Hexatronic Group AB (publ) (HTRO) Earnings Call Transcript & Summary

Good afternoon, everyone, and very welcome to this Investor Update. We're sending live from the beautiful city of Stockholm. The sun is shining and it's a Friday afternoon. So let's make this a good one. My name is Rikard Fröberg. I'm the newly appointed CEO of Hexatronic Group. I started my job on March 1, so I am now on my 20th working day with the company. I spent most of that time on the road to meet our people and our customers. And I have to date visited 15 Hexatronic sites in 7 countries and a handful of key customers, 2 trade shows, 1 in North America and 1 in Europe. So I'm on a steep learning curve and absolutely delighted to be here today. Let's talk a little bit about the purpose of this session. The main purpose today is really to provide some more flavor and insight about our three newly created business areas. You will hear about their market dynamics, strategies and priorities. We'll also provide restated numbers for each business area for 2024 to create that comparability and transparency as this is now the structure, we will be following in our segment reporting going forward. We will also talk about top priorities in 2025 and answer questions at the end. I know people are keen to hear about our current trading and recent developments in the market, but this is not really the purpose of today's discussion. We're maintaining our view from the Q4 report that we are cautiously optimistic about 2025, and we will, of course, look forward to reporting our Q1 results on April 29. Let's take a look at the agenda and our presenters. So into first, we're already into the introduction right now. This will be followed by an overview of our Fiber Solutions business area presented by Christian and Tomas. Next, we will move to data center. And here, we will hear from Martin and Ben. After that, Harsh Environments will be presented by Jakob and Phil. Last, but certainly not least, Pernilla will walk us through the financials, and then I will wrap things up before we go into the Q&A session. And you should all be able to type in questions as we go into the chat function. Let's start now by taking a quick look at the Hexatronic Group. We are today a global business with operations in over 40 countries around the world and sales in over 100 countries. A little over half our turnover is from Europe. Sweden is our home market, but it's less than 10% of the group business today. North America stands for close to 40%, and the U.S. by now is our single largest country in terms of revenue. APAC sales are just under 10%, and that is largely Australia and New Zealand. As you can see, we're quite well diversified geographically. And we also have no single customer accounting for more than 3% of total sales. Our 18 production facilities cover the market well with production in each of the continents where we're active. It has been for a while now an important part of the strategy to have local production to be close to our customers. And this is extra important and the strength in a world when global trade barriers are only increasing. About 2,000 employees and revenue in 2024 was just over SEK 7.5 billion with an EBITDA margin of 10.6%. If we look at the longer-term performance of the business, Hexatronic has seen very strong growth over a number of years. This growth has been both through acquisitions and organic. And in particular, during 2022 and '23, the strong market situation provided exceptional growth for our business. However, as is often the case, this strong growth was then followed by a bit of a hangover and actually declined in 2024. Important to note that most of that decline we saw in the first half of '24 and some stabilization in the latter part of the year. And the 5-year compounded growth rates, as you can see from the slides here are very healthy and also the organic compounded growth is a healthy 9% per year. So now we're coming to the business areas. And if you have followed Hexatronic, you probably know that for some time, we have talked about focus areas. As these have grown, we're now at a point where we feel it's appropriate to take the step and operate them as business areas. Each business area has attractive growth opportunities, but the customer base, market dynamics and strategies are a little bit different between them. And that's why we're now creating a structure to operate them as distinct business areas. So this is not only segment reporting, it's how we run the business. Fiber solution, where it all started, is still over 70% of the business of Hexatronic Group. It's a business that mainly serves the FTTH or fiber-to-the-home market, but also wireless security and submarine cable solutions. We have invested in capacity here, and we're ready to take on higher volumes and get operational leverage. Next is Harsh Environment. This business provides tailor-made cables and other highly specialized products for many industries with energy and defense being the main ones. Third business area is data center. And here, we provide both services and products serving the ongoing build-out of data centers around the world. This business area currently has the highest margin, almost 16% EBITDA and it's got low capital needs, which makes for a pretty attractive financial profile. We see a number of global trends or megatrends, if you like, that are affecting our markets. First, digital transformation, perhaps a little bit of a buzzword, but there's no doubt that there's a huge shift going on. And in particular, regenerative AI is driving enormous needs for data processing and data transfer. We see energy transition towards renewables, mostly wind and solar. Sustainability is an increasingly important trend as in on the agenda for many of our customers across all of our business areas. And I would say that in some areas, we see this going from a nice to have to a must-have. Security is another trend. If you think about the cameras that are recording outdoors and indoors these days, it's much higher than just a decade ago, and that number is only increasing. And all these cameras need to be connected to power and data transfer. Finally, we see geopolitical trends towards protectionism and away from global trend. It seems that things are happening every day, and it's quite hard to say exactly where things will land, but the direction of travel is clear, and it is favorizing localized production. And when we then compare Hexatronic position, we see that we're quite well aligned to those megatrends. First, we're in markets that have exciting growth opportunities, and you will see that in the upcoming presentations from our business areas. Second, we're selling a whole suite of products, and we can provide customers with solutions, not just the product. And in this, we're a little different than some competitors who may perhaps provide only one type of product, whereas we can provide the whole range, including necessary services, training, instruments and tools. We have manufacturing in 18 production sites, generally located in market close to our customers. And as noted, we can easily ramp up production within the existing footprint. Hexatronic has strong brands and products that are known for the performance and features that help customers improve their productivity. We feel on sustainability that we are market leading. And finally, we have a healthy and exciting M&A pipeline. So my last slide now will summarize what I see as our top priorities for 2025. First, we need to turn Fiber Solutions business back to growth. And the U.S. market is probably our biggest opportunity. It's a large market where we have a relatively small share, plus we believe that the air blown technology will over time gain share and traction. We can leverage our completed CapEx investments for further growth, and we're also exploring ways to further diversify beyond just the FTTH business into other growth areas like submarine, security and wireless. And we will continue our sharp focus on operational excellence and also renewed focus on innovation. For Harsh Environment, margin improvement will be a top priority. And data center is really all about how do we accelerate growth, how quickly can we grow without jeopardizing the quality of that growth. And one way to do that is to execute on our M&A pipeline, which is focused on Data Center and Harsh Environment. Finally, I'm new in the business. I'm still quite early in my first 100 days, and it will be natural for me to work with the management team to review and validate our strategies and business plans to ensure that we have robust plans for the long-term. And with that, we will move to the first business area, which is Fiber Solutions, and I hand it over to Christian and Tomas.

Thank you very much, Rikard. In Fiber Solutions, we would like to give you an overview, talk about our markets, touch upon a customer case, which is NOVOS FiBER in the U.S., discuss innovation before we will round it off with our strategic priorities. I am Christian Priess, Head of Fiber Solutions EMEA, and I'm joined here with my colleague, Tomas, who is Director of Product Portfolio Management in Fiber Solutions also. We have a broad range of products and solutions that solve customer needs. First and foremost, in FTTH and transport networks. These are cables, ducts, network products that are customized to local needs in most markets. We have submarine cables for telecom projects and offshore windmill parks. They are long, stationary, unrepeated cables up to 400 kilometers and today up to 192 fibers and of 288 fibers or even more in the future. These -- there are big differences to the submarine cables in Harsh Environment business areas -- area, which are much shorter and dynamic and often hybrid cables, with, for example, [indiscernible] for power. Then we have conduits and pipes, which is mainly in the U.S., but also in Europe. We have instrument and tools, blowing machines for blowing cables into ducts, slicing equipment to slice the fiber cables together and finally, monitoring systems to make sure that you have done measuring and monitoring to make sure you have done everything correctly. In wireless, we have products and solutions for small cells. For big cells, cables fiber and power to the antenna. And finally, we then have training where we train our customers, installers, et cetera. We have had a strong sales growth in the past many years. Here, you see sales development on a rolling 12 months basis, meaning seasonality had been taken out, and you see a positive sales development til mid-2023, where aftermarket slowed down. We had a negative sales development until Q3 '24. From Q4 '24, we have seen small positive increases. And in '24, we had a total turnover of SEK 5.4 billion in Fiber Solutions and an EBITDA of 10.8%. Generally speaking, our facilities are well invested and have capacity to increase sales worldwide. Looking at our portfolio, we have quite a well-balanced portfolio and a broad customer base with diversified sales. We do leading solutions, enabling fast and efficient deployment of fiber optic solutions. Sales per geography is a little bit more than half Europe, a little bit more than 1/3 North America and the risk -- and the rest, around 10% is APAC and the Rest of World. We have quite a diversified customer portfolio, top 10 customers account for 30% of sales. And in the pie chart to the right, you see the big gray area. These are smaller and medium-sized customers in our local markets around the world. We have a strong presence with local manufacturing in main markets. If you focus here on the U.S. and you focus on the blue dots, then you see that we have four manufacturing facilities in the U.S. strategically placed across the country. They are microduct and conduit factories, and we are looking into establishing fiber cable manufacturing in the U.S. by Q2 2026. Looking at Europe. In Sweden, we have manufacturing of fiberoptic cables and ducts in Estonia of termination for cables. And in Europe, then in the Netherlands and Austria, again, microduct manufacturing also in Korea, where we basically sell to all major markets in the U.S. -- in the world, in the U.S. and in Europe in particular. We have microduct manufacturing in New Zealand, for New Zealand and Australia, and we have a smaller termination facility in Australia. The green dots are our sales companies, and we are, as you can see, we are basically represented in all major markets in the world. And finally, the orange dots are our training facilities, where we have three in Europe and one in North America. Looking at market segments and drivers, starting with North America. Market is expected to grow in the coming years. There is a mix of private and public funding of network build-out. You might have heard about the BEAD program, the Broadband Equity Access and Deployment program in the U.S., which is U.S. government money to build out fiber. There are tariffs and protectionism that will come into place or might come into place, and that will, of course, give an advantage to local manufacturing. We have a strong position in our conduits and pipe business. We are very strong #2 in the business, and we have quite a low share in fiber optic systems, which we definitely think will give us good opportunities to grow our market share based on our air blown technology, meaning doing concept sales. In Europe, we expect the markets to show flat growth. There will be a shift from homes passed to homes connections. So homes passed market will go down, but home connection market will go up. And there will definitely be focused on cost-efficient solutions as price pressure is expected to continue. We have a leading position in the Nordics and quite a sizable position in the U.K. and in Germany, and in other key markets. For APAC and Rest of World, we expect to see moderate growth. There is no universal technology that goes also for Europe and the U.S., only network-specific solutions. We have a leading position in Australia and New Zealand. And we have, as I mentioned before, quite strong export business from our facility in Korea. I want to spend an extra word on submarine cables because we see a growing demand here. And as I said before, we manufacture these long length unrepeated submarine cables in our facility in Hudiksvall in Sweden. There's a deal fit for medium distance typically connecting countries in Europe. That could be, for example, from Sweden to Finland, from the U.K. to the Netherlands, but also more global business-like connecting islands in the Philippines or in the Caribbean. I was coming from the submarine cable business, medium distances between countries in Europe and for example, islands in the Pacific or Caribbean and this is global business. We see a growing demand in the telecom business, but in particular, for offshore windmill parks and that is driven by Europe's green transition. And now I'll hand over to my colleague, Tomas.

Thank you, Christian. Hello, everyone. I will start with a question why Hexatronic Fiber Solutions. And our main differentiator is the fact that we offer a complete system solution that enables a cost-efficient network deployment for our customers. And if you look at the split between materials and labor in a typical fiber-to-the-home project, you see that about 20% is material. So that's where we are. And 80% is installation services or labor to actually build the network. And for us, it's a big focus to lower the cost -- the total cost of ownership for our customers by introducing a complete system solution that works together, the products are designed to work together seamlessly. They are easy to install and enable a low total cost of ownership and, at the same time, bring a sustainable solution. But apart from that, we are more than just a supplier. We have a close partnership with our customers. We offer a service called field support, where we have highly skilled technicians that help our customers if there's a problem in the field or perhaps during a start-up of a new project to make sure everything runs smooth. But we also offer more advanced training and certification courses, so we can train the designers or the staff doing the installations for the customers to make sure that there's a smooth rollout. And we also have high-end products. We own the design of all our core products. We can manufacture products like Christian just said, in North America, in Europe and in APAC, and we have a very extensive quality control of our system. So combining all this together, we can really enable a cost-efficient network a lot for our customers. And speaking of customers, we have a very relevant case here with NOVOS in the U.S. So let's talk about them first. They were established 2022 in Dallas -- sorry, in Texas, Dallas, Texas. And they provide broadband services to residential areas by designing and building fiber-to-the-home networks. And they have chosen to use the full Hexatronic solution. Meaning the passive solutions with cables, ducts, cabinets and all. They use our field support or site support, and we have also offered them training services for the design teams, but also for the construction teams, building the networks. And we have a quote here from the CEO, we selected Hexatronic based on their value proposition, flexible and cost-effective network, architecture and ability to meet our aggressive time lines. So this is a typical customer that we target with our system offering. Small to medium private equity, we can help them build the networks very efficiently. We will look into the future a bit. We heard about the trends from our CEO previously. And for the Fiber Solutions part, there are some very, very strong trends that drive the demand of fiber optic solutions. One is sustainability. Again, it affects us all. It's an extremely broad topic. But for us, it is a cornerstone in our value proposition because we can help with our innovation to -- our customers can meet their targets. We are working with miniaturization to reduce the amount of materials in the products. We're using new materials with less CO2 footprint, and we work with recycling, efficient shipping and so on. So there's a lot of work and innovation going into that area. We have closing the digital divide, which means bringing connectivity to underserved areas, which are typically in rural settings. And for us, that is another challenge -- technical challenge because we need to bring fiber for long distances to areas where there's a low density of people living. So that's a specific technical challenge for us. Christian mentioned the BEAD program in the U.S. There are similar programs going on in Germany, U.K. and in fact, all the markets we operate on. So a very important area as well. Wireless was also mentioned before. Today, most of the investments in 5G, particularly in Europe, is focused on coverage and higher bit rates. What we will see in the future is a densification of these networks, more cell sites, smaller cell sites closer to where people actually are. Urban areas, indoor environments and so on. This is another area of innovation for us, bringing fiber, power and also concealment technologies for these cell sites, antenna and other equipment. It's a very important area for us. We also talked about digitalization and AI before. And while we will return to the data center business soon, this is also a great opportunity and an area for innovation for Fiber Solutions because these data centers need a lot of connectivity. We have many projects already bringing fiber to data centers, connected them to the wider core networks and transport networks. We're working with high fiber count cables, new fiber types like multicore, hollow-core and so on to increase the capacity of these networks, driven by data centers and digitization. Electrification is another area. We mentioned wind farm parks before, and there's a lot of communication needs to building these very complicated structures. And both for submarine and terrestrial applications, we will see investments and need for innovation for this as well, not only wind farms, but other electrical grid investments, EV fleets and so on. So also a very strong trend for us to look into. And last but not least, we have world volatility and uncertainty. We see a lot of investments in security systems. Perimeter security, and various defense applications that also need power and fiber in combination. So there are very strong trends driving demand for fiber optic solutions, and we put a lot of effort innovating in these areas. And over to you again, Christian.

Thank you. Growth opportunities that we see in Fiber Solutions and our strategic priorities. Keep our focus on solutions to small- and medium-sized customers. We have good innovation in the pipeline with easy to install, sustainable and cost-efficient products with the best total cost of ownership, drive market share and take advantage of those opportunities that we see in the U.S., especially with locally manufactured solutions. And as I mentioned before, in Q2, 2026, also with fiber cables. In Europe, it's more a focus on operational excellence and explore the future growth opportunities like what we mentioned, the growing market in submarine cables, security and the rollout of wireless 5G, and from 2030 also 6G. That concludes it for Hexatronic Fiber Solutions. And I'm now happy to hand over to my colleagues in Data Center. Thank you.

So thank you, Christian and Tomas. I'm Martin Åberg, Deputy CEO of Hexatronic and responsible for our Data Center business area. I'm very pleased to have with me here today, Ben Parker, CEO of IDS and responsible for our data center services across EMEA. So together with Ben here, we will have a deep dive into our offering, and we will particularly zoom into our service offering. We will talk about our long-term growth strategy, talk about organic initiatives but also on the M&A side -- M&A strategy, very exciting going forward. And we'll provide a market overview talking about trends, drivers, market structure and how the different segments, the outlook for them going forward. So those are the three areas that we will cover in today's session. Starting with our financial overview. We established a platform over the last years. That is structured for continued growth, focused towards the end customer segment data centers. That is now formed into this business area. Over the last few years from 2021, it has been growing to SEK 1 billion in sales, roughly USD 100 million, which corresponds to an average annual sales growth of 54%. The majority of the sales has been acquisition driven. We have done approximately one acquisition per year, but also been a very healthy organic growth. We have been growing with good profitability. If we look at our legal entities and look at the profitability or the EBITDA margin, throughout those years, it has been between 14% and 18% EBITDA margin. And if we look at the average annual profitability growth, it has been close to 50%. So we have been growing steady sales, but maintained a very good profitability throughout this period. And with that short introduction, I would like to leave over to you, Ben to talk more about our offering and also provide a market outlook for the next years.

Thank you, Martin. So here, we have our four data center market segments. So we start the data center journey with the on-premises enterprise clients, owned and managed data centers. So these are heavy CapEx data centers, slow technology path and a more traditional way of managing your data, still growth in that region, and we're still happy to provide services to many of our clients in that sector. But this has led to a push in a transitioning to what we classify as off-prem, off premises. This is where the Colocation segment comes into play. These are carrier hotels, a good step for off-premises data centers. Close to your other customers and high-speed routing, this also gives customers the ability to test and try out and move into the cloud. Colocation serving cloud integration over the past 7-plus years, this segment's gained immense speed, aided in hyperscale growth globally and on a large rate with the ability to take very large power requirements, very fast as facilities are already constructed in the colocation market. We've been working with the hyperscale clients since 2014. And we've been a pivotal part of that transition, I think, is best way to say i., we're a partner for them for several key levers of this sector. And the combined growth and strategy of colocation and self-build, hyperscale market growth of 15% to 17% per year signifies immense investment and they're reading themselves for the new world of high-density and AI workloads. So here we deep dive into our four key offerings for our data center services. We are uniquely positioned to provide ICT services and deployment across the U.S. and EMEA in these four sectors. ICT services, here we design and build the data center networks. Working hand-in-hand with our clients and our customers for installation, anywhere across EMEA and the U.S. and then managing the cabling infrastructure with our day to Smart Hands teams. This is a highly demanding sector of our services and where we're seeing the most growth and its above market trends. Connectivity is our bespoke fiber optic assembly offering, patch panels, fiber connectivity solutions to the end user. Containment is our hot and cold aisle containment products offerings. These products are necessary in every data center. They provide efficiency, dividing the hot and cold air in the data center to provide high levels of efficiency and utilization within that data center. Every facility built requires these products, and we manufacture, supply and install these services across EMEA, and this provides an extra layer of products to our clients. On the land sector, this is the supply of copper-based systems and for commercial projects, end-to-end structure cabling components, panels, cabinets and wall boxes. It's a full turnkey supply solution for our customers, and they're very happy with that. So as you can see, this is a wide range of offerings to our clients, and we make their lives simpler by having this single source for multiple supply. So what makes -- what revenues are available and where are we positioned? So right at the beginning of this amazing graph, the design phase is a very intense part of the stage where we live. Our designers provide full design programs for our customers across EMEA. This is the very start of the project, and this could be several months of workload in this sector. A very interesting part of this graph, and it's part of the program that we've been studying for some time now is the M&E and electrical requirements. Electrical opportunities are a constant requirement in data centers. And we, at Hexatronic have been working and looking very closely and acquisitions in this, what we classify as a gray space. IC fit out is exactly what it is. From our designs, we turn a white box or an entire facility into a network-ready operational data center, and that's ready then for their IT. We've got more than 300 engineers across this region. And this is the most challenging phase of the life cycle of a data center. It's the most demanding. And this is where we really excel. We have managed services or what we like to call day 2, engineering support for our customers. These are daily cabling requirements, and this is where we can support the customer in the data center for many years. We have teams that have been on campus now for more than 5 years, so a lot of cabling, Martin. Decommissioning relocation migration. This is always a part of a life cycle of a data center. The managed services, the blue bar extrapolated could be out for many, many years, but eventually something needs to turn over. And this is where we support our customers and upgrade either their current day center or geographically locate their facility. So as you can see, we have many sectors covered. We are very well positioned for what we call a high wallet share of the data center life cycle.

Thank you, Ben. Moving over to the sales breakdown. Overall, we are very focused on the data center and customer market, but we are well diversified, both in terms of our offering and on the customer base. Starting on our offering side. Approximately 45% of our sales today is towards ICT, what Ben just talked about, and we'll dig deeper into in a few minutes. The other 55% is quite evenly split between connectivity and containment. And again, connectivity being fiber optical systems, mostly for data centers and land being Ethernet-based systems for commercial buildings and so on. And we also have containment that you can see here. It's a very small portion of the sales today. We just -- we've introduced it last year in Europe, and we also introduced it in the U.S. last year. So a great growth opportunity for the next few years we see. Moving over to the customer segment breakdown. Here, we have what we call the Cloud segment accounting for close to 40% of our sales. And what Ben usually talked about, the hyperscaler and the colocation together being the 40%, and that is the highest growth segment in the marketplace today. The remaining 60% of the market evenly split between enterprise and others. So on aggregate, data center is roughly 70% of our sales today. And finally, we look into customer concentration. And we have a number of larger accounts, very strategic to us that we have been working for many, many years, and we'll continue to serve as strong partners. But all in all, a broad customer base with the top 10 customers account for roughly half of our sales, 50%. Where we are present today? We are established in North America and Europe. The two main markets for data center builds today, according to the latest Delaware forecast, those geographies accounted for 70% of the world market. And when they look at it until 2029, they will still be at similar levels. So amazing builds in those regions that were established. Our split of sales is roughly 62% in Europe and 36% in the U.S., so close to 100% in those regions. So vast growth opportunities, it's here, we will focus for the foreseeable future. We're based there, we have the networks here, we know what to do. In terms of offering, we have a balanced split between our product sales and service sales. And we see the largest growth opportunity on the services side. So I will again leave over to you, Ben to talk more about our services and why we have been successful in the EMEA region.

Thank you. So managing EMEA as more or less has been our mantra for more than 10 years. The capability of moving EMEA, our skilled workforce around EMEA has been a driving factor for our customers to bring us on their journey. Same team, any country. With the white glove handholding service, we have gone far and wide with our customers, acquiring new customers wherever we go. 10-years' experience designing and running hyperscale deployments doesn't come easy, and our knowledge, relationships in countries across EMEA and a proven track record makes this business extremely hard entry to -- barrier to entry. Centrally managed deployments for over 70 projects in EMEA at any one time. It is similar to an air traffic control facility at our head office in the U.K. New countries every year, new challenges, new opportunities in the data center and hyperscale industry is a fantastic business to be in. And every year, our customer demands are getting larger and more exciting at the same time. So we've over -- with over 2,500 projects delivered in 10 years, we're extremely well positioned for the growing demands over the next 10 years.

So before we summarize the data center presentation for today, we would like to also talk about our M&A strategy that has been instrumental to the sales group we've had in the past, and it will also be instrumental going forward on the journey that we have ahead of us. If we look on the -- we've talked about both the product and the service side today. If we look and start on the product side, that is a mature market. It is highly consolidated, whereby we have the service side that is highly fragmented. And this is, of course, ideal from an M&A perspective. And our ambition growth for is to continue to grow the ICT services will continue being part of that consolidation in that market. But what we also will we look into is adding adjacent businesses. There are a number of other services requested already today by our existing customers. Ben mentioned earlier on the electrical side, we get the requests -- we're doing the ICT work on the same location to the same customer, and then they request us or ask us to do that services as well. So we look into getting in there. And we have a few other applications or services that we also see would make very much sense to add to our offering today. A few example is indoor wireless solutions, DAS Solutions. Another thing that is critical in a data center is, of course, security. We're talking about cameras, access control, so that we are very much looking into today. And if we move from services and applications into the segments. See, I mean the data center segment that we said before, that is the bulk of our business today, and that is really what's driving the market, but also other segments requesting the same services, just to mention two examples we have demanding industrial sites, and we have schools and campuses that has a lot of needs for ICT and security, just to mention a few -- especially in the U.S. So continuing on the M&A. As I mentioned, the services side being highly fragmented. Our focus in North America and predominantly Europe. We have made a structured search on the services side and identified more than 200 companies, small and midsized companies. We have ongoing discussions at all stages with potential sellers. And now as Rikard had initially said, I mean, we have more focus on our acquisition agenda towards Data Center and Harsh Environment. So ambition to scale up from doing perhaps one acquisition per year to three and even higher numbers per year. We will continue having a lower risk approach when it comes to acquisitions. We'll be very selective on the teams and the companies that we will approach and work with. We'll continue in the markets where we are established, where we have the networks, where we know the good players. We will also continue with acquiring small and midsized companies. We're talking about enterprise value typically below EUR 50 million. And in terms of valuations, we see multiples, EBITDA multiples typically of -- in the interval 5 to 7x EBITDA. And we will also make sure to have aligned interest with the management teams and the selling entrepreneurs to really drive the business forward post-closing and using earn-outs also to reduce risk and get aligned interest or minority shareholdings, and continue with the Hexatronic very decentralized governance model. All in all, I mean, we have a proven track record in M&A, quickly integrating businesses. And again, doing roughly one case per year, our ambition going forward, we see great opportunities here to scale up that acquisition activities. And then a final slide to really summarize where we are and the opportunities, we see ahead of us. And it's all about growth. We have a strong underlying market growth. We see very interesting acquisition opportunities in the markets we are in. The business generally have healthy margins, it's very asset-light. So it's a good cash conversion. But if we start looking again on the market, so taking the hyperscale and colocation with the strongest growth segments going forward. That is 40% of our sales. We continue to invest and grow further here, with our customers and adding new customers as well. On the acquisition side, we'll be very active. We'll continue in the markets where we are. And with this proven low-risk approach and acquire companies at attractive multiples. And then finally, if we look at data center, we see it as a very attractive financial profile. We see it's healthy margins. Historically, as we said before, 14% to 18%, then we closed last year at 15.9%. It's very asset light. I mean, CapEx, 1% of sales or even less. And then looking at net working capital, the same story, roughly 12% to 14% to sales. So all in all, very exciting years ahead of us. So that was all for the data center. And we would like to welcome Jakob and Phil and introduce the Harsh Environment business area. Thank you.

Thank you, Martin. I hope today to give you an overview of the Harsh Environment footprint and cover some of the main applications. And we will dig deeper into especially the offerings within the dynamic cables. And here, I have the pleasure of having Phil Ashley with me. He is the CEO of Fiber and Cables. Just a quick sentence on the nice picture you see on your right. It's from one of our customers, and you can actually see our working cable there being reeled just above the robot. Phil will, of course, enlighten you much more about these cool areas we are in during the presentation. Let me spend quite a while on this one. Harsh Environment consists of three business areas: dynamic cables, connectivity solutions and critical sensing. And let me go from right to the left, starting with the critical sensing. We have a legacy sale in Proximion, based out of Sweden into backbone networks that we will maintain. But over the years, the strategy has been to still capitalize on this know-how and deploy it into the growing fiber sensing businesses. Our value proposition here is quite unique. We give the customers a very accurate sensing of temperature and strain. That kind of parameters are primarily used in process industries where you have very high value-added processes where you wish to really understand for safety or efficient reasons, the accuracy of your temperature. Part of such a system is depicted here down to the right, where you will place the fiber inside this metal tube that is then down into a tank or equivalent. Installing such optical sensors also drive the need for fiber optical cables and connectorized solutions. So it is a very close sales cooperation with the connectivity unit. The connectivity solutions are mainly serviced via Hexatronic Norway and TechOptics in the U.K., and we serve all the businesses we are in, being defense, industry and energy. We often act as trusted advisers mainly to OEM companies that need to have either stationary or temporary optical connectorized solutions that they can reel on or read out in very harsh environments. Our strength is a deep optical understanding on how you can combine optical cables with often from two different vendors, the connectors. Over the years, we have grown a very profound close relationship with key customers, almost acting as an integral part of the customer design cycle. Our expertise is in the design of such solutions in harsh environments being offshore or being in very extreme temperature ranges. Finally, to your left, you have dynamic cables, where we have Rochester cable in the U.S. and Fibron cables in the U.K. The cables we produce here are called umbilicals, as Christian mentioned earlier, because they act as a multifunction cable carrying both energy, optics or data as well as in Fibron cases, we often have a third function being fluids. Hence, it acts like an umbilical. The process and you have a picture of such a process on your left below, are relatively complex and requires a combination of understanding extrusion, different materials, bundling copper, fiber, and conductors, even hoses in fills case into one hybrid. And then we strengthened this cable so that it can operate in very harsh environments. Often with steel armoring on this case, you can see a braiding attached on top of the cable. And then the cable is often then reel on, reel off in very dynamic areas. On the top, you see a cable attached to a robot. This robot is called an ROV or remote offshore vehicle. And this is the working class of robots for most of our customers. And these are workhorses used in multiple offshore applications. And luckily, Phil will go into some of the more exciting parts of that later on. We have, in a very short period, grown from a small player to a global strong niche player via the two acquisitions in '23, Rochester Cable in the U.S. and then followed by Fibron Cable, both acquired, as I said, in '23. It compounds to a 165% sales growth over a very short period. We managed to do around $1.2 billion -- sorry, SEK 1.2 billion last year. And EBIT margin, as you can see, ended up in 10.3%. This is not in line with what we had expected, and it was mainly due to the challenges we had experienced in Rochester. The carve-out turned out that we did from TE have proven to be a little bit more cumbersome, but we are on the right track. And we have -- look, we have done what we think are the right plans, and we look forward and with Fibron, we have a strong internal benchmark as well. Looking at where does our revenue generates, it's in -- from long investment cycles and recurring customers. And as you can see on the left side, these revenues are primarily driven by dynamics. Hence, the rest of the presentation today will be zooming in on the dynamics. We have a very broad customer base and a favorable mix of attractive global customers in defense, in industries and in energy. We also have a customer -- low customer concentration, and the top 10 customers have been there for multiple years, and we seldomly have 1 or 2 projects that pops in and out. If we zoom in a bit on the main markets, we play in and the underlying market drivers. In energy, we are driven by renewables, we are driven by oil and gas and foremost service and subsea engineering companies. In renewables, we see an increase in requests for projects where dynamic cables can play a role. And Phil will give you an example of such an opportunity in just a minute. We also do sell connectorized solutions into energy in conjunction with an increased need for optical condition monitoring. The energy consumption is in -- projected to grow around 5% on an annual basis, even beyond 2030. In the defense sectors, we actually sell to all areas being Army, Air Force and Naval. However, it's primarily Naval that drives our businesses. We both sell tow cables as well as onboard connectorized solution. And onboard system could be, for instance, a radar system that is then deployed with two different types of connectorized solutions. And when I said the word to tow cable, you should consider a tow cable like a part of a sonar system where the defense sector can use it to actually survey over vast area. This kind of surveying or tow cables is are also sold into the bucket we call industries under the name oceanographic. If we jump back to the vehicle that drives the Naval businesses, it is, of course, driven by the general increase in NATO and national spending. But foremost, it's the build-out of new submarines and/or upgrading of existing fleets. And now I'll hand over to Phil to give you some exciting examples of our businesses.

Thanks, Jakob. So we wanted to cover a couple of slides now, just to give a little bit of flavor and color of the type of products and things that we're doing within the dynamic cable business. So this is -- this is an ROV cable and a customer scenario. I think probably with a little bit of explanation. So ROV for us, within the dynamics business represents something like 15% to 20% of our total sale as you combine us in Rochester. What are ROVs, they're remotely operated vehicles, robotics that work subsea. They can be -- they can be 40-kilo observation class, and they can go all the way up to a 10-tonne trencher that would plow paths for pipelines and major optical cables. It's a wide-ranging business. I think the one we focused on here in the slide, this is an Anglo Norwegian vessel operator who are in the process of investing in a range of vessels to lower the personnel and carbon footprint of offshore intervention activities. So they came to us with a problem they needed to -- they needed a narrow cable that could power an underwater robot, but it needed to be extreme high strength. So we ended up putting 5 layers of steel wire armor on there, such that it had over 12 tonne braking strain. The cables themselves are running 6.5 kv, so thousands of volts, but in incredibly narrow copper sections. This is a thin-wall technology that we, as a company, have been working on for the best part of 15 years, developing and improving also on board then is a fiber optic cable that provides all of the telemetry and communications to the underwater vehicle. In this application, the cables were needed really quickly. That was something that we, as a specialist engineering prototyping company as well as being a manufacturer, we're able to take on the engineering challenge of the customer. We were able to do that in a sort of for them record time to support the build-out of vessels and lower the cost of installation onto the vessel. The cable itself is being used by the vehicle operator by -- to do cone penetration testing. So they're taking the remotely operated vehicle and some tooling and they're drilling small holes in the seabed at various locations around the seabed to establish the oceanographic layout, so that when they go and put an offshore wind farm or an offshore oil platform in place, they understand fully what the seabed is. So again, lots of challenges for us around the reliability of the product, when these vehicles are on, when the boats are on station, they're very high cost, and so the reliability of the cable is super important as well. In this instance, we built the -- we built and designed the cable in the U.K., in the Hoddesdon factory, but we have the unique capability that we could have equally done the exact same job from our Rochester facility and put a Made in U.S.A. label on it. So something that's absolutely unique to us as a business. As a secondary example, something maybe that's from a product perspective looks and feels completely different, but actually, a lot of the engineering and activities are quite similar for us. So this is not a steel wire armored umbilical. This is something that is armored with polyester and aramid fibers. So we were approached by an engineering contractor. We've been approached by several for this particular application. The design challenge that's being approached is for offshore wind farms and especially as people start to look at floating offshore wind, they're a long way offshore and the diesel vessel and the diesel supply vessels that are -- that are supporting those wind farms are using significant amounts of diesel. So there's a challenge that the industry has to move to electrical vehicles, to battery-operated vehicles and the ability to charge those vehicles on location is something that a lot of the industry is looking at. So we were approached by a specific customer. They came to us because we have both the capability to do the design work internally, but also to integrate a number of different applications. So we brought in some very, very soft, flexible power cables. We built some of our own signal cables. We put fiber optics, and we also put what effectively were hydraulic tubes, but in this application, they weren't used for providing hydraulic power. They were used for actually cooling the prototype. At that point, that nobody really understood when you were doing these operations, whether that you would have an overheating problem in the cable. So we -- again, we have a unique set of capabilities that not only could we do multiple iterations of a design, but we could do it very quickly. There's a challenge also with a cable like this that -- it needs to be super flexible because it needs to be reeled on and reeled off on multiple occasions. Again, this is something that we, as a small independent manufacturer within Hexatronic, we have this ability to not just look at one solution and say it has to be armored, it has to be steeled, it has to be a certain type. We were able to design a solution to deliver it quickly, to look at iterations and then look at future opportunities. I think this is the type of project, we're looking at a lot. It's not necessarily volume manufacturer, but we're looking at offshore wind as a really, really big growth area for us. And this, along with the multiples of other inquiries come in where we're looking at different opportunities within offshore renewables. I think it's reasonable for me to say that what the fiber team are looking at is different. They're looking at maybe longer length static applications in wind farms. We're looking for short length dynamic, the high-voltage applications, but I think the opportunities are enormous for us. So thanks.

Thanks, Phil. Cool stuff, but lots of opportunities. And not just organic opportunities. We also have, like Martin, an active growth strategy in acquisitions. We target mainly the dynamic cable area as well as the connector business. We believe being at the size we have within the dynamic cable that we can participate in consolidation. And also, we are looking into a bolt-on acquisitions with adjacent offerings as connector solutions, not just cables. In the connectivity part, we wish to strengthen both our offerings, broadening our offerings as well as increasing our geographical reach, which is currently primarily in the Nordic Hemisphere. Critical sensing is also an area for us, however, probably more in the later stage of our strategy period. But here, we look at adjacent technologies in the verticals we play in. Like in data center, we have in excess, currently of 40 companies that we are in dialogue with or monitoring to get closer to the Hexatronic family. I hope I've been able to give you an overview of the Harsh Environment together with Phil. We believe we have a very strong market outlook even beyond the 2030 reach. We are in segments like energy where the demand remains strong for the foreseeable future. We also play in defense markets that are quite buoyant in these years. However, maybe just a word of caution, when a decision is taken by the politicians and then being budgeted, until it flows to companies like ours, it does take years. But we are well positioned. We have a very strong brand. We've been in this industry for more than decades. We also see an interest in deploying fiber optic solutions in the industries, and we believe this trend will continue with an increased focus on asset integrity monitoring for efficiency gains and for safety reasons. With the vast know-how, we have not just within Harsh, but in the Hexatronic Group, we believe we are well positioned to take part of that transition. As stated earlier, Rochester is, from a profitability standpoint of view, not in line with where we believe such a business could be since we have a benchmark among others in Fibron. We have a multi-pronged approach, investing in people, training as well as an aggressive investment in equipment and modernizing the IT infrastructure. I believe we are on the right track with Rochester. In connectivity, we expect to follow the growth for our defense new OEM primes that we've been working with for many years as well as penetrating new industries as they embrace the intrinsic advantages of hybrid optical solutions. With this, I will hand over to Pernilla, and I hope you enjoyed looking into Harsh Environment.

Thank you, Jakob, and Phil. So I will start to talk about the journey or the reason for us updating our segment reporting. Hexatronic have had a 33% sales compound annual rate growth, driven by both organic and acquisition-driven growth during the last 5 years. And organically, we have grown 9%. The expansion in fiber solution in North America and Europe has been the main contributor to the overall growth. But with the Rochester Cable and Fibron Cable acquisition in 2023, we established a significant position in the market for dynamic cables, part of the Harsh Environment business area. In parallel, the offer aimed at the data center market has been gradually developed since 2020. In 2024, Hexatronic started, or we started by sharing sales per focus area. That was based on external sales and per dedicated legal entity. Now in February, we announced that we will introduce new segment reporting or then business areas, and we implemented some changes in the executive management team. Here, you can see our segment reporting structure. This structure is a reflection of the responsibilities and the way the business is operated within Hexatronic. And the business is divided into three business areas. It's the Fiber Solutions, Harsh Environment and Data Center, but also the group function and elimination. And those refers mainly to central functions, such as group staff and departments as well as other operations outside the core business within each segment. Looking into the Fiber Solutions. Overall, we have 28 operating units, and they are based in U.S. and in Europe and APAC. And in 2024, we had a total sales of SEK 5.4 billion sales and an EBITDA of SEK 787 million or an EBITDA margin of 10.8%. 2024 has been a challenging year for the whole industry, not just us. I believe that we have managed to navigate the market and the change conditions well. We went from a record sales in 2022 to 2023 to a steep downturn in the second half of 2023, due to time of consolidation and a focus of internal efficiency and cost reductions. As reported at the year-end report for 2024, we had a full year decline compared to 2023 of 16.5% or SEK 1.1 billion for the focus area of fiber solutions. We're now implementing the updated segment reporting and moving to business areas. The change to Fiber Solutions is another decrease of SEK 68 million, and leading to a decline of 17.6% for the business area, Fiber Solution. And this change is mainly related to reclassification of customers that belongs to the Harsh Environment business. The geographical split was for Fiber Solutions, 54% for Europe, 36% for North America and 10% for APAC and Rest of the World. We have seen a return to seasonal variations that prevailed before the pandemic, with lower activity in the first and fourth quarter due to winter conditions, and we believe that this will continue going forward. After heavy CapEx investments in years in 2022, '23 and '24 and in '24, an overall CapEx investments of SEK 286 million or 5% of sales, our estimate is that will be around 3% to 4% going forward. And these investments are mainly related to maintenance or small capacity investments. Overall in the business area of Fiber Solutions, there is continued need for building fiber optic networks in major markets to increase coverage and penetration. In the Harsh Environment, we have five operating units. They are based in U.S. and Europe. We have Rochester Cable in the U.S., and we have Fibron Cable, TechOptics, Proximion, and part of Hexatronic Norway in Europe. We had a total sales of almost SEK 1.2 billion and an EBITDA of SEK 121 million or 10.3% for the full year of 2024. As reported in the year-end report for 2024, we had a full year growth compared to 2023 of 15.9% or SEK 371 million for a focused area Harsh Environment. But now when implementing the updated segment reporting and change to business areas, I think we have another increase of SEK 78 million. That leads to a growth of 61.6% for the business area of Harsh Environment. And the change is mainly related to the reclassification of customers that belong to Harsh Environment. And the growth overall from '23 to '24 has been mainly driven by the acquisition -- acquisitions we've done. The geographical split was 45% in Europe, 46% in North America and 10% in APAC. The EBITDA margin is as Jakob was saying, below where we aim to be. And this is due to the challenges we've had in Rochester. The carve-out from TE Connectivity back in March 2023 have been tougher than we expected. We have a plan to improve operational efficiency through training as well as investments in equipment, et cetera. In 2024, we had an overall CapEx investment of SEK 34 million or 3% of sales. Our estimate is that we will be around 5% going forward due to the investments needed in both maintenance, but also in capacity investments. We have an attractive M&A pipeline, and the targets are dynamic cables and connected businesses. There is a strong market outlook beyond 2030 as energy and defense markets exceeds to remain strong, and that's driven by long-term global trends. If we then move over to Data Center, we have 3 operating units that are based in U.S. and Europe. We have the DCS, U.S. NET in the U.S. and the IDS Group and Cubic in Europe. We had a total sales of almost SEK 1 billion and an EBITDA of SEK 154 million or 15.9% for the full year of 2024. And as reported in the year-end report of 2024, we had a full year growth compared to 2023 of 18.6% or SEK 152 million. But now when implementing the updated segment reporting and change to business area, Data Center, the change is very small, but that leads to a growth of 18.7%. The growth, as Martin was talking about before, is driven both from organic and acquisition-driven growth. The geographical split was 62% in Europe, 36% in North America and 2% in APAC or Rest of the World. And sales is normally stronger in the first half of the year due to the second half of the year. And that is mainly due to vacation periods, both in Q3 and Q4, and less working days. And for our product sales, many of our customers optimize their stock at year-end. Overall, our Data Center business is a capital-light business. In 2024, overall CapEx investments were SEK 5 million or less than 1% of sales. Our estimate is that we will continue to be less than 1% going forward. And as Martin presented earlier, our data center business is a market with strong underlying market growth. And we want to expand our service offering through strategic acquisitions, and we have an active M&A agenda. Going back to the long-term of our -- development of our performance. So Hexatronic have had a 33% sales growth driven by both organic and acquisition during the last 5 years. And as I said, organically, we have grown with 7%, even if 2024 was a challenging year mainly for the Fiber Solutions business area. Where we went from record sales in 2023 to a steep downturn in the second half of 2023. If we look at our EBITDA, we've had a CAGR of 43% and earnings per share, a 36% CAGR. We have had a focus and will continue to have a focus on working on our operating cash flow. That has been mainly by working on in reducing our working capital, and that has led to good cash conversion in the last years. After two investment having years or actually three in 2022 and 2023 and after then the completion in 2024 of the investment program in the DAC factory in Utah. We believe that we will be able to grow for several years without any extensive investments in the Fiber Solutions. As earlier communicated, our estimate is that investments onward will amount to for the group, approximately 3% to 4% of sales yearly, and of which 1% to 2% are expected to be maintenance investments. The reduced net debt of SEK 240 million in 2024 could not cover for the reduced EBITDA pro forma leading to an increase of leverage compared to prior year. Leverage net debt divided by EBITDA, including IFRS 16 at 2.2x, excluding lease liabilities, 1.9, and that is related to our bank covenant. At the end of 2024, we had SEK 633 million of cash and SEK 1.3 billion of unutilized backup facilities, which gives us a total liquidity of SEK 1.9 billion. We have a continued solid financial position. By that, I want to hand over to Rikard again.

Thank you, Pernilla. All right. So we have heard from the three business areas now as well as the restated financials. I hope that leaves everyone with a much better understanding for the business areas, their opportunities and challenges, strategies and different dynamics. And just to recap, for Fiber Solutions, we will continue to focus on winning with small- and medium-sized customers. The way to do that is by providing them with solutions for optimizing their productivity and their total cost of ownership as we heard from Tomas. The U.S. is a major opportunity for us to take market share. And in Europe, in particular, we're focusing on operational excellence. We'll also pursue further growth in segments adjacent to the FTTH space like submarine, wireless and security. Harsh Environment, short-term priority on improving profitability. We will also pursue growth, both organic and through M&A. And for Data Centers, focus on Europe and North America expanding our service offering and also here pursuing growth through M&A. I hope that you're all taking away the following key messages from the session overall. One, Hexatronic is a global and diversified business with attractive growth opportunities. Two, the new business areas will increase our focus and help drive our growth. And three, we have an interesting and actionable M&A pipeline with focus on Harsh Environment and Data Center. Finally, we're looking forward to updating everyone on our Q1 results on April 29. And with that, we will actually conclude today's presentation part, and we move on now to the Q&A. So I will welcome Pernilla and Martin back up on the stage.

Thank you. So we will start with some questions here. For the first question is for you, Martin. For the data center segment, could you give an indication of the subsegments split hyperscale, enterprise, et cetera, for the segment?

Sure. So if we start with the enterprise. Enterprise today account for roughly 30% of our sales. The hyperscale, we typically group together with colocations and then it accounts for 40%. And the rationale for grouping them together, as Ben earlier described that we have the Class A and Class B. So they are very intertwined and hard to separate. Our approximation is that otherwise that hyperscale is roughly 25%, but together 40% and have very similar growth nature.

Thank you. So Rikard, you have previously indicated that both Data Center segment and the Harsh Environment segment are operating at a 50% margin. However, according to the release numbers, Harsh Environment was 10.2% during 2024. Why is that? And what -- and what level are you aiming for going ahead?

Yes. Good question. I think it has been discussed a bit. It's quite clear that it's predominantly in the Rochester business unit, that margin is lower. The team has a plan that looks quite solid. In fact, I will be there next week to talk to the team and check on that plan. But that is the main reason, and we don't see any reason longer term why that business should be structurally at a lower margin than Fibron, for example.

Thank you. So what impact will the U.S. tariffs have on your business? And what percentage of our U.S. sales comes from products manufactured domestically?

Yes. This is the million-dollar question. And if you could tell me what the tariffs will be, we can calculate the answer. No one really knows where it will land. We are obviously following this quite closely. I'm used to this type of question from my previous life where it was a much bigger challenge. As we have talked about most of our production today is local also for the U.S. So I don't think we want to give a number, but it's relatively small, and there are also some things that we can do to minimize it further. The main one being the decision we made to produce cable also in the U.S. in one of our facilities there.

And on that note then, one question and I have Martin here. What will be the investment cost and return on investment for new cable operations in Clinton, USA?

I think also partly covered that in the past. It's a smaller site and most -- so it's a smaller investment and most of the lines will be moved from our plants in Sweden. So it's quite a small investments for us.

So a question to you, Rikard here. Can you elaborate a bit on the growth opportunity in the U.S.? According to various industry sources, the FTTH market is expected to grow strongly over the next couple of years. How can we expect the FTTH projects and the conduit and pipe demand for both 2025 and beyond?

Yes. I think you have to peel that onion a little bit. For the conduit market, we are not market leader, but we're a sizable player there. And now with our investments and the recent opening of the site in Utah, we do cover the country, and this is a way that we can serve our customers all over the country. And being a sizable player, of course, we want to grow with the market, but we also feel that there are chances to take market share. On the micro duct and cable side, it's a little bit different. We are a relatively small player there. And here, it's all about taking market share and moving slowly but steadily the market towards the air-blown technology that is much more prevalent in Europe, but the U.S. market, we feel is a bit behind still on that.

It's a question primarily to you and me, Martin here. But if you give a general description of the overall market situation today compared to a year ago, is demand stronger, flat, weaker, or customers more or less cautious?

I mean it's a difficult question. We have a very diversified business. We have three different business areas. We are well diversified also geographically. So I think in the short answer is, I mean, we said we are cautiously optimistic for the year. Some areas a bit more demand and some a bit softer. But overall, I think cautiously optimistic, summarize it.

Thank you. I think we have answered that, but just to make sure that we answer it. If you look at your total sales in the U.S., what proportion was achieved with products imported from Europe?

Just reiterating what Rikard said, I mean, we have 6 production plants in the U.S. we have production locally there for all our business areas. So it's a small portion. And also, as you said, I mean, moving production of cables to the state's associates, a very small one.

The BEAD program in the U.S., please explain what you expect in terms of phasing of orders for Hexatronic in 2025 and 2026?

Yes. So the BEAD program is another one that a lot of speculations and rumors, some statements from the White House and administration. I think it's -- first, I think it's important to note that the main part of the market is and remains privately funded and be it or other government subsidies should be sort of cherry on the cake in terms of driving demand. The signals that we are seeing from BEAD is that it looks like it is moving forward. And if anything, the administration looks to be that they want to speed it up and reduce, eliminate some red tape and bureaucracy around it. There's also speculation about maybe the split between technologies, satellite-based versus fiber-based will shift. Earlier comments were 90-10, with 90% being fiber-based and now some people are saying maybe it's 25%, maybe it's more, that will be satellite base, but it will be -- looks like it will be still both and that the ultimate decision will be made on the state levels depending on what suits for each state.

Thank you. So we have a question for you, Jakob then. Can you describe in more detail what the challenges related to Rochester has been?

Okay. Yes, I think what really -- it's, of course, more than one thing, but it's primarily the fact that we underestimated the lack of preventive maintenance that were done by the previous owner. And we did not really see that challenge before coming into '24, where we had a steep growth in order intake and by pushing the equipment, you tend to break it. And in this industry, it's not just a quick fix. You need to invest upfront. You need to also procure and secure that you have supply of extra gear ships, et cetera. And we clearly underestimated that. You can also see then in the second half of last year, we have beefed up the preventive maintenance quite severely. And we do believe that, that will show in the figures going forward in a positive way.

Thank you. So Martin then, what is the rationale for reporting subsea cable sales in Fiber Solution as opposed to Harsh?

So today, we have our fiber cable for the submarine produced in Hudiksvall, it is for the telecommunication customers. And it's also quite different cables, both in terms of length and technology. So it's -- therefore, it is in the Fiber Solutions part.

Thank you. Let's see -- what will the shift from homes passed to homes connected in Europe mean for Hexatronic? Is your market position stronger in either? Do you want to take that one, Martin?

Christian, maybe.

Yes.

Sure. In the past several years, the focus has been with many providers on homes passed. This has been the growth that you have seen in the slides and in the market and in different market data that has been publicized. Providers have had total focus on homes passed and not many connections have been done. Now with the increase of interest rates and banks being more critical if we can say it like that, business plans have had to be revised. Providers have had the pressure to make money, so they need to connect customers to get the revenue streams from the customers. So just recently, and I'm talking here in the past, let's say, 6 to 12 months, providers have had more focus on home connections. Homes connections is a smaller business than homes passed, but it's growing, and it's growing in key markets like Germany, which has a very, very big gap between homes passed and homes connections, and it's also homes connection is also quite a profitable business for Hexatronic. And we have very strong solutions that will give advantages to our customers.

Thank you. So how has your market share in the U.S. for Fiber Solutions developed during 2024? Previously, you have -- previously, you have talked about increasing your share of the market due to your air-blown fiber technology.

Yes. So in the U.S., I mean, we have a small -- very small market share in the fiber-to-home in the U.S., introducing this new technology. So I think initially, Rikard talked about, I mean, we are investing there, we will take market share and continue to grow the business, but great opportunity to grow because we have a very, very small market share on the market over there.

Do you see similar investment programs such as BEAD in U.S., also in Europe and Rest of the World? And what could you capitalize into?

Well, there was a very large infrastructure package launched or announced in Germany, I think EUR 500 billion, if I'm not mistaken. It's a broader infrastructure program. So we don't know how much will be bridges and roads and so on, but I would expect that some communications would be part of it.

Excellent. Then I think that all questions are done.

Okay. Well, thank you, everyone. Thanks to all the presenters, and thank you, everyone, logging in, and we'll see you on April 29.