Well, ladies and gentlemen, we are shy 30 seconds out of the full hour, or actually, we are in the full hour right now. So a warm welcome to this investor call with MilDef, with a special focus on MilDef's reporting of the first quarter of 2024. This call will be, in a moment, presented by CEO Daniel Ljunggren, and also President of MilDef Group, and our CFO, Viveca Johnsson. We expect approximately 40 minutes to be sufficient for the presentation and the following Q&A. A friendly reminder is to ask you to please keep your microphones muted. Please open up your mics for the ending Q&A or state your question in the chat, and I will moderate the lineup of questions. Also, for information, we record this meeting.
So again, a warm Welcome to the presentation of MilDef's First Quarter of 2024. With no further ado, please take it away, Daniel Ljunggren and Viveca Johnsson .
Thank you very much for that, thank you very much for that, Olof, and a big welcome to everyone in this conference call. As Olof said, presented today by me, Daniel Ljunggren, I'm the CEO, and also our CFO at MilDef, Viveca Johnsson. Let's start this presentation. The start of 2024, the Q1 for MilDef, started off slow, but not unexpected in the Q1 2024. We have tough comparison figures from Q1 2023. If you remember the history when it comes to this net sales, there was a delay in 2022, so there was around SEK 50 million slipping over to Q1 2023. That made boost of Q1 2023, and that made us tough comparison figures here in the Q1 2024.
Also, remember, when we are coming from a record high Q4 2023, the previous quarter, and normally in the history, we have seen that the quarter following a strong record high quarter is normally a weaker quarter. So started off slow, but not unexpected from the management in MilDef. And also, this is something that we have talked about now over a long time or period, that the volatility in a company like MilDef is high, and the quarterly volatility remains. So as we see Q1 in the start of 2024, there's no lost orders in Q1, but delayed sales processes. And as I also have mentioned a lot of times, is that the long-term trend is the most important thing for MilDef. So if you evaluate MilDef financial performance, the long-term horizon is the most important thing to look at.
So that is why, we, on a quarterly basis, can see high volatility, but normally that is on a rolling 12 month basis, for example, looks like a better trend. Even if it's a slow start here in Q1, we still have very positive outlook for 2024 and beyond. It's also that in the near-term outlook is supported by some announced orders already making a strong order intake start of the second quarter here in 2024. We have announced a couple of orders this week that was delayed from Q1 into Q2, so hopefully, we will see a better order intake in the first quarter or in the second quarter.
If we zoom out from MilDef and look a little bit out on the market, how we see it, we still see a high activity level in the market, but we also see that purchasing and procurement process take a long time. We have seen today, in this morning, for example, Swedish government has pointed out the direction for future procurement for the military industry. They have announced 2.6% of the GDP until 2030. So it's a clear direction and a clear message that they will continue to invest in ramping up the military spending. I think that MilDef is a very good position over time to be a benefit from this military spending increase. We also have, in the first quarter here in 2024, announced two very important partnership.
We have announced that we have started a partnership with Lockheed Martin on the Swedish market. That is something that I see as really crucial to meet the end customer demands. I think that the defense industry must come together and work more on partnership base to be able to meet the end customer demand that will be high going forward. On top of that, we also announced that we have signed a 10 year framework agreement with BAE Bofors, and that is also that has shown here as an order intake in the start of April. So that is something that I think is very important going forward. And something that's finally also happened in the first quarter here, that Sweden finally joined NATO. We are now a full membership, and that creates for a company like MilDef, long-term opportunities.
MilDef is an international company today, but we have strong Swedish roots, and Swedish market is a strong home base for us, so that will probably be important for, for us, that Sweden has now joined the NATO. With that said, I think we will take a little deep dive into the numbers instead and look at Q1 here in 2024. Net sales ended up on SEK 232 million, decreased 18% compared to, as I said, a, a tough and little bit unfair Q1 since we had this delayed in 2022. That was boosting up the Q1 2023. But still, if we take away the SEK 50 million that was delivering in Q1 2023 instead, and we see that we are somewhere doing the same that we did last year.
Remember that Q1 2023 was a growth of 100%. I think still, even if we're not meeting the expectation on, on the net sales here, I think it's, it's strong, and it's also in line with the management expectation for the quarter, so we don't see any big worries around that. If we jump to the right, on the top here, we talk about the order intake, SEK 250 million, decreased by 37% compared to Q1 2023. There is a very high volatility when it comes to order intake in the defense industry, and even more is that a character when we're talking about the small defense companies.
So it's gonna be a volatile future as well, the volatility will remain when we're talking about order intake on a quarterly individual basis. But as I said, we had a strong start of the Q2, so it looks promising for order intake here in the second quarter. We also talked about the operating profit, the EBITDA, 8.7% in the first quarter. If we compare that EBITDA margin, we had this quarter 3.7% compared to 12% in Q1 2023, and that is almost 100% due to the drop in net sales, the top line issue, so to say. The gross margin has improved if we compare to Q1 2023, and the costs of OpEx, I think, is under a good control as well.
So it's a top-line issue, and when we now can, hopefully, in the following quarters, come back to top-line growth, we will also hopefully see the EBITDA margin raise again. Operating cash flow, very important for us to be self-funding this growth journey going forward. So in this first quarter, we had a positive operating cash flow of SEK 20.9 million. A little bit lower than we did in the Q1 2023, but it's still very positive that it's on the right side. And we continue to say that our midterm target is to have working capital in percent of a rolling 12 month sale that is equal to or less to 25%. And right now, in this first quarter, is 33.4%. Some highlights in the start of 2024.
As I said, if we start from the left here, left here and see what's happened in the Q1, I said it's very, very crucial, I think, for the industry to work together and find partnership to be a relevant player in the market. MilDef has taken this further in the first quarter by starting an industry collaboration with Lockheed Martin, and also signing a framework agreement with BAE Systems Bofors, which also gives a great order here in the start of the Q4. BAE Systems placed a order at MilDef at SEK 52 million into the artillery system, Archer, that we hopefully can see continued good growth in the future of the Archer and also something that can benefit MilDef in the long term.
Also worth mentioning is that Handheld has won a SEK 69 million contract, and this is really the first cross-selling activities that we see on the market between Handheld and MilDef. So this is something that we talked about when we acquired Handheld, a lot, the cross-selling opportunities that we saw, and now we have finalized one of the biggest one on the market. So it's really important to get this cross-selling synergies up and running, and this was a good milestone to do that. The final piece of the start of 2024 is the strategic hardware contract in Estonia. Estonia is a quite new market for us, so it's showing that we have the capability to expand geographically, and we are looking forward to see what that can give more in the future.
With that start, I will now leave over the word to our CFO, Viveca Johnsson. Please, Viveca, go through more of the numbers.
Yes, thank you, Daniel. More numbers. Good morning, everyone on the call. Let me start by zooming out the picture a little bit. It's always good to start with the long-term growth journey that we've been on with MilDef here. 36% annual growth rate with an escalation of 57% from 2021 to 2023. That is the, the tone that we have in the company, and that is what we must remember when we look on the individual quarters as well. Zooming in then a little bit more to, to current affairs, we are looking at the rolling 12, because as Daniel said, this is a more or a better trend to have a look at than the isolated quarters. We remain on a net sales rolling 12 on SEK 1.1 billion.
It's a perfect match with our financial targets of 25% growth over time. It's a slight decline on the all-time high Q4 rolling 12 that we had. Gross margin development is also something that we've been discussing over the last couple of quarters. It remains on a good trajectory with the... It's on its way towards the 50%. Now, it took a quite big step from on a rolling 12 basis here to north of 49%. I expect it to be a bit more of a winding road towards 50%, so 49.1%, this rolling 12, maybe next will not be north of 49%, but we are slowly but surely working our way upwards here, and the stability is really what I am enjoying most about it.
If we turn to order intake, and I can only repeat here what Daniel has already mentioned, but the volatility, volatility, and volatility is a little bit of the name of the game that we are operating with in this business. And even if this is a rolling 12 basis, you still see the fluctuations between quarters. I think it's quite the illustrative that there were no large orders announced from us in the Q1, and then all of a sudden, there are several in quarter two here or in April, even. So sometimes it all happens at once and sometimes not. So if we, from that, go to the EBITDA, and Daniel, you talked about it, I will just emphasize once more the scalable business model that we've spoken about previously.
We see here from Quarter 1 2023 to Quarter 1 2024 on a rolling 12 basis, there is 63% growth. When we add volumes, we also add profitability. Unfortunately, the same is true when you have a slower quarter, like we did in Q1, and then we fall down in volumes for rolling 12 versus the all-time high Q4. Then we also see a drop from Q4 to Q1 in the EBITDA, on the rolling 12 basis. So, again, a very good illustration of what we've said for quite some time, is that we have a scalable business model. Speaking shortly about the backlog, once you have talked about... Welcome.
So when you talk about the sales, and you talk about the orders, and you realize that those are roughly on the same level, it's not much more to say about the backlog now, is there? It remains on the same level as we've had for quite some time here, around SEK 1.3 billion. If we turn to the next slide and talk a bit about the duration of the backlog instead, it's, as you see, we have somewhat of a better visibility for the future, given that we already have almost SEK 300 million for 2027 and further on. We have also, with Handheld being the best example of that, added more business where we have shorter lead times that we get it in and send it out in a shorter time frame.
So with that, we are lowering the visibility. So, the math of the duration is both helped and not helped with these trends. So, I will leave the individual analysts to do their own math of the duration with those statements. Net working capital has also been a topic that we have discussed frequently. We've talked about the inventory, and we've talked about the net position of the payables and receivables. As you can see, the net of payables and receivables have improved well, quite substantially from Q4 to Q1 here, which is due to a lot of deliveries getting then paid here in Q1, according to our normal trends, but also from plenty of good initiatives in the company. Inventory remains on a higher level.
Also, that demonstrates our delivery capabilities for the coming quarter and quarters. 33%, or 33.4%, for those who wants to be exact in relation to sales. We stick to our mid-term target of the 25% and expect some higher sales volumes also contributing to a better position of the net working capital in relation to sales. Having a look at the net debt in relation to EBITDA, a solid level, well below the 2.5% target. The slight uptick that we are seeing in Q1 here is dependent on the EBITDA decline versus the all-time high Q4 EBITDA rolling 12. So the net debt in itself is quite uneventful and has no changes to speak about. Thank you, Daniel. I'll turn it back to you then for some outlooks.
Thank you very much, Viveca Johnsson, for walking through the figures. I will take this presentation to the finish line by starting with a future outlook and the focus areas in 2024 that we have signed up for here at MilDef. This is something that we have now shown a couple of quarters in a row, and we continue to keep a steady direction going forward. Number one is about capturing the growing market, geographic expansion, and also get a wider customer base. There is high activities on the market that I was talking about, and there is a lot of opportunities out there. And even if everything takes more time than we have thought from the beginning, there will happen a lot of business opportunities that we need to take down in the order backlog going forward. Customer delivery is number two.
It's the one, number one thing that keep us as a relevant player going forward, that we have our end customer is very happy with the deliveries and the quality of what we are doing at MilDef. So we keep our strong focus on ensuring quality of our products and deliveries in time. Number three is something where we look a little bit further into the future. We have now started to look at how we can improve our customer offering. There is a trend in the market talking about the Dismounted Soldier System, and that is something that we really want to be a part of. So we have invested in our product portfolio related to Dismounted Soldier System, and that is when they have started to digitizing the individual soldier, and that is where we can see high volumes going forward.
If some of you have already seen this morning, but the Swedish government, as I said, they have announced their direction going forward, and they are ramping up the soldiers a lot going forward on the army side. So this will be something that they will have a high demand on going forward, and hopefully, that's something we can benefit, that we put D ismounted S oldier System that they really can benefit from. Number four, and the last piece that we are focused on here in 2024, is the working capital and operating cash flow. We are on a journey. We are on a growth journey that is tying up a lot of capital.
We want to do this self-finance and continue to grow, and then where, where we need to find ways to reduce net working capital in relation to rolling 12 months sales. Short summary of the first quarter before we go over to the Q&A session. As I started, slow first quarter, but we also have shown here that when I talk about the activities on the market, we have seen a strong start when it comes to order intake in the second quarter. And also remember, the quarterly volatility remains and will remain. Defense sector has nature of the business in the defense sector is a high volatility, and for the smaller defense company like MilDef, the volatility is even higher. Even if we have a slow first quarter, our positive outlook for 2024 and beyond remains. There is a market for a company like MilDef.
We are a really relevant company and our product, there's a big interest in our products going forward. But we also need to respect that the procurement take time and the whole ecosystem of the defense industry needs now to ramping up to be able to delivering more to the end customer. And the final bullets here, the Swedish membership in NATO will, for a company like MilDef, create long-term opportunity. MilDef is our home market, and it's also where MilDef has its roots, even if we are an international company today. I think there will be opportunities due to the Swedish membership in NATO going forward. And with that said, final thing, keep up. I leave the word over to you, Olof. So, please.
Thank you, so much, Daniel and Viveca, for this, presentation, and thank you to the audience, the followers, the friends of MilDef, all of you guys and girls, ladies and gentlemen out there following this call, which is fantastic. This is a very intense reporting week and also a very intensive reporting Friday, closing this lovely week. But I see no questions in the chat. Since we have so many esteemed guests in this meeting, I would anticipate some tricky, clever questions to roll in. Thank you, Hugo Lidsjö, who is raising his hand. Do you want to state your questions? And then I'll go to Peter Lundgren's questions after that. Please go ahead, Hugo.
Hi. Thank you. Do you hear me?
Loud and clear, Hugo.
Perfect. So first of all, the increase in operating expenses, that was the plan, as you told us. Could you provide us some examples of the initiatives driving this increase?
Sure. I mean, we are a growing company, even if the isolated quarter is not showing that. I think the rolling 12 figures is speaking loud and clear for the growth trajectory that we are on. And even if we're not adding resources linear with the sales numbers, clearly not, we are adding resources to support further growth sales-wise, of course, but also in the supporting functions that is crucial for us to support that journey.
Ah, perfect. Then I saw that you were increasing the debt during the quarter. Why was that?
That is actually a technicality in the accounting department that we are going from having a netted reporting of cash and debt to now showing them line by line, so to say. So what you will see is a slightly increased debt, but also increased cash, because we are now separating the two streams from each other than previously we netted it.
Ah, perfect. Thank you. And when looking into Q2, you will meet some tough comps even then. What's your feeling about the Q2?
The start, as I said, of the Q2, looks very promising when it looks to the order intake at least. As you mentioned, Hugo, we will have continued strong, comparison figures. So it is also in the Q2. This delayed orders in 2022 was split into the, it was SEK 100 million that we delayed, and SEK 50 million was, split into Q1 2023 and SEK 50 million to Q2 2023. So we will continue to have tough comparison figures, and we have known that for a long while, but, hopefully, we will see, both revenues and order take here in the second quarter coming up and matching at least the comparison figures in Q3.
Perfect. That was all for me. Thank you so much.
Thank you.
Thank you so much, Hugo, for those questions. Then we'll go to Peter Lundgren's question in the chat. Would you comment on the component crisis? Is it over?
I would say that it's more or less over, yes. We were struggling 2021, 2022, so we had two years struggling with a component situation. But now we see not 100% normal as it was pre the pandemic, but we don't see any big issues around the component situation, and the prices as well on components has coming down to normal levels again. So on that side, I feel very comfortable when it comes to components.
Thank you for that answer, Daniel. Then we go to Daniel Lindkvist's question in the chat. For the future, deliveries for various platforms will be an important part of your growth and sales. Are you planning on providing any guidance on the expected delivery schedule for these?
That's absolutely correct, that the platforms and exactly the vehicle programs that's coming out there for the military industry is very important for MilDef, and we are a significant player into those platforms. But it's also we have a wider product portfolio than that, and we were, for example, talking about here in the near future, the dismounted soldier system that is more related to individual soldiers. We also hear the handheld order, for example, which is a tablet for controlling the drones, for example. So we have much more in our product portfolio than just the platform.
So then we need to really consider and look over to see if this will be some kind of right guidance to give connected to the vehicle programs, because I think we have a wider portfolio than just related to the different platforms. So, but it's a good question and something that we can bring along going forward.
Okay, ladies and gentlemen, 26 minutes past the hour. We are empty out of questions in the chat. Anybody want to raise their hand, this is your opportunity to land this bird and have a few final questions, or you know where to find us. We're always there, ready to take you behind the scenes in the MilDef journey to facilitate understanding the equity story. And if you pass by Helsingborg at any point in time, welcome to the fortress. It's quite an amazing building, actually, with production, and R&D, and innovation, and all that. That really gives you the better feel for the company if you want to come by. Some of you guys and girls already have done that, and we'll do it again, which is lovely, so please come again. So I'm empty for words.
I think we shall sort of hand over the final words to Daniel to land this bird, and then we propel further into this wonderful Friday and our future. Daniel, do you want to close the show?
I think we have landed the bird with a last question here in the presentation, and hopefully we will come back when we now have launched our Q2. So looking forward to see you all then again. So take care until then. See you. Bye-bye.
Thank you, everybody.