Good morning and welcome. Today we're proud to announce the acquisition of DeltaNordic, a Swedish provider of advanced electronics and electrical systems with a strong footprint in the defense market. This acquisition marks the next step in Kitron's strategic journey, strengthening our position in high reliability and mission-critical electronics. I'm Peter Nilsson, CEO of Kitron Group, and with me today is Ms. Cathrin Nylander, CFO of Kitron Group. Next slide, slide two, please.
Disclaimer: Before we begin, a reminder that this presentation contains forward-looking statements. It's prepared for information purposes only and should not be regarded as an offer to sell or solicit any securities. Slide three, please. Forward-looking statements. Some of today's remarks will address forward-looking expectations, particularly regarding revenue, margins, and integration effects. These projections are based on current assumptions and may be adjusted as the transaction closes and integration proceeds. Slide four, please.
Here is today's agenda. We'll start with key transaction highlights, then introduce DeltaNordic and its operations, move into strategic rationale and financial impact, and finally close with summary remarks and a Q&A. Slide five. Next slide, please. Transaction highlights. This acquisition is a natural next step in Kitron's growth journey. DeltaNordic adds strong confidence in defense aerospace electronics, expands our presence in Sweden, and brings complementary expertise in rugged electrical systems. There is minimal customer overlap, creating clear cross-selling potential. The deal is earnings accretive and supports long-term shareholder value creation. Next slide. Slide six, please.
Transaction overview and timeline. We have agreed on an enterprise value of SEK 1.255 billion, or EUR 114 million, corresponding to 9.65 times 2026 EBITDA of SEK 130 million. The settlement combines SEK 760 million in cash, SEK 150 million in Kitron shares, and an earnout of SEK 345 million linked to revenue performance up to and including first quarter 2027. Financing of the acquisition is contemplated by way of available funds and facilities. Kitron may consider existing facilities in combination with other financing alternatives, including new bank facilities, debt equity, or other third-party financing, to settle the cash part of the purchase price at closing. There are no financing conditions for the acquisition. Regulatory approval is expected within 25 working days, and closing is targeted for late December or early January 2026. Slide seven.
Introduction to DeltaNordic. DeltaNordic is a full-service provider, from design and prototyping to certification, production, and aftermarket support. Their core strengths lie in mission-critical electronics and electrical systems, serving defense, industrial, and infrastructure customers. Next slide. Slide eight, please. DeltaNordic at a glance. They deliver robust electronics, electric cabinets, and complete system assemblies, ranging from PCBAs to box build assemblies. Based in Sweden, a NATO member with a strong defense cluster, DeltaNordic serves blue-chip customers such as BAE Systems Hägglunds, supplier of the CV90, the CATV, and the Beowulf combat vehicles, together representing roughly 47% of revenues. Revenue is projected to grow from SEK 498 million in 2025 to around SEK 1.4 billion by 2028, with a full-year outlook exceeding SEK 3.4 billion. Slide nine, please. Market exposure. Today, defense accounts for about 50% of sales, covering combat vehicles and naval systems.
Mining and construction contribute 30%, industrial automation 17%, and infrastructure around 3%. Over the medium term, the defense share is expected to reach around 70% as new NATO-related programs ramp up. Slide 10, please.
Product and service offering. DeltaNordic's product range spans electronics, electronic systems, and value-added services. Their strengths include high durability through conformal coating and potting, and electric cabinets built to withstand dust, heat, and vibration. Their DISP process, integrating design, sourcing, and production, ensures traceability, quality, and efficiency through the product lifecycle. Slide 11, please.
Geographic footprint. The company operates from Ängsjönsvik in the north of Sweden and Kungsängen just outside Stockholm, Sweden, and a site also in Nanjing in China. This provides both proximity to Nordic defense customers and global cost flexibility. Combined with Kitron's 11 production sites across Europe, the U.S., and Asia, we will gain broader capacity and sourcing reach. Next slide, please. Slide 12.
Why DeltaNordic is an attractive addition. DeltaNordic is highly agile and deeply embedded in its customers' development processes. Their prototype and MPI capabilities generate sticky, long-term business. They bring mission-critical expertise in harsh environments and have a management team with strong combined experience. With clear growth, usability, and ample capacity, they're ready to scale. Slide 13, please.
Strategic rationale. Strategically, this acquisition strengthens Kitron's defense and aerospace offering, our fastest-growing market sector. It adds complementary competence, deepens our presence in Sweden, and provides access to a broader customer base with minimal overlap. DeltaNordic will gain scale and support through Kitron's global network and industrial platform. Next slide. Slide 14, please.
Integration and growth platform. Our integration philosophy remains decentralized, and DeltaNordic fits very well into that. DeltaNordic retains its entrepreneurial spirit while benefiting from Kitron's legal, IT, and financial infrastructure. That gives them freedom to focus on production, innovation, and customer support while leveraging our purchasing scale and global capacity to accelerate growth. Slide 15.
Strategic positioning. Both companies operate in the high-mix low-volume sweet spot, where complexity and recurring business creates value. This is precisely where Kitron has a competitive advantage, and DeltaNordic fits seamlessly into that positioning. Next slide, please.
Outlook. Kitron reiterates its outlook for 2025 with a revenue of EUR 700 million-EUR 740 million and an EBIT of EUR 59 million-EUR 66 million. In 2026, excluding DeltaNordic, we forecast EUR 785 million-EUR 865 million in revenue, EUR 70 million-EUR 84 million in EBIT. DeltaNordic adds a further EUR 70 million-EUR 78 million in revenue and EUR 11 million-EUR 13 million in EBITDA, making the acquisition earnings accretive from year one. Slide 17.
Some summary and final remarks. To summarize, this transaction strengthens our defense and aerospace portfolio. It expands our Swedish footprint, and it adds new engineering capabilities to the group. Minimal customer overlap means immediate new growth opportunities. The transaction is financially disciplined and strategically transformative for Kitron.
We expect the deal to close by year-end with full integration support from the blue platform starting in 2026. Slide 18.
Q&A. Thank you for your attention. I will now open the floor for some questions on the transaction, financial impact, or strategic integration plan. Cathrin, this has been a really fast process, right? We've worked hard, long, long hours.
Yeah.
Making it happen.
Yeah.
We signed the LOA just, what, 24, 23, 24 days ago.
Yes. It was important to have a speedy process for all parties.
Let's go to the first question. This is the first one is from Petter at SB1 Markets, and he has not one question, but he has six questions. How many employees are there in DeltaNordic?
You take the second one, and I will come back with it.
Okay. Can we elaborate on the comment, high visibility? Is it better than Kitron? And if so, why? The comment is they're more deeply integrated in the deliveries and manufacturing to primarily BAE, working very closely with the different customizations for the different vehicles that are delivered on different programs. There is a strong visibility. There is a build plan from BAE, so that is completely correlated into DeltaNordic's build plan also. The order horizon is about the same as in Kitron if you look at order backlog, but there is an understanding of what is going to happen in the next one, two, three, and four years out. Can we talk about the history in DeltaNordic over the last five years? What has been both on growth and margin? I think the historical values have been related to the development of BAE and other customers.
There's been a big transformation of the company in the past two years with a completely new management team brought on board, more professional, looking to transform the company to something that very, very much looks like Kitron when you start talking to them and looking at processes and business decisions. The growth journey really kicked off this year. I think it's extremely strong growth for 2026. Just like Kitron, right, we see the tsunami coming in 2027 with defense orders. Number four, was it a structured process? Yes, it was a structured process. The new company has a leverage net interest-bearing debt EBITDA around 1.3. Why is equity any alternative? That's for you.
Part of our very good net interest-bearing debt EBITDA is, as we said in the quarterly reporting, due to very high customer deposits for ramping up of strong projects going on. We always need to look at that and innovation. We are all looking into several sources of financing for this position.
Want to jump back to the employee question?
Yeah. There are around 200 people, and they're growing. It's sort of a what number to say? Mainly, all the people are in Sweden. The Nanjing facility is quite small in that sense.
Now serving a more limited portion of customers for the Chinese market. It is around 20 employees building product there. A very nice site. Our people visited it, and it seems like it will be a good fit for us also.
No, no, two and a half hours from our other sites. They're sort of two and a half hours from each other because nice distance in China.
What capabilities does DeltaNordic have that Kitron does not have? It's the very complicated, complex cabinet assembly, the system integration involved in building those very, very large products on the civilian side, on the mining side, in the industrial side in Europe, together with all of the types of different cabinets that are used in combat vehicles for both the naval part and the land-based part. Those are traditionally not products that Kitron has built. We've based our portfolio much more on electronics, whilst DeltaNordic has the capability and competence to build and understand and quote these difficult products that also contain, in many cases, high voltage and high amperage type of challenges where Kitron really we can't even quote the products. We don't have that experience and understanding how to do that.
This opens up a market for other types of combat vehicles where we have a lot of connections and already are discussing with those potential new customers. Not about DeltaNordic yet, but capability or opportunities for Kitron. I think that can you finally can you bridge the gap from 2025 and 2026 in Kitron in the update guidance, both in terms of growth and margins?
I think we are continuing on our growth journey within defense, and we also see pretty strong growth in actually within connectivity coming into 2026 where the other sectors are more stable, I would say. That is basically the comment on that at this point of time. We will be more specific, I think, in the capital markets in December on the build-up of the whole revenue part for Kitron. As you look at the numbers, we are planning to stay above 9% in 2026.
Why don't we just jump right over to the next question from Espen? How many employees are there in DeltaNordic and some discussions about management fees?
We talked about 200 people. I think no. As we said, we run a decentralized company. Management fee structure here, no. We want DeltaNordic to be run exactly as it is with the company management that they have today. I think what the point here is not removing things. It's adding things, right? It's basically bringing added capabilities that the company of a size of DeltaNordic will need once they grow when they do not have today. It has with IT, it has with other structures, and specifically a strong finance backbone, which they have in Kitron to help them grow and capabilities to support them in their growth.
The next question is, what's the estimated CapEx in DeltaNordic complete new capacity and facility? It's included in the outlook in the budget for next year.
Yes.
In terms of Kitron investment, I think it's fairly modest, actually.
Yeah.
I don't remember the exact numbers.
The added capacity when it comes to footprint, there's new leases, and they are within the cost levels that are in the treatment.
Martina asks, is it possible to get more info on the segment split for the outlook? Excluding the no.
I just told you, Martina.
Yeah. Mentioning some of the contracts are not in the backlog for DeltaNordic. How will those affect us mid-sales? What the timing is there? No, but the backlog is like Kitron. When we look at 2026 and we talk about the outlook for 2026, that means we do not have an order backlog for all of that. The same is the very similar case for DeltaNordic. What is actually on order? Because what is on order is what you are building now and probably for the next three to four to five months. You are starting that actual specialization into exactly which vehicle is it and how will it be equipped. Beyond that, there is a forecast and build plan on how many chassis of a certain version of the product you are going to build.
You have to have flexibility because you don't know exactly which order you're building vehicles in six to nine months' time. That's why the orders come, the actual purchase orders come in as we get closer to date of delivery.
For the other sectors, it's more in line with what we have in forecast and what will be converted into orders. It's in a similar manner to how Kitron operates, basically. I think that's one of the things we recognized when we started to look at DeltaNordic is that they have basically the same type of relationship with their biggest customer as we do with KONGSBERG. It's a very strong net. You share and you have material by early so that you have a good visibility on what's going to go on.
We have done a deep dive into exactly how projections and orders are created and when they come in and what the overarching outlook is for the next three years and how that is created. We had a really good update also with BAE yesterday also. We feel comfortable on the relationship. Or actually, they feel very comfortable with the relationship, which is important for us.
Margin guidance number three here, of course, right? There's always upside.
Margin guidance on the upper end.
Excluding DeltaNordic.
It's quite high.
Yes. That is because basically things come in quickly. We see that there are certain projects and things going on there that have upsides. If they materialize, they will bring very quick revenue. That means that the cost will be less changed from the inverted cost. That is why the upper end is quite high.
For the total for Kitron, you mean?
For Kitron, it's excluding DeltaNordic.
Yeah. But there are opportunities then that are not even included in that upper end, right? So there's upside, but we hesitate to bring everything into the upside also, into the outlook, until we have some more order confirmations to see what happens. Petter Kongslie, again, how many employees? We took that one. I think that's okay. Here's the follow-on question, right? To what capabilities does DeltaNordic have that we don't? It's similar to the new facility we're setting up in Arendal. Not really, right? Our sort of high-level assembly is more based on electronics, on pure PCBA builds, right? This adds capabilities. Like if you imagine all of the electrical systems and cabinets and control systems that you may have in a submarine, right? It's a low-volume build.
You're not building a lot of submarines a year, but everything there needs to be connected, not necessarily just by PCBAs or pure electronics, but connecting different systems together. That capability exists within DeltaNordic to understand and how to quote that and how to actually create better solutions for the customers. We design the product to make it more cost-effective or easier to produce and higher quality. Was Kitron the only potential buyer in the acquisition? I know that there were others also involved in the background, but we went in very fast with a strong offer and got exclusivity. We were able to proceed at really fast pace. There was no bid war at the end.
No.
How big is the largest customer's percentage of the turnover? It's around 45%-47%, right? The other defense customers aren't really that big yet. They're coming in in the next year or so. Erik, can you share some more information about 2022 to 2025 performance? The historical numbers are available to look at, right? But we're not looking back at something that was very small because now it's growing. That's why also it's interesting as an acquisition.
I think that's also what's interesting for us because we can add more into very interesting now because of defense, but our work is to strengthen the other part as well and to build that going forward. They've been around over the 400 mark for the last two, three, four years, basically.
The new question is, what about the depreciation profile? Same as we have or higher?
A little bit lower, I would say.
What does the earnout structure look like in terms of timing? I mean, if we get the closing done and the approval process from authorities done this year, right, we'll be closing either late this year or early next year. From that point, we'll take over. The earnout is over first 12 months of 2026 and first three months of 2027. Over a rolling 12-month period, we have to achieve a certain financial revenue top line. Either it will be achieved in 2026 or it'll be achieved second, third, fourth quarter, and first quarter in 2027, or it won't be achieved. That's basically what it looks like.
Won't be achieved.
I mean, there has to be some, that's why it's called an earnout. What kind of utilization are they operating in 2026? Is there room to continue growing on the footprint they have today? No, we're adding, there's a business plan for 2026, and we're executing on that business plan. It means a few expansions. They're building out a couple of thousand sq m in the factory in Ängsjönsvik. The factory outside of Stockholm in Kungsängen, they are moving into an unused segment of the facility that they're in. They're also expanding some 1,500-2,000 sq m, maybe. That gives them more, I mean, these are pretty large products that they build. The part that is more the surface mount or PCBA part, building electronics, is only done in Ängsjönsvik. It's only final assembly or high-level build in Kungsängen.
China.
China, yeah. Revenue plan until 2028, how concentrated is the revenue uplift across key customers? It's firm orders, not much is none. I mean, the firm order situation is you have a build plan exactly what you're going to be building probably for the next six months or so. That's firm orders. Other than that, there's forecasting to create possibility for material acquisition and those kind of things. I think there's more upside than there's downside in the numbers we've seen after our brief meeting with the customer yesterday. I think between China and defense, what does it look like? How much of the defense business is done in China? There's no defense business done in China.
Never defense business.
Not in Kitron and not in DeltaNordic. Now, the China side is for the civilian side, industrial and mining and such. We stated the 2026 guidance for the first time. We have to do that when we also go out with something like this. We have to give you an idea of what we think is going on. There will be a clearer update on the capital markets day on December 10th.
I'll just repeat that we are growing with defense around 30%, and we'll have a pretty strong growth in connectivity, and the other sectors are fairly stable.
Yeah. Olav Rødevand says, "Can you elaborate on potential synergies and breakdown between revenue and cost synergies?
In this case, when you're acquiring a smaller company where you have a management, you want to keep the management. In addition, they're having competencies that we don't have in Kitron. There is obviously no cost synergies. What we see is maybe cost avoidance synergies going forward because we will have them to grow and use our systems going forward. For the deal for us to calculate it, we have not increased any top line based on our acquisition, or we have not calculated into it any cost synergies or cost reductions.
How do we view additional production exposure to China? I think what was included here, it's a limited operation. It's a strong customer base with a strong relationship with those customers. I am not concerned about that.
That wouldn't matter.
Bjorn asked also about the percentage of customer. Who's the biggest customer of BAE Systems? Yes, correct. Represents 40% of DeltaNordic revenue. Yes, for this year, yes.
A little bit higher.
Yeah. A little bit higher. 47% is what we've said. So capabilities, Petter Kongslie again, let's see if they're coming out. Okay.
Switching over there, you're coming back to the one.
I know, but here, there's a new question in the bottom there. What's the revenue capacity in DeltaNordic with the new capacity? They have indeed more to reach 2028. That'll depend on how much more business and what type of business, right? We are flexible, if nothing else, at Kitron. We're fast and agile. If we need footprint, we can get footprint. We will get footprint because we're going to get the business, all those new opportunities. It's not an issue. It's not a huge cost thing, so.
You have to bear in mind now that for Delta, the capacity is mainly when you grow within the competencies that we do not have so much in Kitron. It is not machinery-based. It is people and footprint, basically. It is a lower investment level. It is easy to find facilities to expand.
There's not a lot of expensive automation.
There will be some.
Equipment.
Not nearly as much as we want.
Petter also asks us why the earnout is only based on revenues. That is a point of negotiation in the contract here, so. No further comment.
Sort of mentioned it. It's not much. It's a couple of million EUR for 2026.
Excellent work. May I ask whether your corporate teams are also following other companies that are being considered for acquisition? As I've stated earlier, we're working with a long-time advisor now for the past almost 18 months, right? Yes, we do have a substantial list of companies we've looked at, and we're continuing to look at a few of those companies. Want to close this transaction before we start moving on aggressively on something else. This has been a lot of work in these past couple of months. I see. I think we have a final and the final question here is also from Alps Tangri. Again, are we looking at further acquisitions in the next 12 months? Yes, we are. What do you expect the financial leverage to stand post the acquisition?
As we're saying, we're looking and tapping into different expectations here.
Possibilities.
Yeah, it's not defined yet entirely. We have ample room in whatever we do.
Yeah. I think that concludes the question part of this presentation. Any other questions or follow-ups, you're welcome to contact either Cathrin or myself, and we'll be happy to take your questions. If we do not see you before December, we'll see you probably on December 10th for our capital markets presentation. Thank you so much for attending, and see you later. Thanks.
Thank you.