Good morning, and welcome to NORBIT's third quarter 2026 presentation. Thank you for investing the time in looking into our figures today. Q3 is normally a quarter which has some effects of holiday season, et cetera. Q3 2026 ended as a record of Q3 quarters at NOK 677 million. This is an increase of 34% from Q3 2025. The EBIT ended at NOK 116 million, which is 53% increase from the year before. This represents an EBIT margin of 17%. Yesterday, in the board meeting, the board decided to resolve an additional dividend of NOK 2 per share based on the power they were given in the annual shareholders meeting in May. Looking for year-to-date accumulated figures for the first nine months, as you see, we have continued to take over steps on the ladder, step by step, to continue to grow.
Year-to-date revenues ended at NOK 2.24 billion, which is 31% growth from 2025. As you can see also, this is supported by growth in all three business segments. The EBIT for the period ended at NOK 477 million, representing an EBIT margin of 21%. Looking a little bit into the segments, the Oceans segment delivered NOK 261 million in revenues. This is 35% increase from Q3 2025. If you look in a constant currency, you see 27% organic growth. It is strong growth underlying in the sonar sales, and the EBIT margin ended at 29% compared to the 21% which was in Q3 2025. We started the quarter by closing the acquisition of Water Linked.
We received some, this is written in our report announced today, we received some orders, and we are in dialogue on additional orders for underwater surveillance sonars yielding USD 8.5 million for delivery in 2027. Looking a little bit into the split, as you can see here, the revenues from WINGHEAD sonars is very much at par from what it was the first nine months in 2025. It is growth in other sonars, excluding WINGHEAD. It is also some growth on other parts, and this is, of course, then also because we have three months of revenues from Water Linked included, which is in the other segment. As mentioned, we are very happy. We have had Water Linked as part of the NORBIT family now for three months.
It is already very good and close cooperation, and we see this as a very good addition to our product portfolio, especially Doppler velocity loggers suitable for being integrated on underwater vehicles of any kind. Looking into Connectivity, as expected, more or less, revenues of NOK 148 million, which is an increase of 38% from Q3 2025. This growth is very much driven by the increase in the sales, delivery of GNSS On-Board Units or satellite-based On-Board Units. As we announced, we, in the start of the quarter, had a period where we were working to do optimization on our robotic lines for this, so that it was a break in the production, but very much on our expectation. We have announced a contract for additional volumes yielding NOK 325 million for GNSS On-Board Units to be delivered going forward.
And as you see for the accumulated revenues for the year-to-date, the first nine months, in Connectivity, this is NOK 610 million, 26%, comparing to the NOK 423 million the year before, so it is an increase of 44%. EBIT margin, 24% compared to the 27% in the first nine months the year before. As mentioned, this new contract, NOK 325 million to be delivered to Toll4Europe. Some is expected to start end of this quarter, but the majority of this is to be delivered in 2027. In the Product Innovation and Realization segment, we have reported revenues of NOK 286 million, which is an increase of 28% compared to the corresponding period last year. EBIT margin, 16%. Worth mentioning, we have announced a new order to an undisclosed European client in the defense and security sector for NOK 185 million. We have, during the quarter, obtained AQAP 2110 certification.
This is a NATO standard where in Norway, it is FMA approving sites according to the standard. So it means that we are now approved for electronic and manufacturing according to this NATO standard, and it applies for all NATO countries. For the first nine months, we have 46%, and as you see, the defense and security part of that is the growth driver. It is fair to say that some of the other segments has, or the sub-markets has been given some, we have talked about it before, like on some of the automotive part, which we have gradually reduced, freeing up capacity to take on the opportunities and continue to scale and grow in the defense and security sector.
I think it is also important for us to see that the investments done, we have spoken about this new machinery which has been placed in the factories and also the extension of the factories we have done, has shown to be good investments as this revenue growth has continued. This contract I mentioned, the NOK 185 million to be the majority of that, to be delivered early next year. That follows previous contracts which has been below the threshold for announcement for approximately NOK 100 million also to be delivered in the same quarter. With that, I leave the floor to Per Kristian to give us some insight in the group financials.
Thank you, Per Jørgen. I will spend some minutes walking you through the highlights of the financial quarter. The third quarter, we reported continued strong growth in revenues and improved profitability. To summarize, revenues were up 28% organically from the corresponding period of 2025, despite continued foreign exchange headwinds. The EBIT margin came in at 17%, up from 15% in the same period of 2025. Improved results and enhanced working capital efficiency led to higher cash flows year-over-year, reported at 60% conversion in the quarter despite high cash taxes. So far this year, our cash flow conversion has been 94%. The pre-tax return on capital employed was 24% in the quarter and 35% so far this year. Revenues came in at NOK 677 million for the quarter, an increase of 34% from the corresponding quarter of 2025.
This is 28% adjusted for the Water Linked acquisition, and in constant currency, organic revenue growth was 33%. Gross margin was 56%, largely in line with the level reported in the same quarter of 2025. Payroll expenses were up NOK 25.1 million, of which Water Linked explained NOK 9.4 million, while the remainder is largely related to a strengthening of organization and wage inflation. Other operating expenses were NOK 58.8 million, and NOK 53.2 million if you adjust for the transaction costs related to the Water Linked acquisition. The increase from the same quarter of last year was largely driven by the inclusion of Water Linked, which added NOK 4.8 million in other operating expenses. Depreciation and amortization expenses were NOK 53.6 million, of which NOK 5.6 million relates to amortization of excess values in connection with past acquisitions. Operating profit was NOK 115.5 million, translating into a margin of 17%.
Net income for the period was NOK 71.8 million, translating into an earnings per share of NOK 1.12 compared to NOK 0.81 in the third quarter of 2025. In the third quarter, Oceans delivered 35% growth from the third quarter of 2025, 19% adjusted for Water Linked. Oceans revenues are predominantly dollar and euro-based, and organic revenue growth in constant currency was 27% in the quarter. Strong demand for sonars was the primary driver behind the organic growth. So far this year, revenues are up 1% adjusted for Water Linked and 7% in constant currency. As Per Jørgen mentioned, the rental market has continued to remain weak throughout 2026, impacting growth negatively for the first nine months of the year. Gross margin for the quarter was 74%, an increase from 71% in the third quarter of 2025, largely related to product mix.
Payroll expenses were up NOK 10.5 million, and as I explained, Water Linked added NOK 9.4 million of that number. Other operating expenses, NOK 6.7 million, where Water Linked added NOK 4.8 million. The EBIT for the quarter ended at NOK 74.3 million, giving a margin of 29%. Connectivity reported a 38% increase in revenues and 46% if you adjust for currency fluctuations. The increase was explained by deliveries of On-Board Units, as well as satellite-based tolling units to Toll4Europe. Gross margin was 63% compared to 65% in the corresponding quarter of 2025, with the decline largely being explained by subscription e-toll representing a lower share of revenues in the quarter. Payroll expenses increased NOK 3.7 million, while other operating expenses rose NOK 9.1 million, driven by higher consultants' expenses and allocated costs. The EBIT for the quarter was NOK 22.4 million, representing a margin of 15%.
PIR posted 28% revenue growth, driven by defense and security sector, while the gross margin fell to 38% from 42% in the corresponding quarter of 2025, again largely related to product mix. Payroll expenses rose NOK 3 million, primarily due to higher activity as well as wage inflation, while operating expenses rose NOK 2.6 million. The EBIT for the PIR segment ended at NOK 47.1 million in the quarter, representing a margin of 16%. Next, the balance sheet and our financial position. Property, plant, and equipment, including rights of use assets, increased NOK 31.2 million. This was primarily driven by inclusion of Water Linked, which added NOK 29.5 million to the total. Intangible assets rose NOK 59.3 million, explained by recognition of NOK 61.7 million in intangible assets related to Water Linked. Inventories increased NOK 35.8 million, NOK 19.5 million net of Water Linked, while trade receivables decreased NOK 17.8 million, explained by the sequential revenue decline.
Trade payables were down NOK 29.4 million, while other current liabilities rose nearly NOK 60 million, primarily explained by prepayments from customers. Net interest-bearing debt, excluding lease liabilities, stood at NOK 637.8 million at the end of September, an increase from NOK 340 million at the end of June, primarily explained by debt financing to acquire Water Linked. This was partly offset by cash flow generation. Our equity ratio was 39% at quarter end, down from 43% at the end of June. on 1st of July, as Per Jørgen mentioned, we completed the acquisition of Water Linked. As part of that acquisition, we entered into a new NOK 350 million term loan to finance that transaction. At the end of the quarter, our net interest-bearing debt to EBITDA ratio stood at one time. This is up from 0.7x at the end of June due to the above-mentioned financing of Water Linked.
Our available liquidity, measured in cash and undrawn committed credit facilities, stood at NOK 825 million. Our financial position enables flexibility and creates a very strong platform to deliver on our capital allocation framework, including acquisitions and distributing dividends, as exemplified today by distributing an additional NOK 2 per share dividend for the fiscal year 2025, bringing the total dividend for the year 2025 to NOK 7 per share. Last slide on the presentation on the financials. Cash flow from operations was NOK 101.1 million, explained by an EBITDA of NOK 169.2 million. This was partly offset by cash taxes of NOK 60.9 million and a net increase of NOK 7.2 million in the working capital. We invested NOK 373.8 million in the quarter, of which net cash outflow related to the Water Linked acquisition was NOK 328.5 million. R&D investments were NOK 30.1 million, while investments in machinery and equipment were NOK 15.7 million.
The investment level for the full year is expected to be around NOK 130-140 million in R&D and NOK 110 million in fixed assets, both numbers including Water Linked. Cash inflow from financing activities was NOK 324.2 million in the quarter. This was primarily explained by the new NOK 350 million term loan, partly offset by NOK 18.8 million in interest paid and NOK 11.8 million in lease repayments. I will then leave the floor back to Per Jørgen again for the outlook section.
The outlook is, as we see today, that we expect a full year revenue in the range between NOK 3 billion and NOK 3.1 billion. This includes Water Linked contribution for second half of 2026. We expect the EBIT margin to end between 21% and 22%. This also includes Water Linked. We continue to explore and assess potential for value accretive acquisitions to add on to this organic growth ambitions. More short term, the fourth quarter is typically the busiest, especially in Oceans, where we see some end-of-year spendings or, as some would call it, the budget flushing effects at some clients. It's somewhat difficult to really forecast the lead time. Normally, in this segment, from you order a sonar until we deliver could be four to six weeks.
Preparing for this end-of-year effects, we kind of put ourself in a position where we are able to take on opportunities as they realize, so it could then be much shorter, especially in December. We expect to deliver revenues in excess of NOK 300 million in Oceans in Q4. For Connectivity, where we will have a more full run also on the GNSS On-Board Unit line, since we did the improvements on the line in Q3, Q4 is more full steam ahead. We expect to have deliveries in the range of NOK 250 million-NOK 270 million. In PIR, or Product Innovation and Realization, it is a strong demand. We do have some supply chain constraint, which with some lead times that is increasing from also somewhat elevated levels. It is also a little bit that it is new kind of materials that could show increased lead time.
Given what we see, we expect the fourth quarter for PIR to be in the same range as for Connectivity, so NOK 250 million-NOK 270 million. That ends the presentation of the numbers, but we are happy to take on some questions if Per Kristian could have a look if there is already some questions on the
Yes, we have a fair few questions. Let us maybe start with a question on PIR. What part of the defense sector do you have exposure against within the PIR segment?
Yeah, I think we have not disclosed that, and I think, as the world is, I think it has also like a matter of security to not disclose in detail what you are doing. So, but yeah. I think it is based on we are doing electronics in these factories. So, yeah.
Mm-hmm. What enables NORBIT to execute its vertically integrated business model more successfully than competitors, and why is this model difficult for others to replicate?
I have very little experience from others, so I've been working with NORBIT for 31 years, but I think it might be that being vertically integrated adds complexity, but also it simplifies a lot. I think the advantage we've seen, and I guess it could be an advantage for more companies, is that if you have engineers working in R&D, sitting on the same table with the same logo on the chest as the production process engineers, they can agree to make a solution which is the best both for the client, but also commercially, instead of wrestling in an interface in between each other. That's the concept we believe in.
Mm-hmm. Given NORBIT's established track record in the defense industry, what additional opportunities does the AQAP certification unlock that were previously inaccessible?
I think it's fair to say that this is relevant, that it could unlock new opportunities. I think that in combination also with our increased scale, also I think what we've done, demonstrating the ability to scale. I mean, we have this slogan now as a NORBIT, "Your scaling partner when made in Europe matters." And I think it really matters for more and more companies, and it could then be easier way to take on, utilize NORBIT as a scaling partner when we also have this certification in place.
Okay. Question on Oceans. How should we assess underlying demand in Oceans in Q4? Q4 guidance of more than NOK 300 million, including Water Linked, implies nearly 35% organic constant currency growth, assuming NOK 30 million in Q4 revenue from Water Linked. Given the December heavy seasonality, how confident are you in achieving this target, and which end customer applications are driving growth? Well, I think with respect to the guidance, we have said now that we aim to deliver more than NOK 300 million. When we present that guidance, we are also confident on that guidance. And with respect to end customer applications, I think it is fair to say that we see a broad demand from different applications. It is not necessarily one specific part of the market that is driving the growth in Oceans. It is relatively broad.
What we have been quite specific on in our quarterly reports this year is that one part of the market has remained weak, and that is the rental market. If you adjust for foreign currency and the rental market effects, then you will see that the other parts of the market in Oceans is actually driving a fair level of growth. Again, that growth is relatively broad across many different customers and many different applications. Given current supply chain tightness, can you give some color on your component situation and if there is any risk related to delivering on the announced Q1 2027 contracts in PIR? With the new PIR certification, are you able to pursue new opportunities, clients that were previously out of reach? If so, what type of clients and which type of products?
Yeah. If we look into the supply chain part, we have invested a lot in building a different kind of supply chain organization than we had in the past. It is now much more analytic approach also to the supply chain. I think we also try to apply new tools to be able to monitor. We interact very closely with suppliers and trying to foresee if there could be some bottlenecks in the supply chain prior to that arising. It is a risk. We work hard every day to manage that risk. We have been in periods before where it has been very demanding supply chain. I think we have managed fairly well, and I hope that will be the same. That is really the focus.
I think when it comes to the other part of the question with this certification, I think that was addressed already in a previous question.
Mm-hmm. What is driving growth in the other segment in Connectivity?
In Connectivity, what is really the driver of growth as it is shown now is the step up driven by the GNSS On-Board Unit. This also shows NORBIT as a player that could do more, bringing us relevant to new clients where it is possible to do more. Think we, in our 2030 ambition plan, we have been very accurate about, or not very accurate, but we have said that growing until 2030 also has a strategic direction where we would like to broaden product offering by going beyond traffic. Still, we expect a lot of good opportunities also inside the traffic.
Mm-hmm. And with respect to the others sub-segment in Connectivity, that is where you see the products which is not related to tolling.
Exactly.
Mm-hmm. A question on Water Linked. Should we assume Water Linked has a similar seasonal revenue pattern to the rest of the Oceans business? Would you like to answer that?
I think it's not necessarily so.
I think a lot of the clients we have in Water Linked is also OEM based. It's a lot driven clients working on underwater vehicles for navigation purposes.
Civil and defense-related players, and that doesn't show the same seasonality.
Mm-hmm. Good. I think those were the questions we had from the web this time.
Okay. Mm-hmm.
Thank you all.
Thank you.