The conference is now being recorded. Welcome to the CTT Systems Q3 2022 presentation. Afterwards, there'll be a question and answer session. Today, I'm pleased to present CEO Henrik Höjer and CFO Markus Berg. Please begin your meeting.
Thank you, and good morning, and welcome everyone to CTT Earnings Call Third Quarter 2022. Next slide. I'm Henrik Höjer, I'm CEO of CTT, and I'm here together with our CFO, Markus Berg. We will present the results of the third quarter. Let's go directly into the report. Next slide, number three, please. The business highlights of the third quarter was that the aftermarket continued to grow more than we expected by increasing 40% quarter-over-quarter to an all-time high. We are also very pleased that we see that Boeing resumed the deliveries of the 787s in August. This means that Boeing started to deliver the newly produced aircraft as well as the 120 ready-built aircraft.
CTT also received private jet orders for one VIP BBJ MAX aircraft, and as previously announced, we received our first kit order for the ACJ 220 Next slide, number four, please. Looking at our financial numbers, the third quarter net sales increased for the sixth consecutive quarter to SEK 65 million, beating our forecasted range, boosted by a strong currency tailwind, leading to a profit margin all-time high. EBIT increased to SEK 33 million, and we reported an EBIT margin of 51%. Earnings per share increased to SEK 1.90, and we had a strong operating cash flow amounting to SEK 31 million. In the third quarter, we had the highest EBIT margin in CTT history, but this can be derived mainly to two things, currency effects and an extraordinary sales mix.
CTT has all its revenues in U.S. dollars, and we benefited from a Euro-U.S. dollar versus Swedish krona at a record high. Further, in the third quarter, our aftermarket accounted for 86% of the net sales. Currency and sales mix are two extraordinary factors that in this quarter coupled and drove our profit margin to record highs. Next slide, number five, please. If comparing to the same quarter last year, net sales increased SEK 25 million, driven by a SEK 28 million increase in the aftermarket revenues, partly offset by weaker sales in OEM and retrofit. We also saw an increase in private jet sales with SEK 3 million. If looking at the sales mix, we see the already mentioned dominance on the aftermarket activities. Next slide, number six.
We had a strong order intake in the quarter of SEK 99 million, driven by a recovery and growth of the aftermarket. As I previously said in the business highlights, we won two new private jet orders during the quarter to be delivered during the first quarter in 2023. We ended the third quarter with order backlog of SEK 94 million, and that is the highest since 2019. I now hand over to Markus on the next slide, number seven.
Thank you, Henrik. EBIT in the third quarter was strong and amounted to SEK 33 million, an increase from SEK 12 million in the third quarter last year. The main reason is business-driven, with SEK 12 million from higher sales volume and SEK 4 million from mix and price, primarily from higher aftermarket share. CTT is profiting a lot from stronger U.S. dollar compared to SEK, with approximately SEK 9 million. Higher costs due to higher sales and the better EBIT increases allocation to variable remuneration to our employees. Let's move along to the next slide, number eight. Cash flow. Operating cash flow amounted to SEK 31 million, driven by improved financial performance, EBITDA. Positive working capital change due to accounts receivable, accounts payable, but partly offset by inventory increases. Given this, cash and bank amounted to SEK 44 million in the end of the third quarter.
Let's go on to the next slide, number nine. Net debt amounting to SEK 5 million compared to SEK 39 million in the third quarter last year, back to early 2020 levels, trending below zero. In addition, CTT has SEK 49 million in available credit facilities. Solidity at 71% compared 65% in the third quarter last year. All in all, CTT has a strong financial position. Let's go to the next slide, number 10, and then directly move to the accumulated numbers, January to September. Accumulated net sales amounted to SEK 173 million, an increase of 58% from SEK 109 million last year. Adjusted for a currency effect, an increase of 37%, mainly driven by the recovering and growing aftermarket. January to September, EBIT increased to SEK 71 million compared to SEK 19 million last year.
Earnings per share increased to SEK 3.87 from SEK 0.79 last year. Let's continue to the next slide, number 12. Accumulating operating cash flow amounted to SEK 43 million compared to SEK 10 million last year, driven by improved financial performance, but partly offset by negative working capital. Increased inventory and accounts receivable from higher sales affecting working capital negatively. During the year, we have reduced the net debt with repayment of U.S. loan of SEK 33 million in the first quarter. In the second quarter, we have paid a dividend of SEK 10 million to our shareholders. Let's go on to the next slide, number 13. We now move over to rolling four quarters and the next slide, number 14. As mentioned before, OEM sales is late in recovery. Private jet looks promising going forward, and the aftermarket is driving the growth.
In number, net sales of SEK 250 million compared to SEK 144 million, up 49% in the period. Operating profit increased more than 300% to SEK 79 million compared to SEK 18 million. EBIT margin of 37%, up from 13%. Earnings per share, SEK 4.22 compared to SEK 0.94, an increase of 350%. A strong operating cash flow of SEK 64 million, improved from SEK 9 million in the last period. Next slide, number 15. I now hand back to Henrik to give you the outlook. Next slide, number 16, please.
Thank you, Markus. It's been a few interesting weeks watching our industry reporting about the strong demand for travel and that revenues and profit levels exceed the predictions from many of the major airlines. These opportunities must be counterbalanced by a risk for recession, driven by higher interest rates and lower consumer spending that likely will have a negative effect on our business environment. We are prepared to adapt applying the flexibility we have in our different segments and put regional differences into play. In general, we calculate with an increased risk of some retrofit projects where a decision can be pushed forward in time or even project can be canceled. On the other hand, we still believe in the recovery of our OEM business starting next year. We are also confident that our project prospects in the private jet segment can endure a normal recession.
Finally, we do not foresee any major impact on the aftermarket. Next slide, number 17. Let's go into the forecast for the fourth quarter. Net sales are forecast to be in the range of SEK 65 million-SEK 70 million, pointing to SEK 238 million-SEK 243 million for the fiscal year of 2022, compared to SEK 150 million in 2021. I calculate with heavier revenues from private jet projects compared to the third quarter, partly offset by the consolidation of our aftermarket to balance underlying growth and a strong inventory effect in Q3. Next slide, number 18. The aftermarket in the third quarter was exceptionally strong, explained by large demand when distributors placed orders to restore inventory to support higher fleet utilization.
The third quarter will clearly be a tough comparable quarter for some upcoming quarters, as it included unusual large spare orders. In the graph, we also see that on a rolling four quarters comparison, our aftermarket sales are above the 2019 numbers. Looking further ahead, we still have some pandemic recovery potential remaining, and this is mainly due to Boeing 787 is back to delivery mode, and the 120 ready-built aircraft is also being delivered, representing a 10% population growth for CTT. We also see some potential in Asia and Pacific due to the underutilized population right now. This rebound effect will, however, gradually fade away, and aftermarket growth will then track the increase in the installed base. Let's go to the next slide, number 19.
Our OEM market is still at a record low, but CTT is in a strong position when the recovery starts next year. We are thrilled that Boeing finally resumed deliveries of the 787. The program is currently producing at a very low rate, one to two aircraft per month, but will short term gradually return to five aircraft a month. Airbus is currently targeting A350 build rate to increase from five to six aircraft a month in 2023. The first Boeing 777X airplane is expected to be delivered in 2025, and we foresee a gradual ramp up starting in 2024. I picked this picture to show you that for the first time, Lufthansa pilots can benefit from better climate in cockpit. In the background, you can see the first 787 to Lufthansa with humidification in both flight deck and crew rest.
We're also very pleased that Airbus confirmed that an undisclosed airlines has selected humidification for A350, including first and business class, totaling six humidifiers per aircraft. Let's go to the next slide, number 20. The anti-condensation retrofit business is struggling. In fact, 2022 will be the first year in more than 20 years with no Zonal Drying retrofit deliveries. We still do not have any retrofit orders, but outlook is not as bad as it seems. I reiterate that we have several sales prospects, both from existing customers such as Jet2 and Transavia, and new airlines, mainly in Northern Europe. There is a risk that some retrofit prospects will be pushed forward in time due to the recession. Even so, this is an area where we expect a lot more out of our performance.
I'm convinced that we, as a first step, shall return to 30 to 50 aircraft per year. If we can convince some of our larger prospects, we should be able, in a few years' time, to establish even on a higher level. Sustainability is the key driver, and airlines can save 20% of fuel and emissions when introducing Airbus A320neo family and Boeing 737 MAX. Sustainability is a never-ending game, and after taking the big reductions, the race continues, and every saving counts also on their new aircraft. This is where CTT comes in with our anti-condensation system. On top of contributing to sustainability, the return on investment is very good with today's fuel prices and emission right prices. We will continue our efforts to fight our way back into this market. Next slide, number 22. It's actually 21. Let's look at 21.
The cabin humidification retrofit opportunity is an emerging opportunity. It has been so for years. CTT experienced strong interest in 2019, but the pandemic stopped all projects. As intercontinental travel now starts to come back to normal levels and airlines start to generate profits, we notice that projects to upgrade cabins has restarted. We see that there is a growing airline interest in cabin air quality and humidity for passengers and the crew wellness. The benefit of humidified cabin versus cost of fitting an aircraft with our system is compelling. I believe that retrofit projects for an upgraded business class probably has a good chance to survive a normal recession. I'm convinced that restoring humidity to wellness levels is more appealing than ever in a post-pandemic environment.
Together with our partner, Collins Aerospace, we have renewed and strengthened our efforts. In my book, we have the pieces in place to start delivering some results. Next slide, number 22, please. Private jet. We have, together with Airbus Corporate Jets, optimized the humidification system for the ACJ320 VIP family. This is now promoted and sold by Airbus. A bolt-on kit delivery is more scalable compared to VIP projects. ACJ has a solid business plan, and we foresee that business shall generate solid revenues and profit many years ahead. We believe that this concept also can be transferred to Boeing and their BBJ MAX. Next slide, number 24. Our second airborne partnership is for the ACJ220 business jet. The first order was received in July, and the aircraft will enter into service in 2023 after the installation of our bolt-on kit in the completion center.
The development, production, and installation is in full speed at all involved partners. Next slide, 25. The large cabin business jet market represent a huge growth opportunity. With good references from the VIP market and the cooperation with ACJ on the 220, we have put ourselves in a position to successfully migrate into large cabin business jet market. The large cabin long-range business jet market consists of 50 to 100 new aircraft per year, which would mean approximately SEK 30 million per year to CTT. Jets are equipped for best comfort, and the humidification system is required for a matching climate on board. The first humidification system fitted to a Bombardier Global 7500 aircraft is now in service with a charter operator, and a second aircraft is ordered and planned to be delivered early next year.
CTT has approached Bombardier together with our partners and intensifies our efforts to reach out to the OEMs, such as Gulfstream and Dassault, and their customers. Next slide, number 26. Summarizing our performance after three quarters and looking forward, we will have a few quarters with low or no currency-adjusted growth in net sales, driven by initial rebound in system deliveries and partly offset by consolidation on the aftermarket revenues. I remain convinced that despite the near-term macro uncertainty, CTT will have the business model, the team, and the market position to deliver accordingly with our long-term strategy. Now more than ever, CTT is in a strong position to grow sales in all our segments. Having that said, let's hand it back to the moderator and open up for your questions.
Thank you. If you wish to ask a question, please press zero one on your telephone keypad. We will now have a brief pause while questions are being added to the queue. Our first question comes from ABG. Please state your name.
Hanna Forsgren.
Go ahead. Your line is open.
Hi, this is Hanna Forsgren standing in for Karl at ABG. My first question is, we have seen airlines as well as OEMs flagging for a higher demand. Apart from the A350 already mentioned in the report, what do you see overall when it comes to penetration of your products? Has this also shown a positive trend?
Okay, Hanna, good morning, and thanks for the question. I didn't really hear the end of it. It was about the-
Sorry.
-penetration?
I can say that again. We have seen airlines as well as OEMs flagging for higher demand, but apart from the A350 order, as you mentioned in the report, what do you see overall when it comes to penetration of your products? Has this also shown a positive trend?
Okay, thank you for the question. That's a really important question. As we mentioned, several times, in different calls, system sales is a very important part of our strategy, and that is where we see the growth for the future. Then it comes down to being on the aircraft and being selected, and penetration rates is therefore extremely important to us. We know that on the 787, we have extremely high penetration rate on flight deck and crew rest. On the Airbus A350, we are improving, but we have still some potential to grow further and increase the selection rate. I hope that answered your question.
Thank you. For my next question, you flagged for higher private jet sales sequentially. Given that you also announced some orders that will be delivered in Q1 2023, should we also expect sequential higher sales going into 2023?
Yes, that's what we're predicting. The market, as we discussed, is hard to predict in detail, but the next quarter we will definitely see an increase, and that will continue into the first quarter of 2023. I think there is an underlying market that is quite strong, and we don't think that there will be any effects on the private jet sector during 2023. We think that the projects that are in the pipeline are strong and that they will survive even if we have a recession coming in. We are quite positive on the outlook on the private jet side.
Thank you. My next question is, margin should normalize as you ramp up system sales. Given what you say about system sales in relation to aftermarket revenues, also in 2023, would we perhaps still see higher than normal margins remaining, especially considering currency?
Yeah. I mean, the aftermarket, as we say, we have an extreme peak in Q3. We think it will normalize to the levels that we've seen during this year. Aftermarket will of course be a big part of our sales going forward. As I said, even if Boeing now is starting deliveries, we are still on low levels compared to pre-pandemic and pre the problems that Boeing has now solved. A350 is increasing. OEM will ramp up and will increase its part of our sales. Meaning, as you know, the margins are a little bit lower on OEM. We will have a slightly different mix, little bit larger part on OEM, more private jets. Aftermarket will keep on dominating our sales, and that will have an effect on the margin side.
My last question is the A350 order you announced. How should we think about potential fleet size for this selection, number of aircraft?
Can you repeat the question again?
Yeah. Sorry. The A350 order you announced, how should we think about potential fleet size of the selection, number of aircraft?
We're not allowed to talk in any details about this. We are super happy that we know from Airbus that this undisclosed airline has selected our system. Why we communicated this, it's because it's for us a really important sign that this airline has chosen for this particular order batch, for all their aircraft, both flight deck and crew rest humidification and then of course on top of that, both in first class and business class. For us, that is a major breakthrough, and we're super happy with that. Hopefully we can come back together with the airline at a later stage and have more communication around this fantastic business.
Thank you.
As a reminder, if you wish to ask a question, please press zero one on your telephone keypad. We will now once again have a brief pause while any questions are being registered. We have no further questions on the phone line, so I'll hand back to the speakers.
Thank you. Let's just finalize this. Having a really fantastic quarter and, driven by currency effects and an extreme aftermarket recovery. We remain confident in this very turbulent times that we are in a good position to grow our sales in all our segments. If we have some downsides in one of them, we are pretty sure that we can maneuver and continue to grow in a very profitable way, going into next year. Thanks for joining us for the third quarter report, and, we look forward to seeing you again in reporting the fourth quarter. Thank you.