Okay, it is 9:00. Welcome to AQ Group's Investor Presentation for the Third Quarter 2026. What you see on the picture is our newly acquired site in Cleveland, Ohio. It is Norlake, and we will talk more about it in the presentation. It is our beautiful new transformer manufacturing site in the U.S. So why to invest in AQ Group? As we see it, earnings per share CAGR of 14% over the past 10 years. We have made profit every quarter since the foundation in 1994. We have been exposed to industrial market segment with high underlying growth, such as electrification, where we include also data centers, defense, med tech. We have a long history of acquisitions. We buy two to four factories per year. This year, we have bought more than two factories. We have a strong balance sheet and a net cash position. Some quick facts.
We have about 8,000 employees. On a rolling 12 months basis, we have almost SEK 10 billion in turnover. We have seven business areas, 15+ market segments, and manufacturing in 17 countries, with 4,000 customers globally. We made profit, as I said, every quarter for 30 years, and the rest I have already mentioned. Now to the third quarter. Net sales increased by 21% to SEK 2.5 billion. Operating profit increased by 36% to SEK 259 million compared to the same quarter last year. The profit after financial items that we measure increased with 38%, and the profit margin before tax was 10.0%, which is in line with our target. Profit after tax amounted to SEK 205 million, and cash flow from operating activities was okay on SEK 269 million.
Earnings per share before dilution was SEK 2.23 compared to SEK 2.06 last quarter. Well, not last quarter, but the same quarter last year. For the first nine months, we have increased sales by 11% to SEK 7.5 billion. Operating profit increased with 18% to SEK 739 million, and after financial items, it increased to SEK 736 million. Profit margin before tax was 9.8%, and after tax, we had a profit of SEK 586 million. The cash flow from operating activities was decent on SEK 631 million. Earnings per share was SEK 6.39 compared to SEK 5.54 a year earlier. Our equity ratio was 68%, way above our target.
Highlights in the quarter. I am very proud that we have doubled the earnings per share since 2021 from SEK 4 to above SEK 8 actually, if you look at a rolling 12-month basis and adjust for the split one to five that we did a couple of years ago. We see high growth in the U.S. and China in inductive components and electrical automation, especially for data center and the power grid electrification. Our growth in data centers and defense continue to accelerate, and all our data center factories are on full throttle, especially the inductive components ones, but also in sheet metal fabrication. We believe we take market share from others, but that is nothing I can really prove.
Together with our customer, I am sure we are, but I am not sure if we take market share at our customers. Defense sales is also continued strong in Northern Europe, especially, which we include Sweden, Norway, and U.K. Then we have made a couple of acquisitions in the quarter. We bought Gumboda in Robertsfors to increase production capacity towards power grids and defense in Sweden. It is basically organic growth acquisition, you can say, because we buy a building and we get some employees so that we can fit more machines to accommodate our continued growth in that factory that we bought in 2024, which was AQ JIT Mech. This will be a bolt-on for JIT Mech.
I think the enterprise value for this acquisition was SEK 5 million , so it is not a huge acquisition, but it will help us to continue to grow. We also made a bigger acquisition where we bought the assets of Norlake in Cleveland, Ohio to double our production capacity of Made in America inductive components. We can say we have a factory in Virginia. I think turnover this year will be close to $50 million in that factory. It is basically full, so we had an option that we considered to extend that factory. We have already extended it a bit. We will probably extend it even more, but then one of our customers came to us and said, "We have this company that we buy inductive components from. They have a financial problem."
Basically, they had run out of cash. They stopped paying their employees. We came in, we restarted the factory with the former owners. We gave them a loan to get the employees back. We did a quick due diligence over the summer, and then we now made the acquisition in the third quarter. This adds a lot of capacity, so we get a lot of machines and other equipment that you need to make inductive components. Also you get skilled operators, which we need. We can say basically every quote we send out for inductive components in the U.S., we win. Meaning there is a big demand there.
We believe that we can make this factory great again by just filling it up with AQ customer orders. We can utilize our sales and the design team in Roanoke, in the U.S. as well to increase the growth in this company. It will take basically a little bit more than a year, I guess, before we see the volumes that we have indicated in the press release, which is like let us see how fast it goes. But we believe that we have at least equipment and buildings to accommodate $35 million in sales in the Norlake asset that we have bought. Some lowlights in the quarter. We are not happy with everything. We feel we need to improve both quality and productivity in our inductive components factory in India.
We have changed the leadership there now, and we believe it will get better in time. We have also some delays in certain defense projects due to delayed equipment. We are taking action there and I think we will be back on track by the end of this quarter four. We also have some backlog in data center deliveries that need to be recovered in Q4. Despite the organic growth was really impressive, I think in quarter three, we still have some more orders that we would have liked to ship out. This will need to be recovered in Q4 and we have a challenge there, but I think we will be able to do it. We have had some issues to get all the equipment in place in Finland.
It will be in place now in October and I think we will be able to go at full speed, in order to catch up this quite small delivery backlog, I would say. We have also low capacity utilization in Mexico and New York in our wire harness factories. I think New York is on the verge of becoming better. We have won some new orders there. Mexico also increasing a little bit, but we need to do more. We are not happy with the performance there. Then Time 24 that we bought in Q2. We think the output is okay, but not as we want. We have a backlog there, and we want to get back on track there because we see that these semiconductor equipment companies that they have as customers are growing very rapidly and we want to get back on track with the deliveries there.
We believe we can make more money in this company if we just improve. We have put in some new people in that team, but we need to do more there as well. On-time delivery needs to improve in several sites. We are down to 91% in the quarter. It's a little bit due to the high growth that we have but also, I think that we can do better and we should do better. We have work to do there, and as I said, we had some backlog issues in some sites that I already mentioned. We also want to do more acquisitions, of course. That was the lowlights. Earnings per share growth, we see it after a couple of years where it's been little bit flat. We see it start to grow again, which is really nice.
We have a target to double the earnings per share every five years. We have done it now from 2021 now to 2026, but we want to double it again now until 2031. Net sales in the quarter was pretty much in line with what we saw in Q2, but it's much higher than Q 3 2025. Normally, for AQ, since we have a big European footprint, there is a, what we call in Sweden, industrial holiday, where our customers and our factories close down, reducing the net sales. In this quarter, we have seen that our Chinese and American factories are running on full speed, which compensate for this industrial vacation in the European companies. It's really good to get. Hopefully, we can get a more balanced output over the full year now instead.
Organic growth in the quarter was 17%, roughly, and acquired growth around 2%. The acquired growth is below the target. We'll get into that later. We have some sales growth and investment activities ongoing. Inductive components for electrification, including data centers, grew 60% compared to the same quarter in 2025. It is a massive growth there. We are assisted by the acquisition of mdexx, which was a half-full factory. Now we are also buying Norlake to increase the capacity further to continue this fantastic momentum that we have in this area. We have also done very fun new prototypes for a new solid-state transformer for a data center application for a leading electrification customer. This product, our customer believes a lot in. They will start to sell it maybe 2027, 2028.
We don't know when the full volumes come, but if the projections are like they believe it is, then we get into a new really nice product, which uses more power electronics to do the switch from medium voltage to 800 volt DC inside the data center, which is really, I think, the technology going forward. We also see increased momentum in power grid projects in quarter three, but I think it will be even better in quarter four. To sum it up, all our business areas and market segments basically grew compared to the same quarter last year. But of course, the main growth is in data centers, power grid electrification, and defense. Another fun thing is that we have won a new wire harness contract and some sheet metal parts as well for a new EV truck customer in Europe.
It is not a substantial volume, but we are happy to see that we also growing in these business segments. The organic growth for the year is way above our target. On the other hand, we have been a little bit below in the start of the year, so for the full nine months we are in line with the target. I think I have commented already on what is growing, so we can stop it there. Regarding acquired growth then, we have acquired Time 24 in quarter two. The integration work is ongoing. We have recruited a new operations person from our sister company, AQ Rockford. We are recruiting a new finance person. We are adding management capabilities there to improve the performance. It is not too bad. We have done much worse turnarounds than Time 24. But we need to get up to speed with the deliveries.
That is our key, because then we will double the sales there and we will also start to make good money as well. Gumboda acquisition already mentioned, and Norlake I will get into on the next slide as well, so let's not mention it here. The integration and turnaround of mdexx I consider now complete, that we are in line with AQ margins and it is growing very rapidly. We are filling it up with new business and also increasing sales with the old customers. We're very happy with the team there. We can do even better and even more, but they have done an amazing job. It's fun to see that they are now into full swing. Some things more about Norlake. We acquired this company on the 21st of September. I told you a little bit about the story. We didn't pay so much.
This is not a share deal. We bought certain assets and including real estate as well in Cleveland. You can see on the pictures there. It's a normal dry-type transformer factory. Can do low voltage to medium voltage products. All the equipment is in place. It's basically just to start to fill it up with the existing customers that have a big demand, but also to get enough people there to be able to produce that demand. This a typical AQ opportunity there, where we can go in with capital and knowledge and expertise and really make this company beautiful again. It's a really fun opportunity for our Managing Director in the U.S., Dan Day, who is an excellent person and has done fantastically well with our transformer solution site in Virginia. Now he gets some more capacities to sell. He's super excited, I can say.
Then we can also utilize our design and sales team in Roanoke and also the experience we have from our fantastic team in Virginia. They are key in making Norlake successful. It will be fun to see these two now sisters to grow up together and become even better. It is very similar to the opportunity we had with mdexx, where they have very nice customers in Norlake. They were under-capitalized and maybe we saw a lot of improvements that could be done. We will try to do the same. Let's see if we can be successful also this time. As a comment also, this acquisition had no real impact in Q3 results. It is in the balance sheet, but there was basically no external sales from this company after the acquisition on September 21.
Acquired growth is still a little bit low, even though we have bought some companies. Of course, Norlake figures does not come in here. I hope that we can get maybe up to 5% in quarter four, but let's see if we can make it happen. We have also lost some opportunities in the quarter. It is always hard to agree. They should like us, we should like them. Prices should match. We maybe lost some opportunities in the quarter also, but we have a pipeline. We continue to work and we will continue to do acquisition also next year. I am not too worried about that. We can find good investment opportunities in the market, that is for sure. Regarding margin development, we have now an EBIT margin in quarter three of 10%, which is really nice. It is in line with our target.
I think our cost control remain very good. We have good sales and capacity utilization in U.S. and China who compensate for the normal downs, as I said, in Europe in the third quarter. We have also several factories which have a potential for improvement, which you saw on the low light slide that I presented earlier. Also remember this journey that we are on to deliver more technology content into our customer. More difficult parts should bring more and better margins, and I think we are seeing it and we will hopefully continue to see it going forward. Regarding inventory value and turnover development, this is calculated on a rolling 12-month backwards, and when we grow very rapidly, normally this goes down. I am not too disappointed with 2.9 actually.
The cash flow in the quarter is quite good despite the fact that we are growing at a really rapid pace. I think we have plenty of cash to follow our customers and to continue to grow with them and invest in equipment, machines, people, and new companies as well. Cash flow and net debt, we do not have a debt, so we have a net cash position, and we do not need to have that. We just need to find more opportunities to invest in. I think we have a good organic growth momentum now where we will continue to invest in our current operations, which is costing a little bit money in capital expenditure. I think we have done most of it, but we will do a bit more, of course, but than in working capital, it really sucks cash from us.
It costs basically the same as when we do acquisitions. We will also try to see if we can make some more acquisitions, maybe end of this year or beginning of next year. Again, then why to invest in AQ Group and went through it. I think most of you know us, so I will not go through it again. Then I leave for Q&A. Please raise your hand and then we will try to. We start with [Johnny] then, and if you unmute yourself, maybe if you can.
Yes. Thank you. Good morning, James and Christina. I hope you can hear me. Just want to start a little bit with the very strong organic growth here, which is obviously very good to see. I just want to break down a little bit further and starting with data center. I know you talked about this a lot, but could you say something how much data center was of the quarter, roughly, would you say?
We don't go out with that number. I think I said if you look at what I said on the sales growth slide, I said we grew 60% in inductive components year-over-year. That is data center growth, I can say. But then, of course, we don't only do data center in that, but we are growing there and in power grids, but the majority of that is data center.
Okay. Yeah. That's good. Just to, I know you also talked about this, but we talked about all the stuff that is growing. That sounds very promising. We just want to clarify a little bit, are there any effect of positive timing effect that could sort of benefit this? Or is this an accurate picture of what you see of assess this underlying demand for you right now, would you say? Is there any sort of material pricing effect in this quarter?
It's maybe a small pricing effect. I wouldn't say it's in line with inflation, I would say. I wouldn't say that it's pricing effect, and it is a true picture, I would say. I think we hope that we can deliver and continue to deliver like this. We see this is the true demand that we see now.
Sounds promising. Do you expect more pricing effects going forward the coming quarters, or is this sort of the?
No, I don't think so. I think we will be pretty much in line with inflation, I would assume.
Okay. Just one final one from my side, and that is on the component side. I feel like you're still, you can correct me if I'm wrong, but I feel like you're still quite confident in your supply chain in the near term. Is that correct?
Yes.
Yes, okay, that's good. What do you hear from your customers? Do they see any sort of bottlenecks in their end markets that could impact deliveries, or is it something that we should think about?
Not that I have heard so far this quarter, so we would have to get back on that. But we don't really see any of our customers slowing down because of lack of components at the moment anyway.
Okay. That's good. Thank you, James and Christina, and have a great day.
Thank you so much, Johnny. Maybe we take Albin Nordmark. If you unmute.
Yes. Thank you, and good morning, Christina and James. Very good reports, of course, but if we try to find some negatives here, gross margin, looking at that 50%, down 3 percentage points here year-over-year and also sequentially. Can you try to help us here break it down, and is this anything we should think about? Any color there would be helpful.
I would say it's mostly product mix in this case. When we sell more transformers, there is more material in the delivery. I would say that is the main reason. It is copper, aluminum, and electrical steel. They are heavy, bulky products, so the material share is higher. I would say it's product mix related mainly.
Yeah, that makes sense. Thanks. Also, if we talk about Norlake, you were talking about this, but you win every time you send out now in the U.S. for inductive components. How come that Norlake had such a bad utilization and performance? What was the main reason behind that?
They had run out of money. I think it's maybe a long story, but they delivered a lot of transformers in inductor to the oil and gas industry. I do not remember which year it was, but it was several years ago then the oil prices dipped, and they stopped delivery to that. They had some customer that went bankrupt, and then the COVID came in the U.S. as well, impacted them negatively. Then they had the other, when the oil and gas was really high, the deliveries that they had invested quite a lot in buildings and new capacity. I would say they have tried their best, but they have not been successful.
It is hard when you are a single company and you run out of cash. Do you take on maybe debt that you shouldn't, you sell your accounts receivables and so on, and then you can get into a bad spiral, and that's really what happened here. I have nothing but respect for the previous owners. They do really nice products, I must say. But they had, it's hard to say bad luck, but they had some market activity against them and then they failed to recuperate from that. Then we can come in, of course, with our strong balance sheet and support them with that, but also with new sales resources and customers that they maybe didn't have as well. I think it will be a good combination.
Okay, thanks and congrats on a great quarter. That's all for me. Thanks.
Thanks, Albin. Okay, should we take Marcus? You are unmuted. Thank you.
Can you hear me?
Yeah.
Very good. Looking sharp, James. I really like the slides. But coming back to the organic growth question that we had, 18% very strong. Can you maybe help us understand the split between data centers, defense, power grid?
We do not really do that. What we say in the report is that all our market segments are growing and the biggest growers are data centers, defense, and power grids. But maybe if I give a little bit more flavor, then it is data centers that is growing absolutely the fastest for us. And it is not one customer, it is several customers that we have in this area.
Very good. Maybe if you stick to that data center growth, could you share how much of the sequential UPS growth is driving this? What capacity now for the UPS?
We have said before that we are aiming to build, that we have a capacity of 100 per month, I think in the quarter we delivered 150.
Very good. Looking into 2027, do you expect that to ramp up?
Yes.
In the same sort of speed that we've seen?
I believe so, but I cannot guarantee anything. I believe that this will continue to increase. It's a fantastic product that our customer have developed and we believe that they will be successful in selling it and then we will get more orders.
Okay. Thank you very much. Those were my questions.
Thank you, Marcus. Good questions. Maybe if we take Anton then.
Yes. Hi, and good morning. Just some quick follow-ups here. You mentioned that you had some problems to get out all of the orders in defense and data centers. Can you elaborate a bit more on this, try to quantify the magnitude? Because it seems like you were quite confident that this was pushed into Q4.
Yeah. Of course I can, but I don't want to because it's some volume. It's not a huge amount. On the other hand, you can see in the report also our delivery performance going down, meaning that we have more delays than we would like. There is some backlog that we would have liked to deliver out this quarter, but now we will deliver out, or maybe backlog is already delivered out, but now it will be delivered out in quarter four instead. As I said, I think easiest is to say that we will continue to grow. I think that is the easiest way to say it, and we will try to get back on track with the deliveries.
Yeah. Okay, perfect. You commented on this before as well, that you see quite solid momentum outside of the defense data center and power grid area. Any specific end market that stands out a bit there that's been weaker in recent quarters and now picking up?
No, I think except the three that we have mentioned, it is single-digit growth numbers across the board, and it is varying a little bit between different market segment, but I think it's solid growth from our customers. They show that they are doing well. More than that I don't like to get into really. But it is a good, nice growth and it's different a little bit from the previous quarter this year where we have been a little bit more certain market segment that have been growing. Now it seems more or less everything is growing.
Yeah. Okay. That's very clear. I think that was all for me. Thanks a lot.
Thanks, Anton. Do we have any more question? Then please raise your hand. I cannot see any. Then I think we can close the meeting there. I think it's a solid quarter from us. We will continue to grow in this momentum and we will do everything we can to continue to increase our output. Thank you so much for listening, and I wish you all have a great day in the stock market.