MilDef Group AB (publ) (MILDEF) Earnings Call Transcript & Summary

Well, it's 15 seconds before the hour, and we slowly open up this investor call, doing a little bit of a sound check and seeing some thumbs up and admitting the just-in-time guests to this meeting. My name is Olof Engvall. A warm welcome to this meeting this Friday morning, the 18th of July. Welcome to a lovely sunny morning when we will present the Q2 numbers and the full 6 months of 2025. We have a special focus on the Q2 as we typically do. This quarterly call will be as normal, presented by CEO and President, Daniel Ljunggren. And we expect approximately 30 to 40 minutes to be sufficient for this meeting with your following up questions in the finalizing Q&A that we will do. [Operator Instructions] And also for your information, we record this meeting for later publication on our website for those lovely people that cannot participate in this specific meeting. So with no further ado, please take it away my dear colleague and our CEO and President, Daniel Ljunggren. And remember, Daniel, to help the listeners in the audience that dial in to actually state the numbers on the slides that we present. That's a request from one of our lovely shareholders. Take it away, Daniel.

Thank you very much, Olof, and a really warm welcome to everyone here for this conference call of our Q2 Report. And I will try to do my best, Olof, to make sure that you're all aware on which slide we are on, so to say. I think it's better we deep dive directly into the highlights of the Q2 on the second slide. Number one is that we still have a positive order intake trend. We saw in the second quarter here, all-time high record quarter for order intake. We are more than doubling the order intake if we compare to Q2 in 2024. We're growing the order intake by 116% and 58% of that is organic and the rest is coming from acquisition of the German company, roda. So there is a really high activities on the market. The order intake is really strong, and that is putting us in a good position for the second half of 2025 and also beyond that. The second bullet around is what's triggering the announced profit warning that we did last week on Friday. It's around -- that we have moved to deliveries from Q2 to Q3. And that, of course, has a clearly negative impact on both net sales, but also the profit here in the second quarter. For us at MilDef, this move deliveries is nothing operational wise, this is quite undramatic. This is something that happened in our industry from time to time. And we are, of course, doing this in a very close collaboration and dialogue with both the customer and also the end user. So this is -- but it's, of course, highly impacting our Q2 numbers. And I have said it before, and I will say it again, that it's better to look at MilDef on a long-term trend. It's better to look at rolling 12 months or something like that. Individual quarter could still be volatile, and that is something that the defense industry has to deliver, and that is something that is also impacting MilDef that high volatility quarter-by-quarter. So it's nothing about component issues. It's nothing about our general lack of capacity in deliveries. It's around that we have some integration issues in the end. For us, it's top prioritized that our products really are doing the work it's supposed to do when it's reaching the end customer. And when we are not 100% sure about that, it's better that take some extra time to make sure that everything will work as supposed when it's reaching the end user. So sometimes this -- our products and solutions are always connected into different systems, other systems and quite complex things and sometimes the whole chain needs some extra time to make sure that everything will work as expected. So that was the reason behind the move from Q2 to Q3. Nothing has been lost and nothing, as I said, around components or capacity in general, just that we have moved it to Q2. So the full -- the outlook for full year in 2025 still remains positive and looks the same, but moved from Q2 to Q3. The third one, MilDef climbs value chain is really important for us. We have normally been heavily relying towards our traditional hardware sales, but now we also see that we are winning business where we can add on software, we can add on integration, we can add on solution services and things like that. So that is a clear step towards becoming more of a system integrator, more of a system house. That also means that we can take on larger contracts. We can improve our margins in the long run, but it's more complex business as well. And I think that is creating a good value for MilDef. We are taking a position that we have now aiming for take for a long time. So we are really becoming more than just a sub-supplier of hardware. We are moving up the value chain and taking on more large contract and become more of a prime contractor in most of the cases. We also saw a really strong underlying gross margin in the second quarter. If we exclude for M&A activities and the impact from roda acquisition, we saw a gross margin that reached almost 58%, which is really strong and which is on a new record level for the underlying business of MilDef. This also is related to, as I say, the increased MilDef in the value chains, it's about adding on more revenue streams coming from software, from integration services, and that is really boosting the gross margin. So it's around our product mix and how that looks, which makes the gross margin here really strong. For the roda, we have expected, of course, the total gross margin for the group to come down. We thought it was 47% here in the second quarter., roda in the second quarter performed 34% gross margin. So even roda has been able to move the gross margin in percentage points, a couple of percentage points up. So that's also really important for us. We have also a strong order backlog for the second half of 2025. There's SEK 1.5 billion that should be delivered in the second half of this year. We have now understand that we have been heavily leaning towards the second half of this year when it comes to the delivery and the revenue streams. It's nothing unlikely for MilDef. We have seen this in many years if we look back in the history and things like that. So this is something that we are quite familiar with, but we are really having a year where we're leaning, as I said, towards second half when it comes to the deliveries of the order backlog. Continued capacity ramp-up progressing as planned and at a high pace when we are adding on this doubling of the order intake, and we also see this new landscape with increased defense spending and really addressing what we are -- MilDef are producing. We see that we need to increase the capacity. We are -- in the next quarter, we will move into a new facility in the area of Stockholm, for example, where we can increase the defense -- or increase the capacity with 4x than we have in our current facilities in Stockholm. And we are also adding on more people. We are also adding on competence when it relates to solution and software and things like that, continue to grow MilDef up in the value chain and continue to strengthen our total offering, so to say. So that is important that we keep on ramping up our capabilities. And the final bullet around the highlights here in the second quarter is the integration phase of roda, which is really intensive. And I think that we have found really a couple of good moves there. We are on right track when it comes to the integration of roda, and that's something that I will come back to a little bit later to give you a short update of the status around the roda acquisition. Just a short and crisp market update as well. We see on the market still customer -- strong customer activities in the market. There's a lot of requests and there's a lot of opportunities out there. We also saw that you're probably already aware of the NATO Summit here in June decided up on 5% of GDP defense spending that, that will be the new target, and that will be by '35. But we also have seen Sweden and many other NATO countries already aiming for reaching this new spending targets already by 2030. So it creates a good market situation for at least 5 years, but probably for 10 years out in time. And the final bullet here on the market update is also around increased focus on European industrial defense base. And that is a real game changer for the defense industry in Europe, including MilDef, of course, where we now see that they are strengthening the supply chain in Europe and they are aiming to procure more and more from the European defense companies, and that is something I really believe will be some game changer for the European defense companies. If we jump down to the figures in the second quarter here, as announced, SEK 383 million in net sales in the second quarter. That is in totally an increase of 27% if we compare to Q2 2024. But as we have said before, it's organic growth that is causing us some problem here in the second quarter. It's down 36% due to this postponement of these 2 deliveries. So also impacting, of course, the rest of the P&L. Really strong, as I said, order intake, it's growing by 116%, 58% of that is organic and 58% is acquisition driven. And aside all of the large announced contracts, we also see a good order intake when it comes to small and medium-sized orders, and that pushed our order intake to a new all-time high. If we look at the operating profit, adjusted EBITA in this case, SEK 25.1 million, and we see that the EBITA margin, of course, is coming down if we compare to Q2 last year. But this, as we talked about, is around the organic net sales that when we are losing the top line, we are also impacting the whole P&L and the operating profit is highly impacted by this lower organic net sales. If we take the P&L a little bit below the net sales, we can also see that the gross margin, as I said, is really strong excluding the M&A, that is a really strong underlying gross margin. On the cost side, the OpEx side, if we adjust for M&A, it was flat compared to Q2 '24. So I think that indicates a good continued cost control, and that is despite all the strong order intake we have had on a rolling 12-month basis. Now I also understand, and as I said, we need to add on more capabilities in the future here to be able to address this big order backlog and this great order intake. So the OpEx will probably see an increase going forward. But so far, we have been able to have it under good control. Free cash flow in the second quarter ended up on SEK 32.7 million, which is clearly better than we did in Q2 2024. And we're also back now in this quarter on a positive free cash flow, and that is despite a significant, of course, increase in the inventory due to the moved orders and a strong order backlog for 2025, where we needed to add on inventory already before we closed Q2. But despite that, we are now returning to a positive free cash flow in the second quarter. Some Q2 business news. There is almost SEK 400 million announced orders intake in Q2. Our subsidiary in U.K. that is coming from the roda acquisition, Westek announced their single largest order ever worth SEK 45 million. We had from FMV, the Swedish Procurement Agency, command and control order, where we are delivering the MilDef traditional hardware of SEK 126 million. And then we had a really, as I said, strong and high strategic order from the Kongsberg contract of worth NOK 225 million, that is just around hardware, but it's also around system integration, implementation and project management around a couple of things. So that is one piece of this moving up in the value chain, taking more responsibility and taking more of a turnkey solution contract than we have seen before. And that's also a little bit related to the final piece of the order that was press released in July from FMV, and that one is booked in the Q3. So we don't see that in the order intake in Q2. But that was not just our hardware. It's also around software and integration services. So that is something that is really interesting as well and put MilDef on the map as more and more of a system house and system integrator. But of course, besides that, it's not every order that we can announce and it's not every order that we are announcing due to the value and things like that. As you can see in the bottom of this slide here on Slide 5, there is tons of other different things to the Swedish Army defense, Danish Defense, for example. We have ground-based air defense in Germany placing order. We have partner contract with Czech Republic and things like that. So there is -- it's not just the big ones. It's not just also the platforms that we are talking about sometimes. It's a lot of small and medium-sized order that is going around in Europe and North America as well. Financial summary is the next one. I'm always starting with this picture. And I think it's a good thing to remember here again on Slide 7 that this is a long-term play for MilDef and our growth journey, if we zoom out in time, has been quite aggressive and has also been accelerating in the last 5 years. So if we don't look at the single individual quarters, we can see that the picture for the growth going forward looks really, really strong. And now we can see that we're now ramping up again in the last 12 months when it comes to the net sales. And hopefully, as we also see the order backlog for the second half of 2025, we will see this bar growing going forward. If we do a geographic breakdown of our net sales in the last 12 months, we can see, and this is something that we have expected now that we will see Europe is taking over more and more. If we compare to 12 months back in time, we can see that Europe is now 6 percentage points higher than it was 12 months ago. And this is a dynamic that will shift due to the acquisition of roda. We will see probably revenues coming from Europe that is more than 50%. So that will change the dynamic a little bit when it comes to how we are breaking down our geographic sales. Order intake, of course, that is our almost strongest KPI right now, and I think it's the most important thing to have -- keep an eye on for MilDef long-term financial development. We see a really strong momentum in the order intake. And if we look back now 5 years, we can see that there had been a steady ramp-up in the order intake. Our last 12 months here is close to SEK 2.5 billion. And that, of course, creating a strong book-to-bill ratio that is 1.78. And that is the landscape we are in right now, and that is also something that we need to address in terms, as I said before, increase our capacity, increase our capabilities in terms of delivering everything that needs to be delivered in this time when we see a quite ramp -- quick ramp-up in European defense capability. I also want to deep a little bit dive into the order backlog on Slide 10, showing you the duration of the order backlog. We have a record strong order backlog, SEK 3.2 billion and almost half of it should be delivered in the second half of 2025. So if we go back 1 year from today, we see that when we closed Q2 in 2024, we are today 177% better than we were in 2024. And also interesting for us now to see how we can grow the order backlog for 2026 and also beyond that. But 2026, I think, is looking quite healthy here and now. It's already plus 125%, and we have the second year of '25 to add on additional into the order backlog for '27. So hopefully, we can come out in '25 with a strong order backlog for '27. Gross margin development, as expected, is coming down here in total gross margin due to the acquisition of roda. Now we saw in the second quarter that the underlying MilDef gross margin was really strong. We saw that the roda gross margin was also picking up a little bit. So let's see where this will take us in the end, but it's absolutely clear that it will come down in the near term. In the long term, hopefully, we can start to increase again due to this more system house value chain climbing that MilDef can continue to improve their margins in the long term. EBITA development, we have now seen 3 quarters in a row where we have really ramping up and improving the EBITA margin and the EBITA in terms of absolute numbers as well. Due to this deliveries -- move deliveries in Q2, we saw that now we are having a lower profit in this quarter than we had in Q2 last year. So we also, on a rolling 12-month basis, of course, then see that we are coming down a little bit compared to Q1 this year. But I think if we go back 12 months in time, we can see that it's plus 21%. So I think that the second half of this due to the strong order backlog, we will see a continued good development of the EBITA and profit margin. Working capital and net debt to EBITDA and net working capital, we are, as I said, already in Q1, expecting this to come down a little bit and we are now seeing more and more of the net sales coming in from roda. The big jump up here in Q1 2025 is related to the acquisition of roda, where we're adding on all their net working capital at once, and then we need to take the net sales over 12 months. So we're expecting this to come down a little bit. Now we saw in Q2 that it was moving in the right direction, and we come down to 38%. Net debt to EBITDA, we have a long-term target not be north of 2.5 more than just temporarily. Now we see 2.9, but the net debt is the same as we had in Q1. It's just that due to the moved orders, we have seen a decreased EBITDA, which, of course, impacting the net debt to EBITDA as well. So we are closing Q1 at 2.9. Then I would like to come back just to give you a status of the acquisition of roda and what we have seen so far now when we have a full quarter of roda consolidated into MilDef numbers. I think we saw a solid Q2 figures. And this is, of course, related to MilDef and the business we're doing as well. They also have this kind of volatility on a quarterly basis as we have. So I don't think that we should look too much into their individual Q2 figures. But as I say, I think it was a solid Q2 numbers with an increased gross margin and quite strong order intake, I would say, as well. So quite happy about that. We also see the integration projects now really running for full speed, focusing on realizing the commercial synergies, making sure that we are doing the rationale that we have told before that we could increase the MilDef own IP products on the German market on the DACH region, and that is something that we are really running at full speed now to try to make sure that, that happen. But besides that the acquisition, as I said before, is clearly a part of MilDef's strategy to expand and also increase the presence in the European market. And I think that is becoming to me clearer and clearer that this is really a right time and that the timing is really good and the relevance in this investment into the Central Europe and Germany is just increasing. We saw that Germany early in this year announced a defense ramp-up of EUR 500 billion over the next 12 years, and there is a lot of business opportunities down in Germany, in the Central Europe. And I think that we -- through the acquisition of roda will be taking part of that growth in those markets. So there will be -- I think that the acquisition of roda will be an important part of MilDef's growth journey going forward. There is absolutely a clear direction how we can grow, and there will be a lot of opportunities. Then we will have before the final part of this presentation, a future outlook, what we see in near and long-term outlook. Near term, MilDef move up the value chain, create a lot of opportunities out there, creates also a stronger MilDef and creates a MilDef where I think that the margin can come up when we are doing more of this business towards a full solutions provider and system house. Also, as I said, continued strong trend towards digitalization and data-driven defense capabilities. The total defense spending is growing. The total pie is growing, but also the piece of addressing increased data power and digitalization will grow within this bigger pie. So I think we are in a really good position to take care of that and the need for data power and utilization is high out there on the defense forces, and that is really into the sweet spot for MilDef. MilDef and roda, accelerate market penetration. We will, of course, move -- trying to move to this European powerhouse in defense technology and solutions. That's the whole play that we are coming together and make this a strong acquisition and making sure that we are addressing all the opportunities that we see in German market and Central European market. And I can also recap that the NATO new defense spending, as I was talked about, market growth expects to be strong. I think at least 5 years to 10 years out in time, we will see a strong market. We will see increased defense spending. So there will be a lot of opportunities. And in near-term outlook, I think that we are supported by our strong order backlog and that indicates that we will have a positive outlook here for the second half of 2025. And that's the final slide on the presentation. I probably forgot some of the slide numbers. Olof, I did my best, but...

You did very well. Most of them you caught. So that's good. Thank you, Daniel. We are now opening up for the Q&A, and we have a lineup, and I will open up mics, but I just want to thank you, ladies and gentlemen, 42 souls in this call out of 46,108 shareholders. So thank you for participating today, 42 of you out of 46,000 shareholders. So something is growing in MilDef.

But now we open up the Q&A. And please raise your hand. [ Bennedolfist ], Daniel Lindkvist and Hugo Lisjo is coming on, and I'm going to open the mics for Bennedolfist. Please -- let's see if I manage. Yes, let's take it away, Benney. Let's see if it works. So technology is not quite with us because I have opened up his mic. You can also, of course, state your questions in the chat, preferably write it. If we fail on this mic thing, you could perhaps do that. I'm going to open up for everyone. Okay. I have now tried to open up mics for everyone. So let's see, Dan, if you can open up your mic or if that does not work, apologies for this, little debacle.

Technical issues sometimes.

Yes, it seems -- we're a technology company. So please let's revert while I'm babbling on trying to gain some moments here. Please state your question written in the chat and I will try to keep this going. Apologies for this. These things happen.

Maybe I should try then, Daniel from Danske Bank.

Excellent. We can hear you, Daniel.

So with the pre-announcement, I was expecting a clearly weaker performance from roda. So it's clearly stronger development than I fear in that division. And the gross margins were some 35%, if I'm not miscalculating. Is this a reasonable gross margin level for that business going forward as well?

I mean we know that in 2024, they have operated around 30%, sometimes like that. And as we saw here in Q2, they were close to 35%. So it's a clear improvement. I think the big portion of that is also FX related. We know that they are procurement a lot of equipment in U.S. dollar and selling into the euro market. So that is also giving them quite heavy boost on the gross margin side. But I also see maybe as we're seeing in MilDef as well that the pricing powering is here to stay, I think, in this kind of market we are in right now. So I think there is a good opportunity to at least maybe trying to reach the 35%, and then we can see how we can develop the gross margin for roda going forward.

Perfect. And then now we're entering the H2, should we see -- are there any seasonality effects in the Q2, so that's a particularly strong one? Or should we expect a ramp-up in Q3 and a further ramp-up of volumes in Q4? Or what's reasonable for the second half of the year?

You mean around the gross margin or...

No, I mean around the sales levels.

Yes. I think we are seeing now, we -- the seasonality has always been here in MilDef, and we are always strong leading towards the second half of the year normally. And this year, I think it's especially strong towards the second half of the year. The order backlog is supporting that we will have a strong finish of this year. And then that is a little bit same dynamic that we see in the roda acquisition, but they are carrying the same kind of seasonality in some kind of way here and now that it's normally Q4 that is a really strong quarter. But I think for our order backlog and to be able to deliver on that, we need to have a strong both Q3 and Q4 to be able to get everything out.

Okay. Cool. And then we have Westek order in the -- from the roda business. Is that with the same kind of gross margins? Or is it different dynamics to those than the base business?

A little bit different dynamics. Westek is selling their own products. Own IP products that is normally carrying some kind of higher gross margin. I would say they are somewhere between roda and MilDef in terms of gross margins. And then we are talking about 40%, 45% something like for the Westek business in gross margin.

Okay. Cool. And then just the digitalization of the German Army, when is that reasonable to see effects from in the roda order book? Or are we already seeing some of those effects?

We are seeing some small portion of it. I think that we will see, hopefully, a clear ramp-up of that already here in the second half of '25. And definitely, we will see it in 2026. So there is a great amount of opportunities in this digitalization of the German Army.

Okay. And then just -- so now basically, we have with the H1 sales and the order book for H2, we are at some SEK 2.2 billion. So I'm just trying to elaborate some on what to be expected on top of that. We should then reasonably have some more volumes from roda in H2, but then you had an order from FMV as well. Could you just give some rough guidance on what's to be expected in deliveries in 2025 from that one?

I think there will be a quite big portion of the total value of that will be delivered already here in 2025. It's always tricky to say how much more business we can win and delivery in the second half of '25. We know that the roda business is carrying a little bit different dynamic when it comes to the lead times and things like that. They are normally shorter times from order to delivery. So there would be some room extra for the second half of this year to be able to win business for roda and delivery in 2025. We also have on top of that, some of the Norwegian consultancy business that we normally don't track in the order backlog. So that would probably adding an additional amount to the total net sales in full year '25 as well. So I'm not going to give you an exact number, but there is some chance that we could take this a little bit further than we already have as net sales and order backlog for 2025.

That's great. And then just -- I mean, the LSS Mark, it was a big thing a few years ago. And now I guess the Elbit had their hands full in Israel and rumors are that FMV is not entirely satisfied with the start of the deliveries for that one. So is it reasonable for you and saw perhaps to get some of those volumes passing your way with time?

I would say, yes, definitely. I would say that the FMV -- the latest announced FMV order around software, hardware integration is clearly LSS Mark related. So we were starting to see this impacting us as well. And this is something that I think that the end customer will now see how they can redirect this kind of orders.

Okay. Perfect. And nothing more from my side at this point. Congratulations on a strong underlying performance despite the turbulence and postponements in Q2.

Thank you, Daniel Lindkvist with Danske Bank. One of the 4 banks that keep a very close eye on MilDef. We are grateful to that, Daniel. Let's see now if we can move on to if Hugo can actually open your mic, DNB Carnegie. Yes, I see it's open. Hugo Lisjo analyst with DNB Carnegie. Take it away.

Some of my gross margin questions have already been asked. But if you could elaborate a little bit on MilDef organic gross margin within this quarter. Was it driven by mainly software sales or anything else?

Yes, that's a really good question. Thank you, Hugo. I wouldn't say that it was driven by the software. I think it's driven of a combination of the total offering we have at the table right now. We are seeing -- there is coming more revenue streams from the software, but also from the solutions side, from the integration side. And we also have increased portion of our own products in the whole portfolio, so to say. So I think I would say a mix of things. And I'm not saying that 58% is the new normal gross margin for MilDef, but it's clearly indicating that we are in the right direction. We are moving towards above 50% in the underlying MilDef business. And that is something that I think we will see continue going forward that our value chain climbing and also what we are adding and offering to the customer with this more high-margin business, that will make an impact on the gross margin for the underlying MilDef business.

Okay. And also, before we have discussed that Crete or that you are the largest customer to your supplier, Crete, have you had any negotiations regarding prices and so on?

That is something I think we have quite often over time. And of course, now we have also putting ourselves in a really good negotiations share when it comes to that we are a really strong sales channel for MilDef Crete, for example, and that could mainly also help in the roda gross margin coming up a little bit in terms of that. But I wouldn't say that, that is the main reason behind what I say, a strong gross margin for MilDef and also an improved gross margin for roda. I think the roda margin is more about FX related. And I think that the MilDef gross margin is more related to the product mix in the portfolio that we have sold.

Okay. And also, the order book for H2 seems quite strong. How do you think about production, supply chains and so on? Is there anything that could impact your deliveries?

There could always be something that we can't see here and now, but I think I'm quite comfortable at least that we're having the capacity, the capabilities, the people that we need to be able to deliver in this order backlog. And of course, we are also looking into adding on new people for '26 and beyond. So we will continue to ramp up the capabilities. We are, as I said, also addressing the facility potential bottlenecks when we are moving up to new facilities in Stockholm area. So I think we are doing what we can to make sure that we are delivering up on this order backlog. Normally, something that could be something that make us delivering -- postpone deliveries if there is any technical challenges in the R&D department, things like that. But otherwise, I think we have the capacity to make sure that H2 '25 order book backlog will be delivered.

Okay. Perfect. Perfect. And then -- so that the framework agreement with Norway expires in 2025. Do you have any updates on the status of this agreement?

No, not yet. I think there is 2 additional years as an option to that. And we are, of course, in a close dialogue with Norwegian procurement agencies. So I think that, that will be hopefully prolonged, and we will continue to have the framework agreement with Norway as well. So I don't see any big risks there when it comes to the framework agreements.

Okay. Perfect. And then my last question. You mentioned an order from Germany regarding ground-based air defense. What type of products were included? And was the customer a prime or a government or...

The customer was a prime. I think it's mainly the classic MilDef hardware that was addressing this business, I'd say, our fixed-mounted network equipment.

Okay. Is this a sign of cross-selling between MilDef and roda?

Absolutely. It's one puzzle piece to that cross-selling commercial synergy piece that we have talked about.

Thank you, Hug, one of the very well-versed analysts on MilDef tracking us from DNB, Carnegie. We will go to your question eventually, Bennedolfist, if you're still around, maybe your mic will work at that point in time or not, but you have written the question, but I will interlude with another question, which is sort of something we've covered a bit. You communicated a strong order backlog in '25-'26, but is there an upside to H2 performance if new contracts are signed in the second half of the year? In other words, could H2 exceed expectations even beyond the impact, the current backlog?

Thank you for that. I think that we already covered that question from Dan Lindkvist already that there is some small potential to do an upside from the existing order backlog for second half of 2025, but there is no major room for adding on a huge overperformance from that. But there is a couple of business that we can win. And also, we have a little bit uncertainties around in the roda business that could be something that we're winning orders and delivering quite quickly. So that could be a potential upside.

Thank you for that, Daniel. We have [ Jakob Gravdahl ], which is a true friend of MilDef following us over some time. We have 2 questions. I will try to reiterate those. What do you see as a base case sales cycle time line for selling MilDef products to roda customers, especially for midsized to larger contracts that could have an impact on long-term growth?

I think that this is an industry where the sales cycles are quite long, so you need to have that in mind as well. But on the other side, we have worked with roda and used roda as a partner for many years before the acquisition. But now I think we can do the right moves by training the staff people, making sure that we're really addressing how you can -- because the MilDef product is technically more hard to sell. So you need to prioritize how you can sell more system solutions instead of just single laptops and things like that. And that is something that we are doing with roda. But they have been working on the market with the MilDef product for many years. So hopefully, that can shorten the sales cycle time. But as I said, normally, the sales cycle time is quite long up to 12 months or maybe 24 months in some kind of cases. So it's hard to say when we can start to see some really clear indication that we are successing with cross-selling.

And Jakob has another good point. He has picked up that we talk a lot more about command and control C2, which is really traveling the value chain going up. So what is the potential in medium to long term to sell more command and control product outside Sweden and FMV? Is this a product that has traction in the market outside Sweden?

It has, and we have some interest from other customers and mainly from some small NATO countries. I think that this product fits the small NATO countries are really, really good. But right now, we are focusing on making sure that everything will be delivered in time to FMV in Sweden, so we can build a strong reference case in the Nordics. We already have this solution in Norway. We have it in Denmark. We have it now in Sweden as well. So if we can build a really strong reference case in the Nordic, we will try to take this outside the Scandinavian countries as well. But that would probably be somewhere around beginning of '26 or something like that. But there is still some ongoing discussions with some potential countries that could be interesting for this solution. So let's see where it takes us. But hopefully, as I said, start to build a strong reference case in Scandinavia and then we can take it further.

Thank you for that. Good question, Jakob Gravdahl. Now I will revert to Bennedolfist and I cannot see the mic open. so I will do my best to reiterate your questions, which everyone can read in the chat, I believe. Anyways, talking about delayed deliveries, how do you plan to prevent these delays from escalating in the face of the increased order volume? And how are customers reacting to delays? Two questions. Sorry for that.

Okay. I will take the one first one. Of course, when it comes to the delivery days and things like that, we are always trying to seek some kind of solution. We're trying to add in the capabilities and addressing and doing the prioritization of what should be delivered, et cetera. So that is always some kind of landscape we are in and putting extra much focus, of course, on trying to make the customer as happy as possible. And how customers react to delays, that's the next one. It normally is quite okay, I would say, as we have a close collaboration with the end customer. And normally, they also understand and they are involved in some kind of say in the decision because they are also really interesting that the final total system solution is working as it's supposed to do. So it's a close dialogue with the end customer, I would say. So normally, they are reacting good to these kind of delays.

And the final from Benny is, will we be able to deliver upcoming orders on time? Or will we face the same issues in the Q3 report? Do you have a crystal ball, Daniel?

I don't have the full crystal ball, but of course, we are addressing this. We're looking in to make sure that we can make deliveries of this in the third quarter as well. But of course, there is no guarantee at all when it comes to some of the orders. We can see this dynamic that we have seen in the second quarter. So, I mean, it's back to see MilDef performance not on a quarterly basis and see it more of a long-term rolling 12-month basis case and see the performance on that. So don't try to lock it down too much on individual quarters. But hopefully, we don't see the issues in Q3 and Q4. And of course, we have some extra focus on this right now due to the movement from Q2.

So thank you for that. Bennedolfist, one of our long-time owners on the West Coast of Sweden. Thank you for that. And thank you for 44, ladies and gentlemen, participating in this Q2 call. This is landing the meeting because we're 45 minutes past the hour, and we have many things to do. We have 12 investor media meetings today, Daniel and myself, and 46,108 shareholders, which is fantastic and something that we are very proud of, and we're traveling the value chain, as you know, and we're very grateful for your support. Thank you. What you do is actually meaningful, not only being a part owner of MilDef, you're part of the rearment of the Nordic and European defense forces. So thanks for taking part of that. Daniel, your final words before I close the meeting.

Thank you, everyone, for joining in this meeting and listening. I hope you have a wonderful summer, and we speak again when we -- it's time for the Q3 report. Take care everyone.

Have a fine summer. We see you many times later this fall. Perhaps our paths cross at the Capital Markets Day as seen on the screen on September 18 in Stockholm. You can either take part of it on site or via live broadcast video this time. So -- but for now, happy summer and stay safe.

Thank you.