. So we are already involved in the business on an early stage. That is where we can come in and help them.

And it's also a really strong enabler for us to being able to sell even more hardware because when we are designing the systems, we are more of understanding the need and what type of hardware they will have a need for in the future. So that is also give us a good insight and intel Intel and also give us a good chance to impact the customer choosing the mill of hardware in the future.

Thank you for the question. [indiscernible] we can also emphasize the fact that in this report, you can actually see the split between hardware, software and solutions integration sales. So if you deep dive into the report, you can see the difference in that area. So I have actually no more questions in the lineup and no more raised hands. I guess you have answered all the possible questions, Viveca and Daniel.

So unless somebody shuts out in the very end of this meeting, I would need to say that this concludes the Q&A session of the MilDef Q1 2026 Conference. Thanks for joining and for your contribution to the MilDef journey. Also, put a note in your calendar Q2 report is up next on July 16 in the middle of the Swedish summer. So now over to Daniel for the closing of the meeting.

Thank you very much for that, Olof, and thank you all for joining this meeting here today, and thank you for following the MilDef journey, and I hope to see you again when we are releasing the Q2 numbers. And for those of you that are already shareholders today, don't forget to that you can join the Annual General Meeting in May '21 in Helsingborg in the fortress where you can meet all of us and also hear us talk about what happened in 2025 and the beginning of '26. I wish you all a great day. Take care. See you. Bye-bye.

Well, good morning, ladies and gentlemen, and welcome to this investor call with MilDef with a special focus on MilDef's reporting on the fourth quarter and year-end 2025. This quarterly call and year-end call will be presented by Daniel Ljunggren, President and CEO; and Viveca Johnsson, CFO, MilDef Group. We expect approximately 30 minutes to be sufficient for the presentation and Q&A. 

[Operator Instructions] Also for information, we record this meeting. 

So now with no further ado, please take away, Daniel Ljunggren and Viveca Johnsson and remember to help our audience where we are in the presentation by stating the number on the slide. Take it away, Daniel.

Thank you very much, Olof, and a warm welcome to all of you that has joined this conference call here today. And if we move on to the Slide #2, this is an agenda slide showing what we will cover here today at this conference call. We will start by having some highlights for the fourth quarter and also some individual key numbers for the fourth quarter. And then we will move on, guided by Viveca here. We will move over to the financial side, covering more of the long-term financial trends within the company. And then after that, we will touch base on the Roda progress. You all know that the Roda acquisition was a transformative acquisition closed in March in 2025. So I would like to give you an update on the progress and the integration of Roda. And then in the end here, we will have a short future outlook, and then we will open up for the Q&A session. 

If we then move on to Slide #3, which contains the highlights of the fourth quarter. It's very happy to see that the fourth quarter was the strongest quarter to date in MøLof history, both in terms of order intake, net sales, and earnings, strongly and significantly supported by the acquisition by Roda that was a strong contributor, especially to the order intake here in Q4. We also saw a margin that was improved here in the fourth quarter. EBITDA reached SEK 151 million, that corresponding to an EBITDA margin of 19.3%, which is a clear improvement from Q4 2024. And I think that in some kind of way, shows the operating leverage and the scalability we have within the business when we are increasing the top lines. 

Further on, I will also highlight the continued strong underlying gross margin, excluding the M&A from Roda. This was now the fourth quarter in a row where we ended up with a gross margin above 50%. And in this fourth quarter, the exact number was 52.8%. And that's showing that I think we have an attracting offering with a good pricing power. Also worth mentioning, I'm very pleased to see that we now return to a positive cash flow in the fourth quarter, improved by 25% if we compare to Q4 in 2024. And in total number, the free cash flow ended up with SEK 60 million here in the fourth quarter. 

Further, as expected, we saw a drop in the KPI net debt to EBITDA. This is something that we have expected due to the dynamic of the acquisition of Roda. We now saw in the fourth quarter that it dropped from 2.6 to 2.0, which is quite far below our long-term target of not exceeding 2.5. And other expected movement was the drop of the net working capital compared to the last 12 months net sales that dropped from 29% to -- from 39%, sorry, to 34%. That was also an expected move driven by the increased top line and the net sales. I also will say that we are moving into 2026 with a solid order backlog -- the order backlog when we closed 2025 was SEK 2.1 billion. That is more than 80% better than we had at the same time last year. So that is building some confidence as well, going into this year. 

And in order to meet this increased demand, we are ramping up more than we have never had in this history of this company. So we are at a very high level when it comes to investments and the investments is into increased capacity. It's about getting more staff in there, production sites, and things like that, making sure that we are reaching a new level of capacity. And about capacity, also worth mentioning is that these investments that we have made during the autumn here in '25 is now starting to pay off. The delivery situation is improved in the beginning of 2026. But I also want to say that things can quickly change. So that is the view we're seeing right now, but we also want to be humble and say that things can change quickly. And I know that you all probably already know about, for example, the global situation when it comes to the memories, which now have a very high volatility, both in price and lead time, and that is something that could have potential negative consequences in the future. But here and now, I would say, starting on this year, we are in a healthy position when it comes to the delivery situation. 

And finally, the directors -- the Board of Directors has proposed a dividend of SEK 0.75 that last year was SEK 0.50 per share. And now we'll move on to Slide #4, and also speaking about investments. I just wanted to show you on the slide here, you can see a photo of our latest addition to our capabilities. Our new production site in area of Stockholm is now open for business, and it's very important milestones and sets the tone for future growth in our future defense capabilities and delivery capacity. So that was an important milestone here in the fourth quarter. 

Now I will jump over to some key figures here in the fourth quarter. Net sales, 87% growth year-over-year. As I said, an all-time high number in a single quarter. Organic growth amounted to 13%, and M&A contributed with SEK 75 million. Order intake, one new milestone for the company in the first quarter where we reached an order intake that exceeds SEK 1 billion, and that was growing 30% year-over-year. And the book-to-bill ratio in Q4 was 1.28. And if we look at the last 12 months, it's 1.57. And also what I think is a really strong number here in the fourth quarter, the operating adjusted EBITDA profit, 19.3% coming from an increased top line with a good underlying gross margin, but also good cost control, where OpEx development is according to plan. We will, of course, need to adding OpEx on this growth journey we are on, and we need to invest to be able to increase our delivery capacity even more, so this is something that we will see going on in the future where we will see some increased OpEx, but I think it will be less than what we can add on top line. 

And as I said, adjusted EBITDA was growing by more than 100% year-over-year. And I touched base on this earlier as well, very positive to see that we have returned now to a positive free cash flow in Q4, growing that by 25% year-over-year, and also worth highlighting is that we ended 2025 with a very high number of account receivables. It was more than SEK 500 million that is in the account receivables due to the strong deliveries here in Q4. 

Also want to move on to the next slide, Page #6, where we can see the business news, and this is announced press release already. So this is some kind of recap. But I would like to go through this to give you an update on what has been going on in the Q4 for MilDef. If we take it from the left, we can see that we won a contract with L3Harris. L3Harris is one of the big primes on the U.S. market. And I think that the significant importance on this contract was that the content in this order was MilDef own IP products, the 19-inch 2 product segments that we now won our biggest first order in U.S., which to me indicates that there is a strong attractive offering on the U.S. market as well, which is still the largest one when it comes to defense spending. 

The next one was an undisclosed NATO country, was a large order for MilDef reaching SEK 326 million. And then we talked about the new production facility that has now been opened in Stockholm. And the final piece here was that Roda awarded their biggest contract in that company's history by adding a contract on SEK 320 million. And since this is also a year-end report, I think it's a good time to make a summary and also make a follow-up through our -- towards our long-term financial targets and how we perform against those. If we take it from the left, we start with the growth, where we have a target of growing the company at least 25% per year. And the performance late in 2025 was strong when it comes to growth, of course, very significant, supported by the Roda acquisition, but it ended up with 70% growth of net sales. 

And if we then go further on and look into the profitability, where the target is at least 15%, we have moved the needle a little bit. We are doing 1 percentage point better than we did in 2024. We are not reaching the target here that we have. So we have a little bit more to do when it comes to the profitability. I think we had a quite slow start in the beginning of 2025. But if we look at the second half of 2025, the EBITDA is reaching more than 17%. So I think we are showing that we are on the right path when it comes to the profitability as well. 

And the capital structure also where the net debt should not exceed 2.5x EBITDA, is the target. And we have now been able to come down, as I said before, this was expected due to we're now adding on more on the Roda figures into the consolidated numbers. We were expecting this to drop, and we can now see that, that has happened as well, and we are closing '25 in a position of 2.0. And then we have the dividend policy in the end where we -- the target is to distribute 20% to 40% of the net profit. And as I said, the Board of Directors has proposed a dividend that corresponds to 24% of the net profit for payout in 2026. 

And by that, I would like to leave the word over to Viveca, who will guide you through the financial highlights and the numbers.

I will, for sure, do my best to do that. So turning to Slide #9 with those financial targets fresh in mind, we'll look at the full year accomplishments, just north of SEK 3 billion in order intake, which is a 76% growth. We have a book-to-bill ratio of 1.56, which is, of course, meaning that we're building for the future with a higher order intake growth of, as I said, 76% and a net sales growth of 70% which is adding to our backlog. We're also welcoming a number of new employees in order to ensure our growth journey. Graphically, we will see the order intake CAGR of 53% since the IPO. And we have continuously built for the future by also increasing our order backlog in a similar pace around 50%. Let's deep dive a little bit into the full year figures on Slide 10. SEK 2 billion in net sales, which is a 70% increase. SEK 64% of that is coming from our acquisition of Roda Computers. The organic growth was 6%. 

However, I want to highlight that we have divested handheld industrial segments. And the Roda sales previously made from MilDef to Roda before the acquisition is now, of course, only considered ones in the Roda part. So the underlying business of MilDef before Roda is around 20%. The same logic applied then to the order intake, 76% growth with organic growth being a mere 1% but the underlying business cleared for those structural initiatives is 14%. Profitability, which is maybe the largest progress in the group, and we're all expecting us to grow, but also profitability is growing. It's showing our scalable business model throughout the group. And I want to highlight that it is throughout the group, which includes Roda. This is also a scalable business model. We have a 15% long-term target, 13.5% in 2025, which is a full percentage point up from 2024. 

Daniel talked about the positive free cash flow in Q4, which is a strong sign. We are not catching up from the slower start of the year, and we're ending the year in a negative free cash flow position. We are gearing for growth and preparing the group to take further orders and ensuring customer deliveries with higher volumes. And with a strong growth, it will be sometimes troublesome to keep a strong free cash flow, but we are confident to build up over time as well. An illustration of what I just said with the strong order intake growth and the book-to-bill ratio, which is pegging me up for the order duration on Slide 12. which is on the left-hand side, you have the order duration split per year, and you have north of SEK 2 billion for the 2026, which is the current year then on the slide to -- sorry, on the graph to the right. And then you have 2027, '28 and beyond. 

And if we are looking at the development of the duration, we have more than 80% growth of the current year versus the position that we held at the end of 2024. And we see a good development also of the year 2, which is, of course, those 2 years that we are primarily focusing on of how much we have loaded the backlog with. So strong position in the backlog. 

We talked about the growth development. Let's take a little deeper look on gross margin development. The green line on the right-hand side on Slide 13 is showing the total group margin with the mix of Roda being further blended in the more the year goes on since it's a rolling 12 graph. And the gray one as of Q1 2025 is showing the MilDef Group, excluding Roda. And as Daniel mentioned, the margin development for the MilDef Group, excluding Roda, is a positive trend, which is following the previous communication that we are north of 50% when we're doing it properly. And as you see, that is exactly what's happening. We also see that the Roda Group has developed well since the acquisition and added on further gross margin in their business. So the downward trend here is merely a mix of the 2 business models. So each business is doing well and the mix is simply a mathematic outcome. 

EBITDA development, it speaks for itself, doesn't it a scalable business model. When we get the good volumes, we're keeping our strong margins. This is what we end up with operationally from a profit point of view. Talking about working capital is where we have the adverse effect of the growing then, if you will, which is impacting our free cash flow. We saw strong deliveries in Q4, adding on our accounts receivable. So we see a shift from inventory to accounts receivable. We are happy to see that we are showing a number here of 33.6% working capital in relation to net sales. 

We have previously talked about different volumes. But since the Roda acquisition, it is a slightly different structure of the business model's working capital consumption. And with that blend, we need to recalibrate what we think is a good level, so to say. We are striving more towards the somewhere around 30% is a good outcome. And as you can see, when we get the good volumes, we are coming closer to that. So that is a good development in Q4. We still have further activities to get closer to the 30% where we are seeing a more long-term trend or stability, if you so will. 

Net debt in relation to EBITDA. Well, we have said since the acquisition, it will take around a year to come below our long-term target after the close of Roda and after 3 quarters, we see that we are coming down to 2.6 and now after 4 quarters, 2.0. So well in line with our previous communications and our internal expectations. 

On Slide 16, I'm leaving you the sales footprint geographically, where we, since the Roda acquisition, saw a strengthening of the European business and a good size of that now on 43%, almost on par with Nordics, 46%. North America is represented by 7%. 

And with that, I will leave the word back to Daniel.

Thank you, Viveca. And I will take the opportunity to go through a little bit of the Roda progress. You know that Roda was one of transformative acquisition we did, and we were closing that in March 2025. So it has now been 10 months within the middle of ownership. And I think we saw here in Q4 solid Q4 figures, especially strong on the order intake, contributing with more than 50% of the total group's order intake in the fourth quarter. And looking at 10 months where we have had Roda in our books, they have contributed with almost SEK 1.4 billion in order intake, showing that there is a strong business and strong demand on the German market. Integration goes according to plan. 

And we also saw that Roda in Q4 won several strategic large contracts in the fourth quarter proves that Roda's strong position on the German market and a good end-user reputation. I would say I'm very positive to the Roda acquisition. And I think if we look further out in time, this will be a very important part of MilDef's growth journey going forward. So that was just a brief update on the Roda progress and how that looks.

And by that, I will jump to Slide #19, and then we will quickly jump to Slide #20, and then we will have a summary and also a future outlook. And this will be around the fundamentals for growth for MilDef. And still, we see a high demand landscape, and we think that this will remain strong for many years. We are now investing, as I said, at a very high pace, and that is because we see continued good demand going on in many years from now. So to be relevant and to be able to meet those kind of demands, we are investing in increased delivery capacity. And also on top of that, that is what we are really doing, what's in MilDef's DNA, what we have been doing since 1997, is around digitalization and connectivity. That is very -- more and more playing a very important role for the European defense capabilities, and that is exactly what hits our core business and what we have done for many, many years. 

And finally, also very important for this journey for MilDef forward is decades of trust in the defense domain. This is much of a trust business and MilDef has provided field-proven products, and we are a well-trusted supplier and partner within the defense domain. 

And by that, we will jump to Slide #21, which is the Q&A slide. So we will now open up and try to manage this Q&A session in the best way.

Thank you so much, Daniel and Viveca, for the presentation, 22 minutes past the hour. We have a first question from analyst at Kantor Finn Kemper. [Operator Instructions]. So let's see if Finn Kemper opens his microphone now and you can state your question.

Congrats on the results, especially in terms of cash generation. I have a couple of questions. Maybe first, with now Q4 showing positive free cash flow inflection and also probably improving delivery execution, what gives you the greatest confidence that the working capital pressure has peaked and that cash conversion can remain sustainably positive throughout 2026? Do you want to answer that first, and then I go my next question.

Yes, please, Finn. It's better to do that, and we remember the question, at least. As I said, very positive that we now return to positive cash flow in the fourth quarter. Looking forward into the next year, as I mentioned also, we have a very strong position in account receivables that we expect to be receiving here in 2026. But it's also coming down to what kind of order intake we will have in the future, building up even a stronger order backlog at the end of 2026. So it's tough to say exactly how the working capital or the cash flow will play out here in 2026. 

But I think in the long run, looking over a long period of time, we have been able to grow this company in a very large amount of numbers without adding any extra cash just because growing the company. We all know that growing a company is going to tie up more money. But this is, of course, something that we address very closely and work hard, both on the customer side, supplier side, internally to make sure that we are optimizing whatever we can to be able to be increasing the cash conversion rate, so to say.

So there's nothing like a guidance or something you could provide us whether you're going to be cash flow positive in 2026?

No, we will not give guidance on that.

But then looking at the current backlog profile and also with the delivery expected for 2026, how should investors think about the required level of incremental order intake over the next 12 months to support your medium growth ambitions?

The thing we can mention here is that we still see a very high demand in the market, underlying demand for the products that we are delivering is still high. Even if we have some volatility, of course, which we always have in this kind of industry over the isolated individual quarters, we continue to see a strong order intake and demand. There is now a situation in the market, I would say, where we're really starting to see the increased defense spending rippling down. We know that Miller is late cycle into this phase. 

So also top of that, that the digitalization is a very important role for the European defense companies going forward. And if you're adding all of those things together, I think that there will be a continued high demand, not only for 2026, but also future on. Also we know that they are starting to ramping up, aiming for reaching the 5% and new spending targets within NATO. A lot of countries that we are operating has already said in 2030. So there will be tons of investments made into increased defense capabilities. And of course, we think we are one of the relevant players to take a piece of that.

And maybe one last question. I was just wondering if you could elaborate a little bit on why the gross profit margin on order basically deteriorated a bit throughout the year. And in the meantime, your legacy MilDef business margin expanded. And maybe to what extent is driven by differences in cost classifications or maybe product mix rather than underlying profitability? And maybe how should investors think about the impact on this on the P&L below the gross margin line, given that EBITDA margins already appear broadly maybe comparable?

Thank you. Very good question. I think, first of all, I think what you're seeing when we're talking about the EBITDA margins for Roda in the disclosed numbers in the interim report is not really super comparable to what we have released before because they are also now bearing on the legal entity level. They are bearing integration costs. They are bearing some of management fees that we are adding on there. So it's not comparing -- the comparison has been a little bit tricky to do, I would say. From my point of view, I still see the same financial profile within Roda with a lower gross margin, but an EBITDA margin that is above or in line what MilDef has done in the past. So I'm not worried that we will see some kind of major drop there or something like that.

Thank you so much, Finn Kemper with us from Cantor Fitzgerald. Thank you for tracking MilDef for 1 out of 6 banks doing so these days. The next question comes from Hugo Lisjo with DNB Carnegie.

Some of my questions were already answered. But I'm curious about how you're thinking about costs going into 2026. In earlier calls, we have discussed the cost increase of about 10% on OpEx. But now that you have announced the production expansion in Helsingborg as well, how do we -- how should we think about the cost increases compared to those 10% we have been talking about before?

Thank you, Hugo, for the question. There will be costs, of course, when we're growing the company, that will be adding on OpEx. We are investing in things that are mainly OpEx related. We still don't see any major investments on the CapEx side. But on the OpEx side, we will see an increase in, as I said, the number of staff, et cetera, to be able to take care of the growth. We will not quantify exactly in terms of percent how we see the future when it comes to the OpEx development. But of course, we hope to see continued operating leverage when it comes to the scalability of the business and things like that. But with that said, absolutely, we need to invest. We need to ramp up to a higher delivery capacity, and that will take some of the margins away.

And also just a short question on Roda and its margins below the gross profit margin. Because you mentioned the Roda bearing more of the integration costs now. So today's margins are comparable to historically. But could you elaborate a bit on how you think about increasing Roda's margin throughout the next years?

Absolutely. Thank you, Hugo. I can start with saying if we look at the reported figures that we have announced when it's related to Roda, we can see that the gross margin 10 months into MilDef ownership is now on a level of 35%. And we know historically that Roda has been operating around 30% something. So we already now see some positive effects of that, and we will hope that we continue to be able to do that. I think that the key thing to be able to do that, it's a success with more of our own IP products and addressing that to the German market. And of course, we see opportunities for that. But it also -- it will take some time before we can see the real impact of those kind of synergies.

And the next question comes from Daniel Lindkvist with Danske Bank.

So just, I guess, the Roda was the explanation mark in this report. So let's start off with that part of the business. I just got my answer on the levels of the gross margins. But I guess for the future now, the working capital profile in Roda, is there something that we should keep in mind now that they're delivering strongly?

I would say that Roda is a little bit more carrying a character where they can add on more finished products on the inventory and be ready to shorten the lead times. They have quite maybe a little bit more of a standard solution when it comes to the products. So they are more able to -- if they see a high demand, we would be ready to maybe increase the inventory, shorten the lead times. So that could be one component into -- that could play out in the working capital.

But the lead times on accounts receivable, that's not any longer than in MilDef.

That is quite similar to what we have in MilDef, yes.

And then just for the future, how will you handle Roda? I mean now it's turning into organic instead of acquired operations. So are you still planning to report Roda separately for the future?

Good question there. And I don't think we have really a deep dive into that. So let us come back to that. We will still in Q1 need to separate Roda because we have January and February, which is a month that we didn't have in 2025. But let us be able to come back exactly how we will proceed with the Q2 report and forward, and how we will break things out or not.

And then on the gross margins in MilDef in Q4, I had estimated that they were going to be lower for the Q4 quarter. Is there anything special to keep in mind with the Q4 level?

As you mentioned, normally Q4 bears a little bit lower gross margin due to high-volume orders and things like that. But now was the fourth quarter in a row where we see underlying gross margin, a mill gross margin, so to say, that is above 50%. And I have talked about this a little bit before that we see a positive trend due to the offering, a little bit change of the product mix. We see increased software revenue. We see increased solutions revenues and things like that. So the total offering and what we are selling, I would say, is now showing for quarters in a row that it's on a positive trend and that we are able to be on the long term above this 50% gross margin target.

So there was nothing dramatic with the software level of deliveries in Q4?

No.

And then just my last question, the lease liabilities, are we now at levels that include the full of Rosersberg and the added facilities in Helsingborg, or maybe even the double facilities in Rosersberg, so just for the future?

For the isolated fourth quarter, almost in terms of the Stockholm facilities for Helsingborg, no, since that has not yet been expanded.

Thank you, gentlemen, for raising these good questions regarding the Q4 and year-end report from MilDef. We are at the final approach of this flight. I can conclude that we have been north of 80 participants in this meeting. That is also an all-time high for this quarterly call. And if you did miss the entire show, you can listen in on our website later today when this full conference will be presented on the MilDef web. So I see no more questions in the chat, and I have no more raised hands. So this concludes the Q&A session of the reporting of today. Thanks for joining. And put a note in your calendar next Q report presents itself, the Q1 report on the 23rd of April. 

Now over to Daniel to close the meeting.

Thank you very much, Olof. And I just want to have a short closing and thank you, everyone, for joining in and listening in to the conference call today, and thank you for following the MilDef journey. Take care, and bye-bye.

Okay. Good morning, ladies and gentlemen, and welcome to this investor call with MilDef this lovely morning with a special focus on MilDef's reporting on the third quarter of 2025. This quarterly call will be presented by CEO and President, Daniel Ljunggren, as we traditionally do.

We expect approximately 30 minutes to be sufficient for the presentation and Q&A. And please help me. We are very cost efficient at MilDef. So we do this over Teams, but please help me mute your mics until the Q&A. I see that many mics are open, and I try to close them as soon as I can, but please help me mute your mic until the Q&A naturally when we will open up for transparent questions.

And also, as always, in the MilDef quarterly reporting, we record this meeting for your understanding. So now please take it away, Dan Ljunggren. And remember, Daniel, to help the audience listening in over telephone to state the number of each slide going forward.

Take away, Daniel.

Thank you very much, Olof. I will try to do my best to update you on the slide numbers we are on at the current presentation. And a warm welcome to all of you for this conference call around MilDef Q3 report. So let's start.

And then before we deep dive into the financial figures for Q3 isolated and also look at the long-term financial trend for MilDef and also the future outlook, I will just give you some short overfly of the basic facts around MilDef and the MilDef universe.

We are a provider of tactical IT solution, founded in 1997. So we have almost operated in this business for 30 years. And history matters because this means much of a trust business. We are a little bit more than 4 years into our journey as a public traded company. We did an IPO in June 2021. Today, and we are very happy to that to see that we have 46,000 shareholders, which is quite much for a mid-cap company. So that is something that we are very happy about.

Today, we are around 460 employees, and we operate in 10 different countries. So what is it that MilDef are doing then? We are a tactical IT provider in the defense domain. So we are delivering into this data-driven defense capacity that is now the European defense companies and forces are building up. So we are delivering the IT backbone where the stakes are the highest. So we're delivering to all of the 3 domains within the military, the Army, the Navy and the Air and Space domain.

With that said, I think it's time to look at the highlights for the third quarter here in 2025. First of all, the order intake is at all-time high. We are more than doubling the order intake. It's plus 119%, and that is really important for MilDef to keep that fuel, and that is what's keeping the MilDef engine running. We are doubling the net sales, that is plus 116%.

We also have a strong underlying gross margin, excluding the M&A. We were expecting the gross margin in total, MilDef and roda together coming down, of course, because we know that roda of course, with a lower gross margin. But the underlying one, and this is something that we have talked about now for many quarters and also years back in time that we were aiming for reaching above 50%. And now we have a couple of quarters in a row where we are above 50%, and that is something that we are super happy about.

And I will give some extra flavor on that coming up on the future slides here. Also, we see a strong order backlog for 2026. We see that if we compare that to exact same position previous year, we can see that we have an order backlog that is 142% better than it was 1 year ago. So we are sitting in a much better position for the upcoming year here than we was 1 year ago.

In Q2, we talked about some of these moved deliveries and the most part of that has been delivered in Q3. There is some small parts in Q4 that will be delivered, but the lion part of those moved deliveries was delivered here in the third quarter. We have a couple of several contracts, one that is really of a strategic importance. I will go through them when we look at the different business news and highlights from the Q3 announced orders, but there is some really interesting and strategic importance in the orders and contracts that we have won.

Capacity ramp-up is also something that is really top of our mind, something that we are really working hard with here that we are accelerating this capacity ramp-up. It's about buildings. It's about people, it's about processes, and it's about in the long term, increase our delivery capacity.

And if we look at into the order backlog, we can see that we will have a very intensive fourth quarter as normal at MilDef, a strong finish here in the year. We have a record strong order backlog in fourth quarter that we need to deliver up on.

Now back to some of the important contracts and the business news that we saw in Q3. If we take it from your left side, you can see that FMV, the Swedish procurement agency, order a combination of MilDef's total offering. It's around the hardware as a base, but it's also on top of that, we are adding the software.

We are adding the integration services, and we're also helping them with some solutions. So that's a good story when we're talking about moving up in the value chain that we can sell the total offering, a turnkey solution to the end customer.

If we move on, we also saw that roda, our German acquisition, they won a contract with a German cybersecurity company that is called secunet, also a long-term relationship with that customer and a really important customer relationship, and we can expect to see some high volumes coming from that business in the future.

Next one, also very strategic, important contract with NATO, the NSPA. So that is also something that was our first hardware order from that, and that is something that is of strategic important character as well.

And the final one that we released before we ended Q3 was roda's biggest order ever from Bundeswehr, the German procurement agency. And that also proves the German's relevance and the roda relevance on this German market. And we have also in Q4, if we jump into that, we have -- before we are releasing this report announced just below SEK 700 million in order intake.

And I think it's also a good differentiation in type of orders. We are talking about the U.S. market. We are talking about NATO markets. We are talking about the German market. So -- and high numbers on these orders as well. So there is a high demand on the market and MilDef is really relevant in this digital arm race that is going on right now.

And final and last press release here is around our new production facility that we have now opened in Stockholm. It's 4x more than we have in the current facilities. So we are really taking this ramping up of the capacity in the right direction by adding on this new production. And as I said, yesterday, we released that roda received an order of SEK 320 million, really also contributing and building the order backlog for 2026.

Let's move on to Slide #6, and then we can see the key figures for Q3. If we start with the net sales. The positive trend for MilDef continued during the third quarter, and the net sales reached an all-time high for a single quarter. Organic growth was in the third quarter, 36% and acquisition contributed by 80%. But in total, we grew 116% in net sales.

And maybe the strongest KPI in the third quarter is the order intake. The order intake grew by 119% in total, smaller organic, but mainly driven by the acquisition part from roda. So we saw a really strong order intake from roda in the third quarter. And totally, as I said, we are growing 119% in the order intake. And this is really important for us to have this fuel for the MilDef engine, give us confidence to continue with the capacity ramp-up, give us confidence around 2026 and continue to build a bigger and stronger MilDef.

If we then look at the operating profit in this case, adjusted EBITDA that we are using our profitability targets, we saw that, that was growing 172% if we compare with the same quarter last year. So that proves the scalability in the business model. The adjusted EBITDA margin here in this Q3 ended up on 15.7% compared to 12.5% in Q3 in 2024.

I was talking about the gross margin, and that is, of course, a super important contributor to the underlying margin as well. And if we look at the gross margin, excluding M&A, it was really high. It was 53.5%. And as I said, we have talked about this transformation to north of 50% in gross margin depends on the product mix, depends on the customer mix and things like that. But we have said what we -- we have done what we said that we should do when we transform this company to a plus 50% gross margin company.

In total, we ended up on 45% if we combine MilDef and roda together, and that's expected that the gross margin will come down due to the roda character and that they are operating with a gross margin that is lower than MilDef.

Finally, the free cash flow was negative SEK 53.1 million, on the negative side and that despite the strong improvement of EBITDA, the free cash flow was negative in Q3. But I think there is a clear reason behind the negative free cash flow in the third quarter.

We are having a really estimated really high deliveries in Q4. So we have been building up inventory for being able to meet that delivery. And that is, of course, impacting the free cash flow here in the third quarter. That is something that from this delivery in the fourth quarter that we will see estimated a strong free cash flow in Q1 in 2026 instead.

With that said, I think it's time to more zoom out and look at the more long-term financial trends of MilDef and see how we have performed at, let's say, a rolling 12-month basis. If we look at those numbers, just to set the scene here for the financial summary, I would say that MilDef is a fast-growing defense tech company. We have now an order intake that is close to SEK 3 billion. We have doubling the order intake in the last 12 months.

Our order backlog is SEK 3.5 billion. That is also more than doubling that we had 12 years back in time. Our book-to-bill is still strong. We are almost at 1.8, and that is despite that we are growing the net sales the last 12 months with 48%. And we have also added employees, of course, to be able to take care of this growth. So we are today roughly 50% more people than we were 12 months ago.

So even if we look back in time and look at the order intake, for example, and go back to 2021, we can see that we are increasing order intake with a CAGR of more than 50% on a yearly basis. So this is the dynamic we're operating right now and the order backlog as well, if you look at that, also really strong development and having been increasing that with just less than 400% if we look at the order backlog. So this is the context and the market dynamics and the relevance of MilDef, I would say.

Geographically, if we split down our total revenue and take it into different geographic areas, we can see that the Nordic countries is still the strongest one, even if we expect that Europe now when we are adding roda over 12 months will become bigger than the Nordic countries. And that is also what we see here in these numbers that Europe is showing that they are really starting to pick up. They are growing 15 percentage points if we compare to 12 months back in time.

So when we close 2025, I think that we will have been transformed MilDef to a strong Nordic company that we are seeing a bigger footprint in Europe and that Europe will be -- Central Europe will be the main market for MilDef.

Back to the order intake, and I showed this picture before, but it's really important for us is, as I said, the fuel for the MilDef engine that is our future revenue, future net sales, future cash flow and also give us confidence to continue with this capacity ramp-up and adding more resources on top of everything and book-to-bill ratio almost 1.8, so continue with a strong order intake.

Backlog duration, we have, as I said, a really strong backlog of SEK 3.5 billion. If we look how this was compared to when we closed Q3 in 2024, we can see that all of the bars are much, much higher than it was 12 months ago. So that also building some confidence. And I think that the 2026 order backlog now starting to look really, really healthy. And that also gives us, as I said, confidence to continue to invest in this.

For those of you who are doing your math correctly, you can see that there has been some orders that has been moved into 2026. The order pie chart for -- and the duration for the rest of this year is not in total line what we have announced in Q2 when it was around the second half of 2025.

But this is also due to that we have been moved some of orders into 2026, and that is also around this historical ramp-up where we're now trying to calibrate our resources to be able to deliver on a new higher level, and that is also something that will, so to say, not be a spike up in the sky, something that will have some lumpiness in it, so to say. So that is what we're trying to solve and work really hard with at the moment.

Gross margin development expected to come down, of course. As I said, roda is starting here to impact in the numbers. It's very important for us that the underlying gross margin is strong at least so we can keep that. And then we will try to work with roda gross margin over time and come back again, but this is quite expected to see a drop from the high numbers that we are delivering at MilDef.

EBITDA development, we have seen that back in 12 months basis, we are growing the EBITDA with 50%. So after now a couple of quarters, we have standing still in the EBITDA development, we're now taking a big jump up again and showing the trend that is going in the right direction.

And as I said, we have an intensive fourth quarter with an expected high delivery. So that will also hopefully continue to add on this EBITDA development before we close 2025. But we can see that the scalability is there. So when the top volume -- top line volume is coming, we can see that rippling down nicely on the EBITDA growth.

Working capital and net debt to EBITDA, if we look at the net working capital, we can see in percentage of net sales, we see that the net working capital is quite similar that we had in Q2. So we are just below 40% in the net working capital.

Now as I said, we are in this phase with the inventory ramp-up to meet the high delivery demands in Q4. And we also have not really taken the full 12 months net sales of roda into these numbers. So that is also something that will positive impact this net sales of the net working capital and aiming to come down around 30% and maybe a little bit lower than that.

Net debt to EBITDA, we see expected coming down 2.9 in Q2 and now 2.6. This is something when we're now growing the EBITDA when we also get the full picture of the roda's EBITDA into the total consolidated EBITDA, we will see that this net debt will come down. So we expect this before we close 2025 to be below our long-term target of 2.5, but it's now showing that it's going in the right direction.

Short update around the roda situation here in Q3. I think that they are showing solid Q3 figures, especially strong order intake in the third quarter here. As I said before, they were announcing the biggest contract ever from Bundeswehr. That's a DLBO contract, digitalized land-based operation, a big digitalization project going in within the German Army that roda plays an important role in. So that was our largest order. So strong order intake.

Also, as I said, proves roda's strong position on the German market and that roda has a good end user reputation and that is something that we can continue to build on in the future. Germany has also announced this defense ramp-up of EUR 500 billion over the next 12 years. So I think there will be a lot of business opportunities and a lot of a great need for building their IT solutions going forward.

With all of this combined, I think that the acquisition of roda will be a very important part of MilDef's growth journey going forward. German market and roda together will be a strong contributor to MilDef's continued growth.

Future outlook. And now I am on Slide #17, growth priorities. This is something that we will focus strongly within MilDef in the upcoming 2 to 3 years, number one, that is really on top of our mind is the scaling up thing that we really need to -- a ramp-up of our capacity. We're seeing a couple of quarters in a row where we are meeting high new record levels in order intake, and that is something that will impact the business and will impact how we build up our capacity. So we need to do that in a cost-efficient way, but we need to increase our capacity in total. It's around the facilities; it's around the people and it's around the processes.

The next one is also climbing the value chain where we can take a position on the market as a prime contractor within the tactical IT solution area, where we have today an offering and a competence and a capacity to delivering turnkey solution to the customer and they are more and more asking for this kind of turnkey solution because they have no time, but they have a lot of money. So they want the industry to really help them out to make sure that they get the capacity they want out there.

And I also think that this climbing in the value chain will increase the barriers to entry. We will create a position and take a position on the market that will be really strong and will be hard for the competitor to come in and attack this position that we can take on the market. Improved margins, of course, is one of the big players as well.

Focused expansion, I think it's really important in this dynamic in this high demand landscape that we are in, that we are laser sharp in our focus around the defense domain, and we really prioritize our key customers, the big customers. We really prioritize the selected MODs and the government customers, making sure that we are super focused on finding the right solutions for them and delivering with the best quality that we can.

Final piece in this one is the resilience. Resilience is really important for our future growth because that if you want to be a relevant supplier and trusted partner within the defense industry, you also need to make sure that you are a resilient company. So you need to have your supply chain really in good order and have a resilient supply chain. You need to have cybersecurity really on top of that. You need to have an organization ready to take on higher volumes and all of these kind of things will build a more resilient MilDef in the future.

And if you see on the bottom row, you can see that something that we always will be working with is our sustainable business and responsible business due to the industry we are in, and we will keep that as a really strong areas to focus on. And also, the M&A, we have been on an M&A journey, and we still want to find good M&A that fits really good into what MilDef are doing into our core business that can help us continue with this growth journey like we did with the roda acquisition. So that is something that will continue to be on our priorities for growth going forward.

Now we will come to Slide #18, and then we can see the strong outlook for the future. I will go through what we see from our view about the future. First of all, something that really creates a dynamic on the market that there is a high demand landscape. We are seeing more and more defense spending.

We also see that they are transforming into more of a data-driven defense capacity, which also creates this digital arm race where digitalization will be probably the most important thing, how we can build this threshold so we can be strong enough to build pace.

And that is our second strong outlook for the future is the digitalization and connectivity. Some people are talking about this defense tech super cycle and it's here to stay. So what we are doing at MilDef building the IT backbone is really a relevant thing into this European defense ramp-up.

And finally, also that is really important in this defense domain. MilDef has a decade of trust in this one. We have been operating in this domain for almost 30 years, and we have a field program portfolio, and we are already today a well-trusted supplier and a partner in this domain. And that is something really important when we now see this -- all of these new opportunities coming up here in the future.

And with that said, I think it's time for the Q&A session.

Absolutely. Thank you, Daniel Ljunggren, CEO and President, MilDef Group. I have raised hand from Tom and Daniel at Danske Bank. So we'll start with Tom and make sure that you unmute your mic Tom, so we can hear your lovely voice. Tom with Pareto. Are you ready to fire away?

Yes, sir. Just a question on the delays here. It looks like you moved some SEK 180 million, SEK 200 million in terms of organic backlog into 2026. How much of that is on you versus on the customer acceptance rate here? And what sort of investments or initiatives are you taking to enable higher delivery pace here into '26?

Thank you very much, Tom. I just want to start with maybe giving some flavor on the bigger picture here. I mean we are in a historical defense ramp-up, and we are talking about this beginning of beginning for many times. And now we really see a strong demand, strong order intake that is building up a need and a situation in the delivery that we need to be able to take care of. So I think we can expect maybe some turbulence in the upcoming quarter or 2 quarters going forward.

So we have the time to find a new delivery capacity, and that is something that has been impacted, as you say, the moved -- some of the moved orders into 2026. But it's really important that we are doing this on a daily basis. We are adding on capacity. We're adding on what we need, as I say, the building, the people and the process to be able to deliver even more.

But it's not always that this kind of movements are -- it's -- that is MilDef needs to address. We also need to increase the supply chain that we are working with. We also have the end user, and the end customer sometimes is telling us to move the orders into 2026. Maybe our products are going into a bigger platform program and maybe there is a delayment of the platforms and things like that, and they don't want our things. They want to have a coordinated delivery of all things together.

And I also see that some peers in the industry is also talking about this growing pain that we are seeing right now. So I think it's a little bit naive to think that this was just going to go on a straight road to heaven. I think we will see some bump in the roads going forward. But it takes some time to calibrate the new situation and find a new higher delivery capacity.

Tom, you have another question? Tom?

Yes. Just a quick one on the sort of seasonality going into '26. Any specific high delivery quarters to expect here for the coming year? Towards similar patterns as '25 and '24?

Thank you, Tom. I think we can expect a little bit the same pattern that we have seen in the past year, so to say. Of course, now we're also moving a couple of things that will be expected to deliver in the first quarter. We had a little bit of what I'd say, a weak first half of 2025. So I expect us to be much stronger in the first half of 2026. But I also think that the biggest delivery quarter will be leaning towards the fourth quarter.

Thank you, Tom. We have a lineup of Daniel, Hugo, Finn and some questions in the chat. So I'll go to Daniel Lindqvist with Danske Bank. Please open your mic. Okay. So if Daniel is not opening his mic, we go to Hugo Lisjo with DNB Carnegie.

I heard that the distribution agreement you have with Mildef Crete ends at the beginning of 2026. Is this correct?

That is not correct. Our current distribution agreement with Mildef Crete will actually now end in April 2031. I know that some have seen this 2026, but there is a dynamic in the agreement that will prolong that agreement with automatically 5 new years. And that really kicked in 2 years ago, actually. So we have a good situation on the distributor agreement with Mildef Crete.

And just to add extra flavor on that, I mean, we have been a strong partner with Mildef Crete since back in the '90s. So agreements or not agreement, I think we have a really strong position together with Mildef Crete. So I'm not worried about that relationship or that partnership or that supplier.

Hugo, do you have more questions?

This also holds true for roda?

roda has been even having a stronger and longer relationship with Mildef Crete. So underpinning of their existing -- they have, of course, an existing distributor agreement with Mildef Crete. And I'm not going to go exactly into when that expires, but I have no worries and also with the new orders what we are seeing coming in from roda is building the relationship even stronger with Mildef Crete, and they have been partners and friends for more than 30 years. So I'm not worried that something will change.

Okay. And regarding those production capacity restraints you had in -- you have in 2025. How should we think about this looking into 2026? How much production capacity do you add?

We are, of course, trying to do this in the same pace that we are seeing order intake, et cetera, coming in. But I'm sure that we will, in upcoming 1 to 2, 3 quarters here, adding a lot of new delivery capacity on top of what we already have today. So it's hard to give an exact number how much we will increase our delivery capacity. It depends a little bit on the future order intake and things like that.

But we will absolutely add on so we can meet our long-term financial target growing 25%. So at least more than 25% of what we are doing today. Then of course, there is a limitation of everything. So if we see continued really strong order intake, then maybe we will have even in 2026, capacity issues of growing that quick.

Okay. My last question, that's regarding the gross profit margin. Organically, it was strong in this quarter. roda's gross profit margin was a bit lower than previous quarters. Would you say that this quarter's level is more of a normal level for both entities and for the group?

If you look at the roda margin, for example, in Q3, it's very similar to what they have done in the past. They have been operating around 30%, something like that, and they are doing that in the Q3 as well. So that is probably something that we can expect going forward. Of course, we will try to make -- see if we can find some opportunities to increase the roda gross margin. But what they're doing in Q3 is very similar to what they have done in the past.

If we look at the MilDef margin, we have now seen a couple of quarters in a row that we are improving. We are above 50%, and we have done this a little bit transformation to our product mix. We have more software. We have more of the solutions and integrations and also improving the gross margin. So I can expect that the classic MilDef gross margin, if we speak it like that, will continue to be above 50%.

Thank you, Hugo Lisjo with DNB Carnegie. I think we go to Finn Kemper now with Cantor Fitzgerald. I hope that you are able to open your mic on your side Finn. I see you did that. Welcome with your questions.

Congratulations to the great quarterly results, really well done. So my question...

We've lost Finn there. Do you hear us still out there?

We hear you?

Yes. Sorry. Maybe I'll ask the question again, sorry. You significantly expanded the capacity in Rosersberg and stepped up also the recruitment. So maybe you could elaborate a bit on the capacity runway and when you expect that to really reach saturation?

And maybe off that, on the flip side, how do you balance the current investment pace with the risk of potential overcapacity if order conversions slow in the following years?

Thank you very much, Finn. If we take the first question there out in Stockholm, our new facility here, we are 4x increasing our capacity here, and that is a 10-year lease contract. So of course, this will not be up and running on 4x higher capacity already here in a couple of 1, 2, 3 years, maybe it will take some time to really come into that new delivery capacity and come into that new facility. But of course, we're trying to do whatever we can to fill that with a lot of new business and things like that, and that give us the room to grow.

Your second question there, of course, we are really listening to the market. We are looking at the order intake. We are doing our evaluation and see so we don't overinvest in things. But here and now, we need to take this delivery capacity to the next level because we are seeing that the high demand is here and it's here to stay. And as I said before, this is probably 10 year out in time. So that is why we are confident in continuing to add on capacities. And then we, of course, need to follow this [ carefully ] walking into '26 and '27 and beyond.

Okay. And maybe a follow-up question. I mean you mentioned that already during your presentation, but moving towards positive free cash flow maybe in early 2026, what are the key levers you're really pulling on the working capital? So maybe improved delivery planning, supplier terms, also customer prepayments? And how sustainable is that improvement? And what is a comfortable working capital ratio maybe moving forward that you feel comfortable with?

Thank you. First of all, I would say, here in Q3, of course, that is a situation where we see a really intensive delivery quarter in fourth quarter. So for me, it's not anything unaware that we are really ramping up the inventory for making the deliveries in the fourth quarter. We are working really hard with improving and optimizing the cash flow.

And I think that we have seen some improvements in that area when we are talking about prepayment, we are talking about milestone payments, and we are talking about an end user that realize that they need to, in some kind of way, support the defense industry in this ramp-up as well. We need to be able to share some risks, and we need to be able also to get some fundings before deliveries.

So I see some kind of change in the dynamic. Exactly what will happen here in the future is hard to say. But at least they are more open to have this kind of dialogues, how we can help each other on the government side and together with the industry.

And in terms of the ratio, is it closer to 25%? Or are you comfortable with below 30% already?

I think that we can -- if we look at the history, we could be operating with 25%, but maybe we were aiming for 30% in that area would be quite doable for us going forward. It's also always a balance act between the lead times. The lead times is really important for the end customer here and now. So we also need to have a basic inventory level to be able to meet this kind of shorter lead times as well. So it's a balance act between a great cash flow, but also be able to winning the business because you have the right lead times.

Thank you, Finn from Cantor Fitzgerald for tracking us. Before we go to Tom for final questions before we have a hard close at 40 minutes past the hour, a question in the chat, you can have a look at it also, Daniel.

How are the projected gross margins for the long-term order intake '26, '27? Do we see expansion of margins as the backlog really starting to become filled? Are you taking winning orders on any margin just to fill the book? What can we expect in the future? Many questions in one.

I think we have touched base a little bit around the gross margin here and we have seen, and we have talked about where we are today and where we have been in the past and the journey we have done. And it's always hard to predict in the future there, but I expect that we can continue to improve our total gross margin. I expect that we can continue to improve the roda gross margin absolutely because they are on a little bit less level than that.

Are we talking -- are we taking orders just to win? No, we are not. We're always keeping our gross margin because we know the importance of the gross margin for the profitability going forward. So I would say we have a good pricing power in these market conditions here and now as well. There is a high demand, and we are in a relevant position. We are a trusted supplier. So that is also why we can keep the price level at the same level that we have done before. So it's not about lower our gross margin and winning order intake. It's keeping our gross margin and continuing this high demand landscape.

Thank you for that question out there in the cyberspace. Final -- very quickly, Tom, with Pareto. You have the final floor.

Yes. On the roda EBITDA margin, I know we spoke about gross margins, but what's happened to the OpEx development here in '25 because EBITDA margins are down quite significantly for the first 3 quarters. What are you expecting moving forward into '26?

Yes, that's a good question, Tom. I think it's a little bit on the side that the figures in the report are not really reflecting how roda looked before because you can see some integration costs in roda. You can see some of the depreciations around this -- around the acquisitions-related depreciations and amortizations. So I don't think it's super fair to compare it because a little bit other dynamic into this -- to the roda EBITDA margin. But for me, operational-wise, I expect them to be at the same level that we have seen in 2024.

So you should see a comeback already in '26 then?

We should do that, and we should also see only [Technical Difficulty].

And then on the jackup program with Rheinmetall and KNDS, what are your hopes there?

I mean we have always good hopes to win some future business, and we know that there are some big programs going on around in Europe and big vehicle platform programs that -- but we are trying to put us in a good position, and we are having a strong relationship with many of the big platform providers. Rheinmetall is one of those where we have an existing framework agreement through our roda company there. So hopefully, we can be a big part of that.

Sorry for the little bit hard close here, but thank you so much, everyone, 45 souls, ladies and gentlemen, 47 altogether tracking this Q3 call. Thank you for taking part of the MilDef journey and thank you for contributing to the MilDef journey. We are very excited to be back on February 5 when we disclose the year-end numbers for the full year of 2025.

So Daniel, final words from you.

Thank you very much for following the MilDef journey, and I hope to see all of you in February when we will talk about our Q4 report. Take care out there.

Thank you very much. Don't be stranger, stay in touch.