NCAB Group AB (publ) ($NCAB)

Welcome to the NCAB Q1 presentation for 2026. [Operator Instructions] Now I will hand the conference over to the CEO, Peter Kruk; CFO, Timothy Benjamin; and Head of Investor Relations, Gunilla Wikman. Please go ahead.

Thank you very much and welcome, everyone, to our call. Today, presenting primarily will be myself and my colleague, Timothy Benjamin. Just for those of you who might be new to us, NCAB is a supplier of printed circuit boards. So the products you see to the left on the screen, which form the foundation in any electronic product. So our customers will mount semiconductors or microprocessors on our product and that then creates the intelligent nodes in any electronic product. And what is important to recognize is that whilst semiconductor components are standard components, the printed circuit board is uniquely designed for each and every application. NCAB is present today through 19 companies across the world. We have about some 650 colleagues around the world supporting our customers and we are dealing with some 34 factories to supply the main portion of our customers. We have no in-house manufacturing but we have a very strong focus on securing the supplier network. So roughly 120 of our 650 colleagues are working specifically with technology and the factory management. Our focus is for printed circuit boards for demanding customers, customers with high demands in terms of quality, on-time delivery, efficiency and we aim to supply them with 0 defects, produced sustainably and giving them the overall lowest total cost. And our aim is to be the #1 PCB producer wherever we are and we are the globally leading supplier of printed circuit boards worldwide. Our focus is also on what we call the high mix, low-volume segment. So we are not focusing on the markets of consumer electronics or PCs or main data applications. But we're typically more applicable working with the industrial applications or medical or aerospace and defense. And typically, what we see in these applications is that the printed circuit board forms a very small part of the total bill of material for the end product. These customers that we are focusing on have very high demands on quality and performance. And given the fact that it is a small part of their bill of material and that their overall total spend on printed circuit boards is relatively limited, they struggle to get good support and access from the leading factories. And this is where we can support them. We can bring them knowledge to help them design their product efficiently and also match them up with the best factories. And where we combine our global spend in printed circuit boards, we are one of the leading buyers of printed circuit boards worldwide. And that gives us also an opportunity to have a margin on the services we provide. What we've seen is that the global printed circuit board market is somewhere north of USD 80 billion worth. And it was a market that was growing rapidly during the early parts of the pandemic but then had a recoil in the market. We are now positive to see that now for the last 1.5 years, the market has resumed growth. And we can also see that NCAB's order intake is matching that and is accelerating its growth in 2026. So moving to our first quarter. We had a strong positive growth on top line and also a positive development of our EBITDA. We can see that the market recovery and our growth in order intake that has started growing from Q2 of last year has continued to grow and has accelerated over the last 4 quarters. It is a very challenging market situation right now. The growth in the global market is accelerated by big data center investments. This is not our main market but it is creating supply chain bottlenecks for printed circuit board manufacturing worldwide. We have a strong supply chain and our factory management organization can actually help to make a difference in this tough environment and help our customers still get good delivery of product. We're also seeing from the growth in the overall global market, increasing market prices. And in the quarter, we have also had on top of that, some project wins, notably in North America, which further enhanced our order intake in the quarter. But overall, we see an underlying good positive development across our segments and we can see things like defense, medtech and power doing quite well, whereas our sales towards the automotive industry remains somewhat muted. On the EBITDA side, we again have a good positive development versus 2025. We can see we're leveraging the growth and we're offsetting quite a significant FX headwind and our gross margins are stable versus prior year. If we take a more detailed look on the numbers, we can see our order intake is up 27% in Swedish krona. Our organic growth in U.S. dollars, we basically trade 90% of our business in U.S. dollars effectively. Our organic growth in U.S. dollar is up 43%. Book-to-bill is also quite positive of 1.2. Net sales grew in -- by 12% to SEK 1.074 billion, which is a growth organically in U.S. dollars of 24%. And we can see our EBITA reached SEK 128 million, up from SEK 100 million last year and an EBITA margin equivalent of 11.9%. We can see our gross margin up slightly but largely stable. But we are overall on the EBITA side, offsetting a negative FX impact of SEK 27 million in the quarter. Cash flow was okay at SEK 65 million versus SEK 53 million of prior year. Our working capital is up slightly, mainly driven by the high growth that we see in the business but also the fact that lead times are longer than they were 1 year ago, which is creating more goods in transit. Net profit at SEK 75 million versus SEK 52 million last year and an EPS of SEK 0.40 versus -- or SEK 0.40 versus SEK 0.28. Over to you, Tim.

Thanks, Peter. So I think you heard a little bit from Peter that our gross profit has remained fairly stable year-over-year, which we're happy to see a little bit over the medium term. When we look at the quarter, as you heard from Peter, up 27% in order intake, 43% in U.S. dollars, which is comparable units for us, excluding acquisitions. Positive development in all segments. We saw a good development, especially in North America and East. Net sales up 12% in SEK and 24% in U.S. dollars. These 2 effects contributed to a positive book-to-bill of 1.2, which you would expect with the longer lead times that we see right now as well as some of the larger project orders that we had within the quarter. But we were happy to see a positive trend in EV charging as well as in our aerospace and defense business. When we look at the EBITA, yes, we did see a 28% year-over-year increase going from SEK 100 million last quarter to SEK 128 million this quarter. We did have to offset quite a negative headwind coming from FX, which mainly impacts gross profit, offset a little bit on the SG&A side. These 2 things were offset very much by the strong growth in revenue that we saw and they contributed to a very strong operational leverage within the quarter. And as you heard a little bit from Peter, gross margins, although a little bit down sequentially, were quite stable year-on-year. If we're looking bit closer at our different industrial segments or regional segments, Nordic had a positive order intake growth of 17% in Swedish krona from SEK 261 million versus SEK 222 million last year. So a good organic growth in the business here of 7% in Swedish kroner and 25% in the U.S. dollars. Good positive development here, notably in Norway. We had some earlier order placements in Q4 in some of our Nordic countries but that was nicely offset by other growth in the segment in the quarter. Net sales grew by 21% to SEK 271 million versus SEK 224 million last year. So also here, good organic growth of 12% in Swedish kroner and 30% in USD. Here, we see our EV charging business in the Nordics resuming and we've also seen good deliveries of defense contracts that has boosted growth in the quarter. EBITA amounted to close to SEK 38 million in the quarter, up from SEK 24 million last year and our margin EBITA increased to 13.9% versus 10.7% and we've seen good leverage on the net sales growth. And we've also seen good positive contribution from Multi-Teknik that we acquired here in Q4. And these things have offset the negative FX and mix impacts that we may have seen from larger project deliveries.

If we move to our European segments, also here, we start to see the order intake grow 8% in Swedish kroner to SEK 537 million, up from SEK 497 million. The organic growth is 2% in Swedish kroner but 20% in U.S. dollars. We see a positive trend in a number of our markets, notably Germany and Benelux but we see some of our countries here, U.K. and Italy notably impacted by their share of sales to the automotive industry. Net sales are up 2% to SEK 508 million versus SEK 497 million. It's an organic decline in sales still in Swedish krona due to the FX impact, so --of 4%, but it's a growth in U.S. dollars of 13% year-on-year. And the general recovery that we see is offset by, again, here a little bit by the negative sales to automotive industry. EBITA increased to SEK 57.6 million, up from SEK 55.8 million and the margin is largely flat at 11.3% from -- compared to 11.2% last year. So we see some negative impact from FX impact on the EBITDA but we're at the same time, we're also getting a positive contribution from the B&B acquisition that came into the company in Q2 of last year. In North America, we have seen a very strong growth in the quarter. We're up 71% to SEK 403 million versus SEK 236 million. So in U.S. dollars, it's actually a growth of 100%. And this is supported by large project orders, some of which will have deliveries extending into 2027. But also underlying this, there is a good positive development. We see notably our sales in defense and to power segments are doing quite well. Net sales are up 24% to SEK 233 million versus SEK 188 million and 45% in U.S. dollars. We had a little bit weaker Q1 of '25, so that number gets help from that as well in the comparison. We have positive development in defense, power and medtech sectors and we have seen a further decline in the share of sourced products from China in the quarter compared to prior year. EBITA increased to close to SEK 28 million, up from SEK 18 million and corresponded to a margin -- EBITA margin of 12% versus 9.7% and the growth here is primarily driven by the increased revenue in the quarter. And finally, looking at our East segment, we also here see a very positive development on the order intake, order intake growing 52% in Swedish kroner to SEK 88 million, over SEK 58 million and it's growth in U.S. dollars by 77%. We are able to capitalize on the growth in high-tech and our supply base as well as growing with NCAB's global customers. With the challenging supply markets, we are able go through our access to the relationship with the factories to be able to sort of support our customers better than customers, who may be, in some cases, have been buying direct from factories. Our net sales are up 21% to SEK 61 million, up from 50.5 million and our net sales in U.S. dollars increased by 41%. With that, our EBITA was able to grow from SEK 8.2 million to SEK 11.3 million and it's equivalent to an EBITA margin in the quarter of 18.5% compared to 16.3% last year. And this, of course, is supported by the strong leverage from the revenue growth. Over to you, Tim.

Thanks, Peter. So if we look on the financials that we have here, our return on equity up 50 basis points to 15.6% from 15.1%. We expect to see that continue to tick up. Net debt-to-EBITDA, 1.5 versus 1.6, which shows that we still have quite a bit of capacity here for M&A. Equity/asset ratio fairly stable year-over-year and net working capital up a fair amount, which you heard earlier was from the recent growth that we've had lately, along with some of the recent acquisitions, which have a higher working capital average than the standard NCIB business as well as the longer lead times that we're seeing in the current market conditions. Available liquidity, north of SEK 1.2 billion, which again gives us good dry powder on the M&A scene. And then we have a proposal from the Board of Directors for SEK 1.1 per share. If we look at the pipeline side, we have a number of good conversations ongoing on the M&A side. You see recently, mid-last year, we did B&B in Germany and then in December, Multi-Teknik In Sweden. And with a number of good conversations ongoing, we're happy to see this continue. When we look at the recent acquisitions that we have had in the past 12 months, the 2 that I mentioned, we saw good and strong contributions within the quarter as we start the integration process. So if we look ahead, I mean, our company, we are glad to see that the market is starting to turn back -- turning back up. And our strategy remains as before. We are focused on growing our business in the printed circuit board market with a 100% focus on printed circuit boards and continuing with an asset-light model, whereby we use outside partners for the manufacturing. We are, however, continuing to invest in technology and our processes to be able to support our customers more efficiently to grow our market shares and deepen the relationships with the customers we have in existing markets. We're also continuously looking to expand our business geographically, whether that is to enter completely new markets or to strengthen our footprint in existing regions. And we believe M&A is a good vehicle for us to accelerate that process. And finally, we are acting in the market where there are a higher degree of fragmentation, a large number of smaller trading companies, local or regional, primarily in Nordic, say, in Europe or in North America. And we see great opportunities to consolidate this market by sort of giving these smaller companies access to the NCAB framework, our factory management organization and our purchasing power to be able to serve their existing customers better and to help them grow in the future. With that, I think we open up for questions. And thank you for the presentation.

[Operator Instructions] the next question comes from Jacob Edler from Danske Bank.

Congrats on a strong report. A couple of questions from my side, starting a bit on price in the order intake. I remember in connection with the Q4 report in February, you talked about pricing for some raw materials being up around 10% at that point. We've now seen some reports on copper clad laminates, prepreg, et cetera, having increased in the magnitude of, let's say, 15% to 25% in February and March and even some higher prices here in April. Is it fair to assume that price will be a bigger factor in Q2 orders relative to what we saw here? And what was the number you saw for Q1?

Yes. Thank you for your question. I think as we said last time, we were seeing price increases expected in quarter 1 and sort of that led to some level of prebuying in Q4 where customers potentially come back to place orders earlier. As you said, we were estimating prices to be up in the order of 10%. I think it's fair that we have seen that. I think in some cases, we don't maybe see it fully come through on the order intake in Q1 because, I mean, there's a mixture here of pricing for completely new projects versus to what extent we can sort of work with our suppliers to maintain, say, a slower introduction or lessen price increase on existing parts. But I think it's in that order of magnitude of price increase that we have seen in Q1. We are, of course, here working with our suppliers to protect our customers to the extent possible. But we are foreseeing and expecting further price increases here coming into Q2. So the price increases will probably continue here in the second quarter on the order intake side. On the revenue side, however, it's not really showing in our numbers yet. So that is part of why we have the positive book-to-bill. And we will gradually see the prices show up in the net sales, like starting maybe in Q2 but primarily in the second half.

Yes. Good. And then just a question on the North America order, USD 20 million. How much -- how should we think about it deliveries '26 relative to '27? If you're able to add any flavor there?

I mean you can say there are various -- it's not one specific order. It's actually a couple of different projects. And one of these projects goes over 2 years. And I think it's primarily where we were involved with some research activities for particular accelerators. And that has been business that we have had. It's a continuation of projects that we have been doing before. So we have had these kind of projects in the last, I think, last 2 years at least, where we've had project orders of around, say, $4 million in, say, either Q2 or Q1 or sometimes split between the 2. This time, we are getting this order but it's actually split over 2 years. So I think we are here maybe seeing a $4 million that's going to be into 2027 from this side here.

Okay. Very good. Just a last question on orders. I mean, in Q4, you quantified that roughly 10, 11 percentage points of the growth we saw in orders in Q4 was prebuying related. Was there an element of prebuying here as well? I presume that lead times are continuing to creep up as you're stating. So any prebuying effect, so to speak, continuing here?

I think what we see is, I mean, I think we do foresee the price -- we do see prices continuing up at the moment. And that is probably leading to some level of prebuying as well. But I think we don't see prebuying boosting our numbers in Q1 but maybe they are sort of netting out the positive prebuy we saw in Q4 to some extent. So the net effect of prebuying is probably pretty small because what we saw is prebuying in Q4 would actually have created a kind of a down blip downwards in Q1. Now that downturn blip is probably sort of offset largely by some further prebuy in Q1 here.

I think one of the effects that we saw in quarter 4 was that some of the largest customers sort of trying to get ahead of the current market conditions and the pricing increases and whatnot. So we saw that effect strongest with the large customers in quarter 4. We see it now with the medium customers that are also kind of waking up to the current market conditions and the difficulty in some cases to get orders in the future. So I think that's kind of the trend that we see. It's the large customers, medium customers and smaller customers.

Yes. Good. Just 2 last quick questions. On the gross margin, I mean, it's a bit lower sequentially, which I guess is -- makes a lot of sense given how fast prices are moving and you having to -- I mean, there's, I guess, a lag effect created from factories pushing on prices to you and then you have to kind of push them on to the customers. But is it fair to assume that we should see a similar theme here in Q2, so kind of the lower end of the interval of 35% to 36%. And then eventually, as prices may stabilize that, that could creep up a bit, I don't know.

Yes. I think it's fair to assume that we could be in this -- in the current range. It's a lot of work right now with our customers trying to manage the cost increases that are happening in the market. Of course, we try to protect our customers to the extent possible during this phase. But we expect probably to be in this range where we are right now.

Good. And last question from my side. I mean we had some decent invoicing in this quarter and you've had a relatively sizable backlog from the last, let's say, 1.5 years here. Can we expect kind of decent invoicing to continue during this year different from that backlog?

Yes, yes. I mean we've been booking orders here since basically during, say, '24, '25 on the defense side and we continue to win business in this segment. And some of these projects, it's a mixture here. Some projects are kind of short term but they also contain a fairly high degree of projects, which are longer term. So yes, we will have deliveries of defense during the remainder of this year as well as into '27.

The next question comes from Jonny Jin from SEB.

I have just a few quick questions. I think the first one is on data center project. I think that's very exciting. Could you maybe clarify how much direct data center you have today? And how is the pipeline of similar data center projects going forward?

Thank you, Jonny. I'd say -- let's say we are not specifically in the data center direct application. But I think where we are -- have been successful has been participating in projects where we are auxiliary -- supporting the auxiliary systems. So in some of the kind of power regulation systems for the kind of data center projects. And this is a business that we've started developing partly with some customers here in North America during the -- say, during 2025. And we've had very good business with them in Q1. And this is, of course, a business we hope to be able to continue to develop going forward. So we are very happy about the big project orders we have seen here in quarter 1 but they are by no means, hopefully, our final orders for this segment.

Okay. That's clear. And I mean, direct data center exposure, is that something that you're interested at all? Or is that more sort of high volume that you want to avoid? Or could that be a new growth pocket for you? Or how should we view that?

I think the main data boards themselves, that is very much high-volume applications. So that is not our sweet spot where we can add most value. But I think you have a lot of, say, infrastructure around the data centers either power distribution or it's cooling systems and all these other things that you need to make a data center work. And there is typically where you find more of our high mix of volume applications. So if we can be well positioned there, we have an opportunity to be a strong participator in this market as well. But it's, say the data center application itself is maybe not our area.

Okay. That's fair. Then one question on lead times. Can you maybe elaborate how we should think about the lead times even more and the order conversion we should expect going forward because there's some moving parts there at the moment.

Yes. And I think what we have seen is the lead times have gradually extended. I think they are still sort of in the -- historically, we've been in 1 quarter, maybe they are now more like 2 quarters. So we should not expect the current Q1 order intake to translate into Q2 revenue. I mean there will be some delay in this. And of course, partly due to the fact that there is -- part of the order intake growth is also related to price increasing, which would also translate into later deliveries. So I'm not sure if that sort of answers your question.

Yes. Okay. Just one final quick one here on Germany. That's an important market for you and you have some upbeat comments on Germany. Could you maybe elaborate a little bit more what you're seeing in Germany now? And how is the momentum developed during the quarter, so to speak?

I think what we have seen, I mean, for our business, we have gone through, say, from '23 to beginning of '25, quite an elongated, say repercussion from the growth in '21, '22 during the kind of COVID years. And I think what we've seen is that there's been a tremendous pile up of inventory or semi-built products, maybe not necessarily that there has been inventory of printed circuit boards but finished products in retail or in -- from contract manufacturers to OEMs, et cetera. I think a large part of what we have seen happen during -- starting in '25 and continuing is that, that has not come out of the system. So we are now seeing not only a growing market, we're also seeing the growth that was already there during '24, '25, which we were seeing a discounted version of in our order intake. So I think from that, it's -- we can see our European business and our European customers coming back and we can also see that they are growing. So -- but I think they are -- and as you have seen from our numbers, they are a little bit behind some of the other segments in terms of growth rate but I think the trend is quite in the right direction.

[Operator Instructions] The next question comes from Gustav Berneblad from Nordea.

It's Gustav here from Nordea. So I thought maybe just to start off with the certificate you got here for the CMMC 2.0. Can you just elaborate a bit more on what you see in terms of potential from this certificate to start off with?

I mean the aerospace and defense business that we have in NCAB is historically has been primarily in North America and in the Nordics. And over the years, we're now starting to sort of gradually expand our know-how of this and selling into more markets. In the U.S., we have had a strong position also from the fact that we have [indiscernible] approval to use certain factories in Asia also for U.S. -- some of the U.S. defense applications, which has given us a strong position. The U.S. has moved forward with their way of securing data security. CMMC 2 is one important part of their new regulation that is now coming into effect. And for us, it's very positive that we are one of the first companies to have the CMMC 2 accreditation, which means that we are sort of accredited to support the U.S. defense projects, which is quite nice. And there is, of course, just like we see in Europe, significant investments in this industry going on.

Okay. But in terms of, I mean, volumes, I guess that's very hard to give an exact figure of. But is it -- I mean, are you seeing less competition now given that you are the first company to be approved and sort of can take market shares during this sort of raise that we're seeing? Or what's your view?

I think it's a bit too early to say. But I think if anything, it will sort of weed out some smaller or less competent competitors. It is a market where, say, if you're even allowed to be even to look at material to quote something, you need to be accredited to be able to prove that you can handle the data that you're looking at in a secure way. So it's an important part of us being a credible supplier into this market and continuing to grow in this market.

That's perfect. And then I thought maybe can you just elaborate a bit more on the situation here where you comment of customers that went previously directly through factories are now potentially coming to you. Is this something that brings up material volumes for you already now? Or...

I think we may see it. I think we know it's a very tough situation right now with our factories. We know our factories are more or less forced to turn away smaller customers. They need to prioritize how they handle the volume they have and even the factories themselves are competing to get access to the raw material. So you really need to be working with the leading factories. So I think it's too early to say that we have seen customers coming to us. I think we've already seen some signs of that during end of last year that customers were getting worried and looking for support from someone like us. I think it's part of the growth that we're seeing in the East segment right now, where typically you can say it's challenging for our organization in China to be successful when you have the customers and the factories close by. But I think part of the growth that we're seeing right now is that we actually have strong factory relationships. We can still get access to material. Even if prices are going up, we can secure delivery to a better degree than what many are that are trying to buy direct.

That's very clear. And on that note, the East market, I mean, given if we assume volumes are fairly stable from here on that level, I mean, how sustainable are the margins there currently?

I mean there's always a bit of variation here in the mix. I mean, in our business in Asia, we do a very high degree of advanced engineering, supporting our customers. And I think that also lends to, say, margins moving a bit up and down on some of these projects. So -- but I think to -- we have, I think, over a long period of time, been able to perform in that range of around 15% or sometimes above. I think that's fair to assume that we can continue that.

That's perfect. And just one last question here. Sorry. The new customers -- or sorry, the data center part of the business that you saw -- you received some customers during '25. Are those new customers that appeared in '25 and you're now seeing volumes ramp up more and more significantly in 2026?

I think this is one of those customers where we work both with their OEM as well as with their contract manufacturer. And I think that cooperation with both these parties have been going on for multiple years. And then together, we have worked on developing the concept for these applications here, which started taking off in significant volumes, I'd say, during '25 and is continuing in -- here in '26.

There are no more questions at this time. So I hand the conference back to the speakers for any written questions or closing comments.

Thank you very much. There is one question from Thomas Blikstad at Pareto Securities. And he says congratulations on a strong report today. Could you break down the 40% organic order growth here in Q1 in regards to prebuying and pricing effects? How are these 2 dynamics looking heading into Q2 onwards?

I'd say prebuying is virtually nothing because you have this kind of net effect. You had some prebuying in Q4. And yes, there is probably some prebuying in Q1 but they are largely offsetting. So it's a little bit hard to predict exactly. It's always a bit of a guesswork to understand exactly what is a preorder, what is just an order. But I think we don't really see that much of prebuying. I'd say on the pricing effect, maybe we have in the order of 10% on the order intake side. And then you have some of the larger orders, which maybe are somewhere in that 10%, 15% impact right now. And then you have an underlying growth of some other 15% on top of that to get to the kind of the numbers we talked about.

Okay. Thank you very much, Peter and Tim. And just to remind you, our AGM is coming up soon, the 7th of May, very welcome there and our Q2 report is on the 22nd of July. So very welcome back and thank you for today.

Thank you.