It's now 10:00 A.M. this beautiful morning. A warm welcome to the MilDef Investor Call with a special focus on MilDef reporting on the Q3 numbers January to September 2022. This call will be presented by our CEO, Björn Karlsson, and our CFO-
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Daniel Ljunggren, and we expect about 45 minutes to be sufficient for the presentation and the Q&A. A friendly reminder is to please help us, mute your microphones when you enter this lovely meeting. Please open up, of course, your microphone for the Q&A, or state your question in the chat, and I will moderate the lineup of questions. By the way, my name is Olof Engvall. I'm the Head of Investor Relations with MilDef. Also, for your understanding, we are recording this meeting. Again, a warm welcome to the Q3 presentation. With no further ado, please take it away, CEO Björn Karlsson and CFO Daniel Ljunggren.
Thank you very much, Olof, and thank you everyone joining this call. Very happy to have you here. We're now sitting in the capital of Sweden, most beautiful capital in the world, and happy to have everyone joining this meeting. I have a bit of an echo on the line, so I'm looking around the room here to see if I can have some support. Now it's perfect. Thank you very much. Today we will take you through the MilDef universe. We'll share some business highlights from the third quarter. Daniel will give you a financial overview, and then we'll look a little bit into the crystal ball and talk about the future before the Q&A session at the end. We will start here and give everyone who does not know us from before a short introduction.
MilDef turns 25 years old this year. We were listed on Nasdaq Stockholm June 4, 2021. We're almost 300 employees across 10 countries, and we operate in Nordics, in the EU, and in NATO.
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Our customers are in defense, government, and critical infrastructure, and we serve them with portfolio consisting of hardware, software, and services. We expand the business organically on the markets where we operate through partner networks in the countries where we do not have a presence and through acquisitions. We'll talk more about these things soon in the presentation. This is what we do. We digitalize the world where the stakes are the highest, requirements are the toughest, and when technology has game-changing potential. We are a full spectrum provider of tactical IT across hardware, software, and services. We serve customers within military, government, and critical infrastructure, which means that with MilDef, we help protect the fabric of our societies. We do this, as I said before, with 300 employees across 10 countries.
This map, for those who have known us from before, our flags are quickly expanding, and we're putting more MilDef flags around the world. We intend to continue to do so. That is who we are. I will now jump directly into the third quarter. When Daniel talks about the numbers, he will zoom out into the first nine months, and he will also look at this company from a yearly perspective. If we just zoom in now on the third quarter, some things that I want to mention specifically. The first one is that the company's growing revenues are up 20%. The biggest number of them all is the second one. Order intake up, it's 2.5x what it was last year, the same time.
We are, of course, super happy about that. Order intake is our future revenues, and this order intake has helped us create an order backlog that is now north of SEK 1 billion. For the first time, it's up to SEK 1.2 billion. The gross margin is of course difficult to protect these days because of the logistical challenges, because of the continued shortage of semiconductor components. We are able to not just protect our margins, but to improve our margins up to 51%. We believe that this is critically important. We believe that this is due to the fact that, of course, that we have very relevant high-tech products, but also that we complete and complement our portfolio with hardware, with software and services. The combination is what helps us protect and improve our gross margins.
Daniel will talk more about that as well. If we combine these things, top-line growth and increased gross margins, we also see a healthy increase in EBITDA. Profitability is also up by 34%, which means that we now look at just for this quarter at an adjusted EBITDA margin of 12.2%. For those who do not know, our long-term target for this company is to always be above 10% on EBITDA margin. These are numbers, but I want to talk about some events. The first one, which was a big splash not too long ago, was the acquisition of Handheld Group on September twelfth of this year. This acquisition is important for many reasons, and I would just state three of the directions where we're expanding with the help of this acquisition.
First one is technology. We add Android support, the operating system Android, to our portfolio, and we get new products that we can reuse for our military customers across all MilDef sales channels. We increase our footprint geographically. We double the footprint, and we get direct access to some of the most important markets in Europe. I've mentioned Germany specifically, the fastest-growing defense market in the world right now, and one of the big markets in Europe, and we now have direct access to that market. We also have our U.S. dream and our U.S. business, which is now twice as big. U.S. is doing very, very well this year, and now we have twice the size of our team in the U.S. Third, but not least, market segments.
I mentioned before that we serve customers in the defense sector, and this is our legacy, where we come from. We have an increasing amount of customers within government, and now we also are entering an adjacent market segment, which is critical infrastructure, where Handheld Group comes with a very, very strong customer base. This completes what we have talked about in this forum for a couple of years when we talk about Total Defence and our ability to serve those customers. We are super happy to welcome everyone in Handheld, not just the employees, even though they are great, but also all of the customers. It's also, as I said before, very, very good for existing MilDef customers. The synergy effects from this acquisition, we will talk more about those when we see them become realized during next year.
Another big thing, of course, that has been press-released was the framework agreement over 20 years that was signed with the NATO nation. We do not disclose the name of this nation, but it is a NATO member. This is important for us not just because of this framework and the trust that this nation puts in us, but this will have a ripple effect across other NATO nations as well. The things that we do for this nation, we are able to repeat across other NATO nations. This is part of how we write MilDef's NATO story. That is also Sweden's NATO story, because we're now applying to become a member. This NATO has become even more important for us as a nation, but also us as an industry, but also for us as a company.
That connects to the third point I want to mention when it comes to OneCIS, which is our software for zero-day deployment of tactical IT. It has a special feature that makes you NATO-compatible, and it makes you interoperable with other NATO nations. When you acquired Sysint in 2021, we thought that this piece of software had huge international potential. We thought it would take three to five years for us to get ready for export and internationalization. It turned out that I was wrong. It took us less than one year to start exporting, and we are now entering two other nations outside of Norway. I think this is driven, of course, in part by the increasing importance of NATO, but also because the software is even better than we thought at the acquisition.
We're super happy about this, and it's very important for us because this completes not just what I mentioned before on the market segments, but also on the product segments where we have hardware, software, and services. This software is important for the future of our company. It also makes Daniel happy when it comes to the margins. Talking about Daniel, I think it's time now to invite him into this discussion to talk about January to September 2022 in numbers, and then I will get back to you at the end of this presentation again. Daniel.
Thank you very much, Björn, and hello to everyone in this call. I will try to walk you through the financial package in this investor call. The first slide, I would like to focus on the right columns here, the LTM columns, towards the 2021 column. We will look in deeper on next slide into the isolated first nine months. Let's stay a little bit on the bigger picture. LTM, the last twelve months, we have performed very good on every row in the P&L. We grow at 33% if we compare to full year 2021. We increase our gross margin with 3 percentage points, which is very important for the bottom line profit. Our adjusted EBITDA has increased with 59%.
We are showing a good financial performance the last 12 months if we compare to full year 2021. Let's isolate and jump to the next slide and then take a more consumable view over the figures for January to September this year. If we start from the left, we can see that net sales is up 57%. Order intake is up at 75%. That's very important for us. We have a very good order intake here in the Q3 2022. As Björn mentioned, when we're talking about the order backlog, we now see a record high order backlog again. Now we have breaking the SEK 1 billion. We have some impact from the acquisition of Handheld. It's SEK 137 million from that acquisition.
Even if we eliminate that, we can see over SEK 1 billion order backlog. We will be busy for some quarters going forward. The combination of the increased revenues and also increased gross margin, as we mentioned before, is also giving a good impact on EBITDA, where we can see an improvement of SEK 18.9 million. On the last twelve months, we have performed an EBITDA net margin of 8.2%, and we have a long-term financial target that is above 10%. Hopefully we can, in the fourth quarter, move us above our financial target. We can take the next slide, please. Let's zoom out the net sales and the EBITDA margin a little bit further in time.
We can see that we now, in the third quarter in a row, are reporting record high last twelve months net sales figures. Now we are up on a performance that is SEK 624, and we're showing a good trend here, and hopefully we can get the EBITDA margin also to climb up, and maybe get up to how it looked in 2021. If we jump to the next slide, please, we can see that if we zoom out even further in time and compare our last twelve months compared to full year from 2016 to 2021, we can show that we are on a growth journey, continue to have a CAGR that is high. Right now it's +27%. We continue to grow our top line in a healthy way.
If we move on and look at the order intake, we can see that we have increased order intake with 21% if we compare to how it looked one year ago. We are now having an order intake the last 12 months of SEK 881. You can also see that we have a book-to-bill rate, so to say, that is far above one. Hopefully we can continue to grow this company going forward. Next slide, we can see the order backlog I was talking about. It has increased a lot. If we zoom out here, we can look back three years, Q3 2019, we can see the improvements in the order backlog. If we go back one year, it has increased 71%, and this is very healthy for us having a big order backlog.
If we take a little bit of a breakdown of the order backlog and look into how we are planning to deliver in this order backlog, we can see that we have a very hectic fourth quarter coming up here. We are already in that quarter, and we should deliver products, services, and hardware and software for almost SEK 400 million. We have a very busy fourth quarter. Also good is to notice that we have right now an order backlog for 2023 that is plus SEK 500 million. Also puts us in a good position for the upcoming year here. If we should be able to deliver in the fourth quarter, there is some risk, of course, when it comes to the components and delaying of orders and deliveries, et cetera.
If we can deliver as planned, we will have a revenue growth of 75% if we compare that to the full year 2021. Next slide, please. A slide that we have shown you before, and we continue to show it. Now it has changed a lot due to the acquisition of Handheld we did here in the third quarter. This is a picture of the financial position on our balance sheet, so to say. We have now moved from a landscape where we had a net cash now into a net debt situation. We are trying to strengthen the balance sheet a little bit, and change that to a more aggressive P&L instead. Right now we have a net debt of SEK 112 million.
The ratio of the net debt to the adjusted EBITDA is now 2.2. There is a long-term financial target that says we should not exceed that 2.5x the EBITDA. Still below what we think is a healthy and low-risk situation for us. We have used some of the balance sheet to hopefully get a better P&L going forward. Still an equity asset ratio that is high 59% showing that we are a stable and solid company. If we just move to the last part of the financials, just to summarize it, to refresh your memory. The sales growth the first nine months, 57%. Order intake +75%, showing a very healthy process going forward. Very important, gross margin has improved.
We continue to improve our gross margin, and we have for the first quarter ever now performed over 50% in gross margin for the third quarter, and for the first nine months, 49%. Operating cash flow SEK -45.7. Impacted, of course, about the big deliveries we have here in the fourth quarter. We are ramping up the inventory, et cetera, for making us in a position where we can deliver all the orders we have won. Net sales the last twelve months is continuing to be an all-time high level. We have an adjusted EBITDA margin of 8.2%, which we hope to improve here in the fourth quarter. We have a record high order backlog above SEK 1 billion.
We have an order intake the last twelve months of SEK 881 million showing that we can continue to grow, because the book-to-bill rate is above one. With that said, I'll hand the word back to you, Björn, and continue.
Thank you very much for that, Daniel. Let's talk a little bit about the future as well, and talk about our strategies for growing this company and accelerating the growth into the future. If we start from the left-hand side of this and our organic growth, while we now have, as I said before, an increased geographical footprint. On this market where we have direct access and also through our partner networks, we are, of course, capitalizing on a technological portfolio that still has substantial untapped potential. We're growing through the power and the value of our high-tech portfolio. We're also expanding this portfolio. We are adding more software. I mentioned this once before. We are increasing our services and what we are able to do.
The whole life cycle of digitalization within our space is something where we also deliver the services to go with that. The hardware and the services are reinforcing each other. We are also working strategically in a structured way with our M&A agenda, and that looks like this. We have an M&A compass that tells us where we should look for interesting companies to acquire. We still see that this is a highly fragmented market. For a company of our size, there are lots of interesting opportunities that we can work with on the markets where we operate and also on new markets where we won't have access. We have put in place a model that we have used since just before the IPO, where we use this compass to find where we should go.
We highlight on our map those prioritized acquisition targets, and we nurture and mature them through M&A backlog. We have, through our own resources, our own teams, our own models, a blueprint for how we evaluate the companies, how we perform due diligence, and also after acquisitions, how we integrate the companies with a greenhouse model, making sure not only that the acquisitions are successful, but also that this organization has time and energy left to continue looking forward and outwards to find that next acquisition. We've said before that we will make one acquisition, one substantial acquisition per year. Handheld Group, I believe, fit the bill for that really well. It also fits our M&A compass, and we now look forward to continue working towards the next one.
Even though we're growing organically and the market is of course now expanding rapidly, we still believe that M&A must be high on our agenda going forward. Three things to look out for if you are following this market. The first one, the NATO effects for Nordic defense companies. I think that. For us, we talk about this a lot. I talk about this when I meet military leaders. I talk about this when I meet political leaders. We talk about what will it mean for the Nordics when Sweden, if Sweden and Finland joins NATO. It will have a bigger impact than most of us will think, because the Nordic voice within NATO is important. Our geopolitical situation is important, and I think that this will have an effect.
I think it's very important for companies such as ours to understand how we can capitalize, which are the risks to mitigate, and how do we expand with the help of our the Nordic NATO effect. That's something that we are driving internally, and we also drive this message when we talk to others. You'll hear more about MilDef's NATO story as we move forward in time. Of course, this may not always be in the headlines anymore, but I think it's, of course, there is something serious happening in the world. Europe is still at war. This leads to increased and accelerated defense spending. From a MilDef perspective, I mentioned this also in the previous reports, we do not see a big effect yet. We anticipate a big effect.
We are part of the strategic discussions. We see the work that is ongoing, but the numbers that Daniel just showed you have very, very little of the effect that we expect to see sometime when it comes to accelerated defense spending. This is just continued performance on markets and programs that were already in place before. So that's just something to look out for, how that will play out in the future. The third topic is that the sustainable Total Defence, this is more or less, I think a Swedish concept. When we talk about Total Defence, but this is now talked about everywhere. I was recently in Washington, and this was a topic that came up many times. Sustainability, of course, is high on the agenda for everyone now.
This is not just a topic for people to talk sustainability. Now it's something that everyone talks about and cares about. Total Defence, this is why I mentioned, and we have said it before, that it's so important that we are able to serve customers in military, in government, and in critical infrastructure, because these three combine to create healthy societies that work and operate, including logistics and health and energy and banks and all of those things that you need for society to work. This is becoming top priority. MilDef is positioning ourselves to be able to support those who protect our societies in a sustainable way. We'll talk more about that as well.
Just to summarize what we have said, some of the highlights, I think it's worth repeating that the revenues are moving up 57% for the first nine months of the year. It is significant, and it is important, and of course, we keep a close track of this. Order intake is up even more, which is good because we need to grow faster in the future if we can. The order backlog, our future revenues, is now up over SEK 1 billion, making it easier for us to start looking into the future, plan our production better, become more effective, and keep and hopefully improve those margins that are protected even in difficult times. The last bullet there, I just want to repeat that as well. We are very careful when we talk about M&A.
We only want to make really good acquisitions, so we're pretty picky about the companies that we choose. The companies who join us should also be picky about who they want to work with. We believe that Handheld is a great example, and we believe that it's important to continue with this strategy. What we've done so far this year, exactly what we said that we would do. This is one of the four core values in MilDef. It is called integrity, and we say what we do, and we do what we say. With that, let's open up for your questions and answers.
Thank you, Björn. Thank you, Daniel. We have another 15 minutes to go if we want to use that time. Please raise your hand if you want to ask a question to Daniel or Björn, and write a question in the chat function. Don't be a stranger, don't be shy. No question is a silly question. All questions are good questions. While we wait for some questions, I will start with one. How much impact did the acquisition of Handheld have for the Q3 numbers? How much of Handheld is in the numbers?
Thank you for that. I don't know if I can answer that one. We consolidated Handheld from September 2021, so it's just a minor part coming from the Handheld acquisition so far. They contributed with SEK 11.2 million on the top line, and in annual percentage, that's 8% on the quarter, so to say. Hopefully we can see more of that going forward when we can consolidate them from one full year, so to say.
They contributed with SEK 536.8 million on the order backlog.
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Yes. Okay.
The order backlog was also impacted positively.
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By Handheld by SEK 136.8 million.
Still waiting for some questions. I have a question for Björn on the same topic in a sense. How is the integration going along with Handheld? How are we perceiving the integration phase of this?
So far, it's very positive. The first thing we did after the acquisition was to visit Handheld's headquarters and meet the people working there. I mean, MilDef is a people company. We're a technology company, but we are also a people company. Fantastic people. It reminded me actually of what MilDef used to be a few years back because of the size is a little bit smaller. It's very familiar feeling, and it's like a family, and we felt warmly welcomed. I believe so far that the Handheld employees feel warmly welcomed. If we look into the business side, we've already received lots of interest. We've received interest from our military customers to understand more about the Handheld portfolio and how we can customize this for defense.
We've also received lots of interest from Handheld's partner network, which is extensive, on how they are able to resell and distribute MilDef products. That's something we'll look into. We keep this integration positive, business-oriented, and we seek a mutual benefit. So far, super positive. Very happy to have Handheld on board.
Thank you for that, Björn. The audience today is a little bit shy, but maybe everything was so colorful and so to speak sufficient. One question, trying to understand MilDef, you need to understand the importance of the fourth quarter. It's historically a very big quarter. How shall the audience anticipate? Daniel touched on it in his forward-looking slide. How should one look at the Q4 for MilDef, Björn?
It's usually the biggest quarter of the year. It's a very hectic quarter. If you have the chance to visit our production facility in Helsingborg, I promise you that it will be. The lights will be on all day and all night because we're working to get these Christmas presents out the door in time, working super hard in production in order to deliver. I think Daniel had the number there, SEK 397 million or something like that. It's that is what we the ambition is to do. Yeah, it's a big quarter, but it's also the most fun quarter. It's where we get to deliver on our promises. It's where we get to solve the toughest problems. We work hard, but we also have lots of fun in there.
Yeah, it's a big quarter, and we hope to do well.
Thank you, Björn. I see no questions, so I will end this with a tricky one. If you try to, and this is not going to become a prognosis, of course. If we look further at, after Q4, we have a 2023 coming up. I mean, what is in your crystal ball for 2023 regarding MilDef, Björn?
Yes. I think Daniel mentioned something that is important, that was the SEK 505 million that are waiting in the order backlog for next year. This creates stability on our growth journey. We are also working super hard across all MilDef companies to drive sales, because there are lead times, lead time issues. There are difficulties on the market. We will have production lines that get filled with the work coming in. We need to be better at production planning. We need some help with that. The best way to help us is by placing orders early. I hope to see that order book filling up. I mean, the positive signs on the markets, we talked about those before. That's not a forecast, this is facts. Defense spending is accelerating.
Our importance on the market is growing. We have strategic relationships in several nations. We're working with the biggest defense companies in the world. It is up to us, it is up to our performance to deliver on what these market conditions offer us. We have fantastic conditions, but this does not mean it's easy. It's a luxury problem to operate on a growing market, but it is still difficult. We need to keep our troops focused on the task at hand, and we need to work very hard and very smart. With a 27% CAGR. I'm super happy about that.
Thank you. Thank you, Björn. This will sign off for our investor call, Q3 numbers. Thank you for following today's investor call with MilDef. Don't be a stranger. Stay in touch. Follow us on LinkedIn, send an email or make a call. We are here to assist you to understand our continuing journey. Stay tuned for more. Have a fine day, and stay safe. Bye-bye.