NCAB Group AB (publ) (NCAB) Q4 FY2025 Earnings Call Transcript & Summary

[Audio Gap] Q4 presentation for 2025. [Operator Instructions] Now I will hand the conference over to the CEO, Peter Kruk; CFO, Timothy Benjamin; and Head of Investor Relations, Gunilla Ohman. Please go ahead.

Thank you very much, and welcome all to our Q4 release. First, a few bit of information about NCAB. So we at NCAB, we are a supplier of printed circuit boards, and those are the products that you see to the left on this slide, which basically creates the foundation in any electronic or intelligent product. So our customers are the ones placing components on the board that can be either OEM customers or it can be contract manufacturers. . Our focus is on printed circuit board for demanding customers. We're focusing on customers with high demands in terms of quality, technology, and we aim to supply them with zero defect products produced also sustainably, giving them the most competitive offer by offering the overall lowest total cost. We are aiming to be the #1 PCB supplier wherever we are, and we are already the globally leading producer of printed circuit boards worldwide. We are operating with a local presence in around 19 countries. We are some 660 specialists in the group, and we have no in-house manufacturing, but are working with a network of factories and our main factories, which are currently around 34, make up around 90% of our total deliveries. Besides looking at the demanding customers, we're also focused on the high mix, low-volume segments of the market. So we are not involved in super high-volume applications like consumer electronics, mobile phones or computers, but more typically industrial products, so products where generally, the final product has a significantly higher value. The printed circuit board is a small part of the bill of material. Demands, however, can be very hard in terms of quality and environmental ability to withstand. And also, even if these -- our customers in these segments are very quite often large globally leading companies, their spend on printed circuit boards is relatively limited, and therefore, they struggle both to have the internal expertise to manage this commodity, but also to even get access to the leading factories. And this is an area where we can help them and also by combining the spend of our portfolio of customers, we can also get very good terms and earn the margin on our business. We have been going through a quite significant volatile market over the last 5 years. As you can see, I mean, overall, this is a globally long-term growing PCB market, as you can see in the green bars. We saw a tremendous spike or growth in the market following the pandemic. And we have, for a few years, been living off the backlash of that where inventories in the supply chain were full of product produced or semi-produced products at our customers and our customers' customers. We are happy to see that in 2025, this is starting to turn around, and we can see that growth in our order intake also for the full year coming through and even more so in the fourth quarter. We also have a good mix in our portfolio. We are not biased on any specific segment, but I think we've seen in this year, automotive has been one of the segments where there's still been some challenges, whereas, however, we've seen good continued progress in areas like defense, power and medical applications. We're also handling the geopolitical risks by an increasingly diversified supply base. So we've been continuing to expand our sourcing in Asia outside China, and I think making good progress here, and I think we expect that to continue to grow also in 2026. So coming more closely into Q4, and I think we're very pleased to see that we have good order intake and net sales growth in U.S. dollars. We trade predominantly in U.S. dollars. And it's also both a market recovery, but also it's sequentially growth order intake for us during the last 3 quarters, which is quite positive, not just year-over-year. We can see this as a general recovery across all of our regional segments, and we see accelerated growth in certain areas or industries like defense, medtech and power energy. There is to the order intake an impact also here from some early ordering by customers. We have seen as the market is growing and expanding, especially driven globally by data center applications, the lead times are extending. And we also see prices going up now at the beginning of 2026. And therefore, we also see customers who have the ability to forecast to place early order, and that is influencing our order intake growth in the fourth quarter. We estimate that roughly 1/3 of that order intake growth is related to these earlier order placements -- very good recovery in our EBITA versus 2024, where we had a weak ending of the year. And I think we see here a good recovery despite a strong FX headwind. And it's a combination of our gross margin improving sequentially. We are now basically on a level where we were in Q4 2024, but really leveraging the growth now to our overhead structures and with that driving better performance in financial EBITA. Also, M&A activities have continued. We were able to sign and close with Multi-Teknik here in the fourth quarter. Multi-Teknik Monsterkort is a Swedish company based in Gothenburg with the main customer base also in Sweden. It's a company that has a long history from 1975, which also included manufacturing, which was ended in 2008. They are mainly focused on industrial applications, automotive, telecom and medical. Revenue in their financial year '24, '25 was approximately SEK 110 million with an EBITA just below SEK 20 million. And with that comes 15 new employees, of which 8 are in Sweden, 5 in China and 2 in Lithuania, and the deal was closed on December 19. Looking then at Q4 in the numbers, we can see that our order intake is up a strong 20% to SEK 1.092 billion versus SEK 907 million prior year. That equates to 33% organic growth in U.S. dollars and a book-to-bill of 1.21. Net sales also grew by 9% in Swedish kroner to SEK 902 million versus SEK 830 million prior year. And also here, we can see the growth now in organic -- in U.S. dollars of more than 20%. And with EBITA, our EBITA increased to SEK 98.6 million versus SEK 71.6 million prior year. And now we have an EBITA margin of 10.9% versus 8% of last year. The gross margin, as can be seen, is equal to prior year, but having improved sequentially during the year. And you can also see our negative impact from FX in the quarter, which was a full SEK 23 million, and we'll elaborate on that a little bit later. Cash flow was at SEK 22 million versus SEK 45 million prior year. Our working capital increased a little bit up versus last year, tied partly to the acquisitions, but also due to some temporary changes that we're doing with the implementation of our ERP system. Net profit of SEK 53 million versus SEK 41.5 million and EPS of SEK 0.28 versus SEK 0.22 last year. And with that, I give the word to you, Tim.

Thanks, Peter. So if we take a look at the full year, we saw order intake increasing 10% to just above SEK 4 billion. We saw a positive book-to-bill, especially driven by the second half of the year of 1.09. While sales increased 3.6% to SEK 3.7 billion versus SEK 3.6 billion the year before, when we look at the organic growth, it was actually 5% in U.S. dollars. The EBITA margin came out for the year at 10.8% versus 12.4% prior year, mostly impacted by an adverse FX effect that you heard from Peter. For the full year, SEK 53 million over SEK 20 million in Q4, and that's just a result of FX rates being significantly different in quarter 1 of 2025. Operating cash flow at SEK 287 million, impacted a little bit by the temporary increase in working capital in quarter 4. And then that all contributed to an earnings per share of SEK 1.1 versus SEK 1.36 in the prior year. And the NCAB Board of Directors has proposed a dividend of SEK 1.1 per share. When we take a look a little bit over time at the gross margin, it's nice to see that we're stabilizing at a high level at 35.1% for 2025. It was a little bit weaker than that in the first part of the year and then developed well in the second half. And it's also nice to see the top line starting to grow as well. So when we take a look at it, we see that order intake increased by 20% in the fourth quarter, but actually for comparable units in U.S. dollars, up 33%. And that wasn't just driven by one particular segment. We saw a positive development in all segments, especially so when you look at it in comparable units in U.S. dollars, which is a typical trading currency in our industry. Net sales followed, but still significantly below where the order intake level is. So up 21% in USD, a positive book-to-bill of 1.2. And there's a couple of particular industries to highlight here with a good positive trend in EV charging as well as continued positive development in aerospace and defense. And when we look at EBITA, that developed well to SEK 99 million in the fourth quarter versus SEK 72 million in the prior year. The FX was impacted negatively in the quarter by SEK 23 million, which influenced the margin from where it would have otherwise been. Gross margin came in at 35.7%, which is just a hair below where it was in the prior year, but slightly higher than quarter 3. Acquired companies did have a slightly dilutive effect on gross margins versus prior year. I should note that. When we take a look and unpack the FX a little bit, I think it's interesting to look at where the U.S. dollar versus the SEK was this year versus prior. So this year in quarter 4 on average, just a hair below 9.4 versus prior year at 10.8. So what that does for us is that impacts our revenue with basically negative SEK 100 million on the top line side, which travels directly down to the gross profit side of minus at minus 40. There's a small revaluation effect of minus 3, but most of it is just a pure translation effect at minus 37. Within our SG&A, though, we have a little bit of a negative hedge against that. So that actually boosted the result a little bit with 17, but the overall effect, you can see is quite strong at minus 23.

Thank you, Tim. Moving over a little bit more in detail in the segments, starting with Nordics. We see again a continued strong order intake development here with a growth of 24% in Swedish krona. Here, though, there is some early order placement, which kind of further accelerates this growth. The countries with the most significant increases were Denmark, Finland and Norway. . Net sales also grew nicely even though we had significant FX impact in the markets here. And large drivers here are the defense side, but also the EV charging business, which is resuming after having had a low period during large part of -- early part of '25 and latter part of '24. EBITA amounted to SEK 36.3 million versus SEK 31 million in the prior year, and the margin came back up north of 15% to 15.9% versus 15.7% and really the result of good leverage on the net growth offsetting the impact of FX in the quarter. Moving over to our largest segment, Europe. The order intake also here increased. It grew by 13% to SEK 483 million versus SEK 428 million. That's an organic growth in the order intake of 5% in Swedish kroner, but 21% in U.S. dollars. And it's a little bit of a mixed development here in the European segment, but clear positive trends in markets like Spain, Benelux and Germany, which are recovering from a weak end of '24. We can also see net sales growing 10% to SEK 400 million versus SEK 365 million. Organically, the increase is 3% in Swedish krona and 19% in U.S. dollars. And the industries tied connected to automotive is still weak, and that is impacting primarily for us, regions like U.K. and Italy, but we see a recovery in most other areas. The EBITA increased to SEK 34 million versus almost close to 0 in end of Q4 2024. And the margin was now 8.5% versus only 1% in 2024. And still, there is also here a negative impact from FX and some product mix on margins. North America, a very strong order intake in the North American business. We grew 31% over what was also a little bit of a weaker fourth quarter 2024 order intake-wise, but nevertheless, very strong development. We're making good progress with our new product introduction model that we sort of acquired through Phase 3 and are expanding across our U.S. organization. Strong growth also here in defense, but also related to power applications, auxiliary solutions around data centers. Even if NCAB is not in the high-volume data center market, we can still be participating in parts of the auxiliary systems. Net sales are up 4% to SEK 214 million and 19% in U.S. dollars. And a note here again, as before, tariffs are included in the revenue, but are not registered as part of our order intake as the tariffs are only known when we bring the goods into the U.S. market. Our share of China-sourced products supplying for the U.S. is continuing to decrease and is now in the low 40s percent. EBITA decreased to SEK 26 million versus SEK 33 million, a margin of 12.1% versus 16%. It's a bit of timing of costs and also adjusting a little bit to the higher pace that we're seeing in the order intake that is impacting the margin in the fourth quarter. East, also here a continued positive development. Order intake growing by 32% to SEK 72 million versus SEK 55 million last year. Order intake in U.S. dollars, up a whole 49%. And we are capitalizing on the growth in high-tech. We're leveraging our supply base where customers who may have been buying direct are now struggling to get access, but they can have better access to the market through us. But we're also growing with NCAB global customers growing in China. And there's also here some preordering effect that is also helping the numbers. Net sales grew 7% to SEK 59 million -- sorry, decreased 7% versus SEK 63 million, also here in U.S. dollars down, but it's more a timing of business and deliveries in the different quarters. So our EBITA is down to SEK 7.5 million versus SEK 11 million and equivalent to still a healthy margin of 12.7% versus a very strong margin of 17.3% in the end quarter of the prior year. And there is some adverse mix here as well in product mix and pricing impacting the margin. Tim?

So when we look at the return on equity, we see about 14.3% this year versus around 18.3% last year. equity fairly stable. You heard a little bit about the FX impact on the earnings earlier in the call. We just completed an acquisition of Multi-Teknik Monsterkort. That drove our net debt to EBITDA up just a little bit to 1.8 versus 1.5 in the prior quarter -- prior year. Equity to asset ratio at about 40.9% versus 42.7% prior year. Working capital around 9.6% or SEK 376 million, a bit higher than this time last year, but you heard a little bit earlier from Peter, that we have a bit higher temporary working capital as a result of some of our ERP go-lives. Still quite a bit of available liquidity with a little bit over SEK 1.2 billion available and a proposed dividend of SEK 1.1 per share.

Very good. So as Tim mentioned, we have a good balance sheet and a lot of dry powder to continue our M&A activity, which is part of our strategy. So we are happy with the 2 acquisitions we did in 2025 and are continuing to work through our pipeline of both long list and shortlist and have a number of good discussions pending or ongoing at this moment. Our model is that we are -- the integration process is an important part for us, and B&B and Multi-Teknik are now entering our process where the initial phase is very much about sort of getting to know our new friends in greater detail to understand in the areas where they are working differently to ensure that we welcome the new colleagues to our company in a good way as well as reassuring our customers of how we will continue to support them in a good way. Following that, we will then start looking more into synergies of cooperation, how can we work closer in terms of our factory base as well as longer-term integration of systems and finance roles. So here we are now in the beginning of the phase, and we are continuing, of course, to ideally add further acquisitions to our portfolio. And historically and continuously, we're looking to see roughly half of our growth come through acquisitions over the cycle. And our strategy overall remains firm. We are -- remain 100% focused on printed circuit boards, and we're also believing strongly in our asset-light model where we don't invest and own any factories, but look to sort of provide superior service and flexibility for our customers. So we continue to invest though in technology as well as other services to be able to provide our customers better products and better service and by that, grow our market shares in the market where we have a presence. We're also looking continuously to expand geographically. And we believe that M&A is a good way for us to open up new markets. It is very much a relationship business and getting a first foothold in a new market speeds up that process and then we can add the full value of the NCAB Group to these new markets as we go forward. And we also have in predominantly Europe and North America, still a very fragmented market with a large number of smaller trading companies that date back to the '90s or early 2000s when a lot of the manufacturing moved to Asia. Many of these companies have remained regional or local. And as they were started in the '90s, some 20, 30 years ago, many of these companies, there's also now a time where they are approaching a succession dilemma, and that is also a good opportunity where we can help these companies into the family of NCAB and give them also the strength of access to our full factory portfolio and our factory management organization. And with that, we conclude our presentation and open up for questions.

[Operator Instructions] The next question comes from Jonny Jin from SEB.

Hope you can hear me. I have a couple of questions. Starting with organic order momentum seems strong here, which is good. And you mentioned both preorders, longer lead times and increased PCB prices. So starting with the price here, are there any price effect showing in Q4 orders at all? And secondly, what sort of magnitude of the price increase can we expect here at the beginning of 2026.

Thank you for your question. And I mean, I think we don't really -- we do see very minor impact of pricing on Q4. I think prices are really coming into effect here in the beginning of 2026. So this is predominantly earlier ordering, if anything, in the Q4 impact. And the magnitude, I mean, here is a little bit volatile, and it varies quite differently between different technologies because you have some which are very gold heavy and then you see significant price increases. But -- and in some areas, you see more reduced. But it's a combination right now of both capacity utilization, which is driving price increases as well as commodities. And it's commodity on gold, metals, but also even the laminate materials. So I think we are estimating that the average price increase is in the order of 10%. And therefore, we expect probably say, in Q4, we're going to see some positive impact of pricing, but then you're going to see the detraction from the preordering. And on revenue, we don't expect really to see impact on revenue more -- maybe more pronounced in the second half of '25 if this continues -- '26, sorry.

Yes. So 10% on average, did I catch that correctly?

Yes, it's in that order of magnitude.

Okay. Yes, that's clear. And then a question here on the price. I mean, are there any margin impact for you at all from the higher PCB prices? Because as capacity utilization gets up and long -- lead times longer and then your prioritized deliveries get more important. So I suppose your value to customers also becomes more important as well. So do you think you can increase your prices more than the increase of the input prices? Or how should we view that on the margin?

I think we believe and if we look back in our history when we have seen significant price increase in the market, if you go back, say, '21 or at that time when we start to see price increases. I think we've been quite good at keeping our gross margins. But I think we're also taking care of our customers in a good way that for us, I think it's more an opportunity where actually maybe we can see growth because I think a number of customers right now with poor lead times or lead times extending, that could actually be an opportunity where we at NCAB sometimes can have better opportunities to have stronger priority with the factories and maybe more see that as an opportunity of gaining market share as opposed to sort of driving margins further up. I think we've been good at managing, keeping margins with that growth.

Yes. Understood. Then moving to lead times there. Could you try to please help us understand how much longer lead time we could expect. I mean if you look at historical patterns on order conversion patterns, for instance, historically here in Q1, it's sort of an average above 100% conversion on orders. Could that move below 100% now in Q1? Or what is a reasonable assumption there?

Yes. I think -- I mean, historically, I think you could -- I mean, we have a large variety of orders. And I think in history, we've had kind of on average, you had almost like a quarter delay from order to revenue. And I think now we're looking more like 5, 6 months maybe in some of these areas. So I think it's crept up at least 1 to 2 months in terms of lead time from what you would normally see on the average. And I guess it's a little bit of a combination of, say, lead times and maybe some larger -- longer orders as well, which also impact this. So I think it's a large portion of the excess orders that we've seen in Q4 will spread over several quarters in '26.

Okay. Understood. And then just one final one from my side, if I may. And that is on the order growth intake. I mean you mentioned that 1/3 is pre-buys. And my question there is, was that driven by a few number of customers only. And then the rest here, 2/3 of the growth, how much would you say is existing customers and inventory normalization versus you taking on new customers. And what sort of is the pipeline visibility here of the new customer entering the new year?

I'd say on the preordering side, I mean, you have a few things maybe which is more impacting. I think we also have some cases where we have one larger customer, for instance, where we're making some factory shifts and that causes them to place bigger orders. But actually, you see that pattern across where customers have good visibility, they can -- we've been working with them to sort of help them understand and understand what kind of level of price increase are we seeing and we've been negotiating with the factories to sort of give our customers room to react as well. So there is a little bit across many of our markets that we have seen this impact. I'd say, I mean, on the basic order intake, I mean, if you look back in U.S. dollars, our order intake was -- we were up 8% in Q2 order intake while we were 14% up organically in Q3. And now we are, say, 33%. So maybe you take out around 10% maybe. So we -- maybe we're now north of 20% organically. So it's a clear progression of the order intake growth. And I think it's a combination of both growth in a couple of segments, but I think it's also the impact of inventory having come out of the system. I think that is actually something that we can see in some of the segments like EV charging, where they were very much -- they already actually started to have outbound sales growth during, say, early part of '25, but we only start to see the orders started to grow after the summer really.

The next question comes from Jacob Edler from Danske Bank.

Tim, Peter, I have just one on Nordics to start with. I mean you've had a pretty significant buildup of order intake in the Nordic segment since the start of '24. And I think if you kind of look at it accumulated orders relative to revenue, there's a kind of a USD 20 million backlog here. How much of that mainly, I guess, the Defence, Aerospace backlog can you -- can we expect you to deliver in '26 relative to further out, so to speak?

I'm not sure if we have a number that we can give. But I mean, there is a significant portion of some of those, specifically, say, defense orders, which also run into '27. So I think there is a significant part that actually also belongs in '27. It's not all going to be in '26.

As lead times tend to be 12 to over 24-month time line for these.

Sorry, I heard you a bit poor there.

No, I was just saying that the lead times tend to be in the 12- to 24-month time frame for these.

Yes. Yes. Perfect. Okay. Just a question on the Europe segment then. I mean you mentioned that industrial demand is improving in some of the core countries here, including Germany. Even though, I guess, PMIs haven't skyrocketed during the quarter, would you say that the development is mainly driven by inventory replenishment and that inventory levels have reached kind of bottom levels and are now bouncing a bit? Or how should we read it.

Yes. I think that, as you say, I mean, I think German economy is not, by any means, say, booming, but I think it's recovering. I think we're starting to see the signs of it recovering and the effect of, say, inventory reductions diminishing is helping to see our numbers normalize as well. So yes. .

Perfect. And then just a question, I guess, on automotive and U.K., Italy, auto has been a drag for quite a while here. Would you say the trend is kind of somewhat stabilizing sequentially? And when do we kind of reach the point where we're kind of washing out the comps here, if you get my question?

Yes. I think to some extent, it has been stabilizing over, say, in the second -- partly during the second half of 2025 on the automotive side. And if you start -- if you follow the reporting on the -- from the truck manufacturers, I think they start to show some positive order intake numbers now in the U.S. market, which I think was the initial really big drag on the truck industry. So I think we've -- I don't -- right now, we don't see signs of things getting worse, but maybe actually there are some indicators that would indicate that this market will start to recover.

Very good. And then I just have maybe a last question. Just on North America, how much of the -- how much was related to tariff offsets -- the price increases on tariffs here in Q4. The increase was 19% in U.S. dollars year-over-year. Are you able to add any more flavor there?

We don't give out exact on tariffs in North America, but it was a fair portion.

Next question comes from Thomas Blikstad from Pareto Securities.

Just a question on the dividends from my side here. SEK 1.1 is quite a large payout ratio. And just wondering if you could give some flavor on the rationale behind it in terms of market outlook, visibility, cash flow, M&A possibilities and so forth.

Okay. I'm happy to do so. I mean, as you know, our dividend policy is to basically give out available cash. During last year, we decided to pull back on our dividend. Basically, we were at the time of approaching our decision or our Q4 release, we -- or Q1, we had the Liberation Day in the U.S., which caused a lot of anxiety. And at that time, also we had B&B in the pipeline, and we actually also expected that maybe that we could close Multi-Teknik already before the summer. And with that, we saw a payout of dividend that we had originally proposed plus these 2 acquisitions that would put pressure if the market would have declined more than it actually did. So in that time frame, we decided to pull back on the dividend. Since then, you could say the market has not done as badly as we could potentially fear. We have also generated quite a bit of cash flow over the period of time. And we have also refinanced the company during -- before the summer of last year, which also gives us more headroom on our covenants. So with that, we exit the year with a very strong balance situation, and we find it's fine that we can actually then maybe give back some of the things that we did not do last year.

That's great. And just a quick follow-up on the prebuying trends. Are you seeing the same development here in January, February? Or was this more of a 2025 trend?

I think we could see that the lead times really grew in Q4. So the lead time aspect already started to be sort of impacting then. I think it's not really changed that much in the beginning after the year. And the price prebuy effect was more related to before the year. We don't see further pre-buy impacts right now. If anything, we probably might see a bit of a backlash on order intake than in Q1 from the fact that we had preordering in Q4.

The next question comes from Gustav Berneblad from Nordea.

It's Gustav here from Nordea. Just maybe just to come back here to the early part of the Q&A regarding your gross margin guidance that you have sort of given with stating 35%, 36% should still be something we should expect longer term. Do you see any -- are you any hesitancy in regards to this margin guidance? I mean, you comment on maybe looking a bit more at growth here, but...

No, not really. I mean, I think like Peter said, I mean, if you look at us historically, we've been able to handle both price increases in the market and price decreases in the market in a fairly good way and in good cooperation with our customers. We try to make these type of partnerships sort of over the long term. There will always be a quarter or 2 here or there, a little bit like you saw in early '25 where we're adapting the new circumstances. But I mean, if you look at it over the medium or long term, no, I think that's still where we expect to be.

That's perfect. And then just one clarification. I mean when you take these preordering, are there any risk to these orders in terms of cost inflation or that may cause lower profitability looking a few quarters out?

When we take these type of preorders, what we're doing is we're lining them up back to back with factory pricing. So it would be unusual. Not impossible, but unusual for there to be a margin impact.

I mean the only area where we sometimes can be exposed more is in kind of freight costs, which are more volatile and can change. And that is where we could have -- can sometimes get some volatility. But on product pricing, as you said, Tim, it's back-to-back with the factory. So there's a tie between those orders and deliveries.

Okay. That's very clear. And just in terms of the preordering, just also a bit of a clarification. Just wondering if there is a risk that you are undermining the market or if you're underestimating the magnitude of these preordering, is there a risk to that? Or do you have very good visibility of exact what are preordering and what are normal.

No. Actually, in this case, I think we have a pretty high degree of confidence on the preordering. I think one of the nice things with a lot of the investments that we've been making in our ERP over the past couple of years is that we have quite good visibility into which customers and which regions this comes from. So no, I think we have a fairly good handle on it.

That's great. And then on your topic there, ERP. I mean, you should have gone live in Sweden and Norway, right, this quarter. Is there a negative impact from the IT rollout in the Nordic segment in this quarter?

No, not particularly a negative impact in the Nordic side. Actually, there, even if going live with these ERPs is a little bit of a struggle in the first couple of weeks and months, I think both Norway and Swedish teams handled it in a really good, really professional way. So I think there was actually less business impact than we feared there might be. And at this point now, we're 75% of the way of the company loaded into the new ERP. So all of the large go-lives are actually behind us. So now we have 3 smaller entities in 2026 to go with, which are significantly less risky than the ERPs countries that we went live with in 2025. So actually, it's a comforting feeling going into '26 with the road map that we have. The one disturbance that we did see in the quarter, which Peter commented on a little bit earlier in the call, was on the working capital side. So we just have a few issues to work through with how we use the system to make sure that we're doing invoicing in the most optimal way so we can collect accounts receivables from our customers at the normal pattern. We expect to recover that in the next 1 to 2 quarters.

That's very clear. And then just -- sorry, one last question here from my side. You also commented on the lower inventory levels supporting particularly Europe here. What you're hearing in the market? Is that, that the inventory levels are still on low levels in general? Or are you seeing that normalization occurring right now, would you say?

I think from our perspective, it's not been that they've been super low. It's more that they were historically always high. And I think now the fact that we are seeing orders pick up is maybe not that they're building up orders, but I think that they need to start ordering again. So I don't think we see customers gearing up and building inventory right now. I think it's more the fact that actually they are running out of old inventory, and therefore, it kind of restarts the cycle of production in a greater deal.

[Operator Instructions] There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.

So we have 2 questions written here. The first one is from Johan and he asks, how do you view the current high demand and price trend within the more advanced PCBs, say, for high-density interconnect HDIs and other advanced AI application. How is your exposure to these more high-tech segments. And are there spillover effects in terms of factory utilization, price levels and so forth.

Yes. This is a good question, and it's very much the case. I think what we see is even if we are not directly supplying to the high-volume data center applications, it is creating sort of ripple effects through the industry. And a number of the applications where we are also working with these high-tech technologies is seeing that increased workload because there is a kind of spillover where those factories who are directly focused on data centers, they are forced to sort of move other production out to the other manufacturers. So this is creating in part of what is driving lead times. It also, of course, is driving price increases from these factories who are now very fully utilized. But it also creates opportunities because, I mean, NCAB, we have very strong relationships with our partner factories. We are generally between 10% to 20% of their turnover, and that means that we still have good priority, and it actually becomes an opportunity for customers who are struggling to get access, to find access through NCAB.

Great. And the second question comes from Carlos Moreno. And he is asking, it's amazing that diversification of suppliers means moving from China to Taiwan. Can you find price quality suppliers anywhere else in the world? And what do the defense companies do. Must be a great time to set up a factory in India, et cetera.

Yes. Our activities, of course, growing here is not only in Taiwan. Taiwan happens to be our largest non-Chinese region in the market. We are also developing business in Korea, Malaysia, Thailand as well. And I think there is where we see a lot of growth happening as well. India, maybe not so much for the kind of technologies and qualities that our customers are demanding. But a lot of activity in the whole of Southeast Asia and beyond what we currently see in terms of orders or revenue through these factories in '25, if you look upon the activity of sampling validation activities, there's a lot of activity outside of these markets.

So that was the last question we had. So I just would like to thank you and remind you that our first quarter report for '26 is on 23rd of April. So very welcome back, and thank you, Peter and Tim.

Thank you.

Thank you.