Good morning, ladies and gentlemen, and welcome to this investor call with MilDef, with a special focus on MilDef's reporting on the fourth quarter and year-end 2025. This quarterly call and year-end call will be presented by Daniel Ljunggren, President and CEO, and Viveca Johnsson, CFO, MilDef Group. We expect approximately 30 minutes to be sufficient for the presentation and Q&A. At this time, all guest microphones are muted, but I will open up and allow individual mics for the Q&A. If you wish to state the verbal question, raise your hand or write in the chat, and I will moderate the questions in the Q&A. Also, for information, we record this meeting. Now, with no further ado, please take it away, Daniel Ljunggren and Viveca Johnsson, and remember to help our audience where we are in the presentation by stating the number on the slide.
Take it away, Daniel.
Thank you very much, Olof, and a warm welcome to all of you that has joined this conference call here today. If we move on to the slide number 2, this is the agenda slide showing what we will cover here today at this conference call. We will start by having some highlights for the fourth quarter and also some individual key numbers for the fourth quarter. Then we will move on, guided by Viveca here, we will move over to the financial side, covering more of the long-term financial trends within the company. Then after that, we will touch base on the Roda progress. You all know that the Roda acquisition was a transformative acquisition, closed in March 2025. So I would like to give you an update on the progress and integration of Roda.
Then in the end here, we will have a short future outlook, and then we will open up for the Q&A session. If we then move on to slide number 3, which contains the highlights of the fourth quarter, it's very happy to see that the fourth quarter was the strongest quarter to date in MilDef history, both in terms of order intake, net sales, and earnings. Strongly and significantly supported by the acquisition of Roda, that was a strong contributor, especially to the order intake here in Q4. We also saw a margin that was improved here in the fourth quarter. EBITDA reached 151 million SEK, that corresponding to an EBITDA margin of 19.3%, which is a clear improvement from Q4 2024.
I think that's, in some kind of way, shows the operating leverage and the scalability we have within the business when we are increasing the top lines. Further on, I will also highlight the continued strong underlying gross margin, excluding the M&A from Roda. This was now the fourth quarter in a row where we ended up with a gross margin above 50%, and in this fourth quarter, the exact number was 52.8%. And that's showing that I think we have an attractive offering with a good pricing power. Also worth mentioning, I'm very pleased to see that we now return to a positive cash flow in the fourth quarter, improved by 25% if we compare it to Q4 in 2024.
In total, the free cash flow ended up with 60 million SEK here in the fourth quarter. Further, as expected, we saw a drop in the KPI net debt to EBITDA. This is something that we have expected due to the dynamic of the acquisition of Roda. We now saw in the fourth quarter that it dropped from 2.6 to 2.0, which is quite far below our long-term target of not exceeding 2.5. Another expected movement was the drop of the working capital compared to the last twelve months net sale. That dropped from 39%, sorry, to 34%. That was also an expected move, driven by the increased top line, the net sales.
I also will say that we are moving into 2026 with a, with a solid order backlog. The order backlog when we closed 2025 was two point one billion SEK. That is more than 80% better than we had at the same time the last year. So that is building some confidence as well, going into this year. And in order to meet this increased demand, we are ramping up more than we have never had in the history of this company. So we are at a very high level when it comes to investments, and the investments is into increased capacity. It's about getting more staff in there, production sites, and things like that, making sure that we are reaching a new level of capacity.
And about capacity, and also worth mentioning, is that, these investments that we have made during the autumn here in 2025, it's now starting to pay off. The delivery situation is improved in the beginning of 2026. But I also want to say that things can quickly change, so that is the view we're seeing right now. But we also want to be humble and say that things can change quickly, and I know that you all probably already know about, for example, the global situation when it comes to the memories, which now have a very high volatility, both in price and lead time, and that is something that could have potential negative consequences in the future. But here and now, I would say, starting on this year, we are in a healthy position when it comes to the delivery situation...
Finally, the directors, the board of directors has proposed a dividend of 0.75 SEK. That last year was 0.50 SEK per share. Now we'll move on to slide number 4, and also speaking about investments. I just wanted to show you on the slide here, you can see a photo of our latest addition to our capabilities, our new production site in the area of Stockholm. It's now open for business, and it's very important milestones, and sets the tone for future growth and our future, the defense capabilities and delivery capacity, so that it was an important milestone here in the fourth quarter. Now, I will jump over to some key figures here in the fourth quarter. Net sales 87% growth year-over-year.
As I said, an all-time high number in a single quarter. Organic growth amounted to 13%, and M&A contributed with 75. Order intake, one new milestone for the company in the first quarter, where we reached, an order intake that it exceeds SEK 1 billion, and that was growing 30% year-over-year. And the book-to-bill rate in Q4 was 1.28, and if we look at the last 12 months, it's 1.57. And also, what I think is, a really strong number here in the fourth quarter, the operating adjusted EBITDA profit 19.3%, coming from an increased top line with a good underlying gross margin, but also good cost control, where OpEx development is according to plan.
We will, of course, need to adding OpEx on this growth journey we are on, and we need to invest to be able to increase our delivery capacity even more. So this is something that we will see going on in the future, where we will see some increased OpEx, but I think it will be less than what we can add on the top line. And as I said, adjusted EBITDA was growing by more than 100% year-over-year. And I touched base on this earlier as well, very positive to see that we have returned now to a positive free cash flow in Q4, growing that by 25% year-over-year. And also worth highlighting is that we ended 2025 with a very high number of accounts receivable.
It was more than SEK 500 million, that is in the accounts receivable, and due to the strong deliveries here in Q4. Also want to move on to the next slide, page number six, where we can see the business news, and this is an announced press release already, so this is some kind of recap. What I would like to go through this to give you an update on what's, on what has been going on in Q4 for MilDef. If we take it from the left, we can see that we won a contract with L3Harris. L3Harris is one of the big primes on U.S. market.
And I think that the significant importance on this contract was that the content in this order was MilDef's own IP products, the 19"/2 product segments that we now won our biggest first order in US, which to me, indicates that there is a strong, attractive offering on the US market as well, which is still the largest one, when it comes to defense spending. The next one was an undisclosed NATO country, it was a large order for MilDef, reaching SEK 320 million. And then we talked about the new production facility that has now been opened in Stockholm. And the final piece here was that Roda awarded their biggest contract in that company's history by adding a contract on SEK 320 million.
And since this is also a year-end report, I think it's a good time to make a summary and also make a follow-up towards our long-term financial targets and how we perform against those. If we take it from the left, we start with the growth, where we have a target of growing the company at least 25% per year. And the performance lately in 2025 was strong when it comes to the growth. Of course, very significant, supported by the Roda acquisition, but it ended up with 70% growth of net sales. And if we then go further on and look into the profitability, where the target is at least 15%, we have moved the needle a little bit. We are doing one percentage point better than we did in 2024.
We are not reaching the target here that we have, so we have a little bit more to do when it comes to the profitability. I think we had a quite slow start in the beginning of 2025, but if we look at the second half of 2025, the EBITDA is reaching more than 17%. So I think we are showing that we are on the right path when it comes to the profitability as well. And the capital structure, also, the way the net debt should not exceed 2.5 EBITDA is the target. And we have now been able to come down, as I said before, this was expected due to when we're now adding on more on the Roda figures into the consolidated numbers.
We were expecting this to drop, and we can now see that that has happened as well, and we're closing 25 in a position of a 2.0. And then we have the dividends policy in the end, where the target is to distribute 20%-40% of the net profit, and as I said, the board of directors has proposed a dividend that corresponds to 24% of the net profit, for payout in 2026. And by that, I would like to leave the word over to Viveca, who will guide you through the financial highlights and the numbers.
I will for sure do my best to do that. So turning to slide number 9, with those financial targets fresh in mind, we'll look at the full year accomplishments. Just north of SEK 3 billion in order intake, which is a 76% growth. We have a book-to-bill ratio of 1.56, which is of course meaning that we're building for the future with a higher order intake growth of, as I said, 76%, and a net sales growth of 70%, which is adding to our backlog. We're also welcoming a number of new employees in order to ensure our growth journey. Graphically, we will see the order intake CAGR of 53% since the IPO, and we have continuously built for the future by also increasing our order backlog in a similar pace, around 50%.
Let's deep dive a little bit into the full year figures on slide 10. SEK 2 billion in net sales, which is a 70% increase. 64% of that is coming from our acquisition of Roda Compute r. The organic growth was 6%. However, I want to highlight that we have divested Handheld industrial segments, and the Roda sales previously made from MilDef to Roda before the acquisition is now, of course, only considered once in the Roda part. So the underlying business of MilDef before Roda is around 20%. The same logic applied to the order intake, 76% growth, with organic growth being a mere 1%, but the underlying business cleared for those structural initiatives is 14%.
Profitability, which is maybe the largest progress in the group, and we're all expecting us to grow, but also profitability is growing. It's showing our scalable business model throughout the group, and I want to highlight that it is throughout the group, which includes Roda. This is also a scalable business model. We have a 15% long-term target, 13.5 in 2025, which is a full percentage point up from 2024. Daniel talked about the positive free cash flow in Q4, which is a strong sign. We are not catching up from the slower start of the year, and we're ending the year in a negative free cash flow position. We are gearing for growth and preparing the group to take further orders and ensuring customer deliveries with higher volumes.
And with a strong growth, it will be sometimes troublesome to keep a strong free cash flow, but we're confident to build that over time as well. An illustration of what I just said with the strong order intake growth and the book-to-bill ratio, which is pegging me up for the order duration on slide 12, which is on the left-hand side, you have the order duration split per year, and you have north of SEK 2 billion for 2026, which is the current year, then on the slide to, sorry, on the graph to the right. And then you have 2027, 2028, and beyond.
If we are looking at the development of the duration, we have a more than 80% growth of the current year versus the position that we held at the end of 2024. We see a good development also of the year 2, which is, of course, those 2 years that we are primarily focusing on of how much we have loaded the backlog with. Strong positioning in the backlog. We talked about the growth development. Let's take a little deeper look on gross margin development. The green line on the right-hand side on slide 13 is showing the total group margin, with the mix of Roda being further blended in, the more the year goes on, since it's a rolling 12 graph.
The gray one, as of Q1 2025, is showing the MilDef Group, excluding Roda. As Daniel mentioned, the margin development for the MilDef Group, excluding Roda, is a positive trend, which is following the previous communication that we are north of 50% when we're doing it properly, and as you see, that is exactly what's happening. We also see that the Roda group has developed well since the acquisition and, and it added on further, gross margin in their business. The downward trend here is merely a mix of the two business models. Each business is doing well, and the mix is simply a mathematical outcome. EBITDA development, it speaks for itself, doesn't it? The scalable business model. When we get the good volumes, we're keeping our strong margins.
This is what we end up with, operationally, from a profit point of view. Talking about working capital is where we have the adverse effect of the growing, then, if you will, which is impacting our free cash flow. We saw strong deliveries in Q4, adding on our accounts receivable, so we see a shift from inventory to accounts receivable. We're happy to see that we are showing a number here of 33.6% working capital in relation to net sales... We have previously talked about different volumes, but since the Roda acquisition, it is a slightly different structure of the business model's working capital consumption. And with that blend, we need to recalibrate what we think is a good level, so to say. We're striving more towards the somewhere around 30%.
It's a good outcome, and as you can see, when we get the good volumes, we are coming closer to that. So that is a good development in Q4. We still have further activities to get closer to the 30%, where we are seeing a more long-term trend or stability, if you so will. Net debt in relation to EBITDA, well, we have said since the acquisition, it will take around a year to come below our long-term target after the close of Roda, and after three quarters, we see that we are coming down to 2.6, and now, after four quarters, 2.0. So well in line with our previous communications and our internal expectations.
On slide 16, I'm leaving you the sales footprint geographically, where we, since the Roda acquisition, saw a strengthening of the European business and, and a good size of that, now on 43%, almost on par with Nordics, 46%. North America is represented by 7%, and with that, I will leave the word back to Daniel.
Thank you, Viveca. I will take the opportunity to go through a little bit of the Roda progress. You know that Roda was one of transformative acquisition we did, and we were closing that in March 2025, so it has now been 10 months within the MilDef's ownership. I think we saw here in Q4, solid Q4 figures, especially strong on the order intake, contributing with more than 50% of the total group's order intake in the fourth quarter. Looking at 10 months of where, where we have had Roda in our books, they have contributed with almost SEK 1.4 billion in order intake, showing that there is a strong business and strong demand on German market.
Integration goes according to plan, and we also saw that Roda in Q4 won several strategic large contracts in the fourth quarter, proves that Roda has strong position on the German market and a good end user reputation. I would say I'm very positive to the Roda acquisition, and I think if we look further out in time, this will be a very important part of MilDef growth journey going forward. So that was just a brief update on the Roda progress and how that looks. And by that, I will jump to slide number 19, and then we will quickly jump to slide number 20, and then we will have a summary and also future outlook. And this will be around the fundamentals for growth for MilDef.
Still, we see a high demand landscape, and we think that this will remain strong for many years. We are now investing, as I said, at a very high pace, and that is because we see continued good demand going on in many years from now. So to be relevant and to be able to meet those kind of demands, we are investing in increased delivery capacity. And also, on top of that, that is what we are really doing, what's in MilDef's DNA, what we have been doing since 1997, is around digitalization and connectivity. That is very, more and more playing a very important role for the European defense capabilities, and that is exactly what hits our core business and what we have done for many, many years.
And finally, also very important for this journey for MilDef forward, is decades of trust in defense domain. This is much of a trust business, and MilDef has provided field-proven products, and we are a well-trusted supplier and partner within the defense domain. And by that, we will my jump to slide number 21, which is the Q&A slide. So we will now open up and try to manage this Q&A session in the best way.
Thank you so much, Daniel and Viveca, for the presentation. 22 minutes past the hour. We have a first question from an analyst at Cantor, Finn Kemper. I just wanted to reiterate that, either you raise your hand, you write in the chat, and when I allow your microphone, you also need to open your microphone. So that's... It's a two-step dance. So let's see if Finn Kemper opens his microphone, and you can state your question. Please go ahead, Finn.
Hey, good morning, everyone. Thanks for taking my question, and congrats on the results, especially in terms of cash generation. I have a couple questions. Maybe first with now Q4 showing positive free cash flow inflection, and also and probably improving delivery execution, what gives you the greatest confidence that the working capital pressure has peaked and that cash conversion can remain sustainably positive throughout 2026? Do you want to answer that first, and then I go over my next question?
Yes, please, Finn. It's better to-
Yes
... do that, then we remember the question at least. What's very, as I said, very positive that we now returned to positive cash flow in the fourth quarter. Looking forward into the next year, as I mentioned, also, we have a very strong position in accounts receivable that we're expected to be receiving here in 2026. But it's also coming down to the, what, what kind of order intake we will have in the future, building up, even on the stronger order backlog at the, in the end of, of 2026. So it's, it's tough to say exactly how the working capital or the cash flow will play out here in 2026. But I think in the long run, looking over a long-term period of time, we have been able to grow this company-...
In a very large amount of numbers without adding any extra cash injections, just because growing the company. We all know that growing a company is gonna tie up more money. But this is, of course, something that we address very closely and work hard, both on the customer side, supplier side, internally, to make sure that we are optimizing whatever we can to be able to be increasing the cash conversion rate, so to say.
Okay, thank you. So there's nothing like a guidance or something you could provide us, whether you're gonna be cash flow positive in 2026?
No, we will not-
Okay.
-give guidance on the-
Okay. But then, looking at the current backlog profile, also with the delivery expected for 2026, how should investors think about the required level of incremental order intake over the next 12 months, to support your medium growth ambitions?
The thing we can mention here is that we still see a very high demand on the market. Underlying demand for the products that we are delivering is still high. Even if we have some volatility, of course, which we always have in this kind of industry, over the isolated individual quarters, we continue to see a strong order intake and demand. There is now a situation on the market, I would say, where we're really starting to see the increased defense spending rippling down. We know that MilDef is late cycle into this phase. So on top of that, the digitalization plays a very important role for the European defense capabilities going forward.
And if you're adding all of those things together, I think that there will be a continued high demand, not only for 2026, but also future on. Also that we know that they are starting to ramp up, aiming for reaching the 5%, the new spending targets within NATO. A lot of countries that we are operating in has already set in 2030. So that there will be tons of investments made into increased defense capabilities, and of course, we think we are one of the relevant players to take a piece of that.
All right, that sounds great. Maybe one last question. I was just wondering if you could elaborate a little bit on why the, the gross profit margin on Roda, basically, deteriorated a bit, throughout the year, and in the meantime, your, your legacy MilDef business margin, expanded, and maybe to what extent this is driven by differences in cost classifications or maybe product mix, rather than underlying profitability. Maybe how should investors think about the impact on this, on the P&L below the gross margin line, given that EBITDA margins already appear broadly, maybe comparable?
Thank you. Very good question. I think first of all, I think what you're seeing when we're talking about the EBITDA margin for Roda in the disclosed numbers in the interim report, is not really super comparable to what we have released before, because they are also now bearing on the legal entity level. They are bearing integration costs, they are bearing on some of management fees that we are adding on there. So it's not comparing, the comparisons has been a little bit tricky to do, I would say. From my point of view, I still see the same financial profile within Roda, with a lower gross margin, but an EBITDA margin that is above or in line with what MilDef has done in the past.
I'm not worried that we will see some kind of major drop there or something like that.
Okay, understood. Thank you.
Thank you, so much, Finn Kemper, with us, from Cantor Fitzgerald. Thank you for tracking MilDef, one out of six banks doing so these days. The next question comes from Hugo Lisjö with, DNB Carnegie. Take it away, Hugo. Please open your mic.
Hey, thank you so much. For some reason, my camera doesn't work, but don't mind. Some of my questions were already answered, but I'm curious about how you're thinking about costs going into 2026. In earlier calls, we have discussed the cost increase of about 10% on OpEx. But now that you have announced the production expansion in Helsingborg as well, how should we think about the cost increases compared to those 10% we have been talking about before?
It's thank you, Hugo, for the question. There will be costs, of course, when we're growing the company, there will be adding on OpEx. We are investing in things that are mainly OpEx related. We still don't see any major investments on the CapEx side, but on the OpEx side, we will see an increase in, as I said, the number of staff, et cetera, to be able to take care of the growth. We will not quantify exactly in terms of percent, how we see the future when it comes to the OpEx development. But of course, we hope to see a continued operating leverage when it comes to the scalability of the business and things like that.
But, with that said, absolutely, we need to invest, we need to ramp up to a higher delivery capacity, and that will take some of the margins away.
Yeah, yeah. Perfect. And also just a short question on Roda and its margins below the gross profit margin. Because you mentioned the Roda bearing more of the integration costs now, so today's margin is not comparable to historically. But could you elaborate a bit on how you think about increasing Roda's margin throughout the next years?
Absolutely. Thank you, Hugo. I can start with saying, if we look at the reported figures that we have announced when it's related to Roda, we can see that the gross margin, 10 months into middle of ownership, is now on a level of 35%. And we know historically that Roda has been operating around 30% something. So we already now see some positive effects of that, and we will hope that we continue to be able to doing that. I think that the key, the key thing to be able to do that, it's a success with more of our own IP products, addressing that to the German market. And of course, we see opportunities for that, but it also, it will take some time before we can see the real impact of those kind of synergies.
Perfect. Thank you very much. That was my final question.
Thank you, Hugo Lisjö, with DNB Carnegie. The next question comes from Daniel Lindkvist, with Danske Bank. Your mic is allowed, and please open it.
Perfect. Thank you. So just, I guess, the Roda was the exclamation mark in this report, so let's start off with that part of the business. I just got my answer on the levels of the gross margins, but I guess for the future now, the working capital profile in Roda, is there something that we should keep in mind now that they're delivering strongly?
I would say that Roda is a little bit more carrying a character, where they can add on more finished products on the inventory and be ready to shorten the lead times. They have quite, maybe a little bit more of a standard solution when it comes to the products. So, they are more able to... If they see a high demand, we would be ready to maybe increase the inventory, shorten the lead times. So that could be one component that could play out in the working capital.
But the lead times on accounts receivable, that's not any longer than in MilDef?
That is quite similar to what we have in MilDef, yes.
Okay, perfect. Then just for the future, how will you handle Roda? I mean, now it's soon turning into organic instead of acquired operations. So are you still planning to report Roda separately for the future?
Good question there, and I don't think we have really deep dive into that, so let us come back to that. We will still, in Q1, need to separate Roda, because we have January and February, then, which is months that we didn't have in 2025. But let us be able to come back exactly how we will proceed with a Q2 report and forward, and how we will break things out or not.
Okay, perfect. And then on the gross margins in MilDef in Q4, I had estimated that they were going to be lower for the Q4 quarter. Is there anything special to keep in mind with the Q4 level?
As you mentioned, normally, Q4 bears a little bit lower gross margin due to high volumes orders and things like that. But now, what's the fourth quarter in a row where we see underlying gross margin and MilDef gross margin, so to say, that is above 50%. And I have talked about this a little bit before, that we see a positive trend due to the offering, a little bit change of the product mix. We see increased software revenue, we see increased solutions revenues, and things like that. So the total offering and what we are selling, I would say, is now showing four quarters in a row, that it's on a positive trend, and that we are able to be on a long term above this 50% gross margin target.
Okay, so there was nothing dramatic with the software level of deliveries in Q4?
No.
Okay, perfect. And then just for my last question, the lease liabilities, are we now at levels that include the full of Rosersberg and the added facilities in, in Helsingborg, or maybe even the double facilities in, in Rosersberg? So just, just for the future.
For the isolated fourth quarter, almost, in terms of the Stockholm facilities. For Helsingborg, no, since that has not yet been expanded.
Okay, perfect. Thank you. That's, that's all from my side. Thanks.
Thank you, gentlemen, for raising these good questions regarding the Q4 and year-end report from MilDef. We are at the final approach of this flight. I can conclude that we have been north of 80 participants in this meeting. That is also an all-time high for this quarterly call. And if you did miss the entire show, you can listen in on our website later today when this full conference will be presented on the MilDef web. So I see no more questions in the chat, and I have no more raised hands. So this concludes the Q&A session of the reporting of today. Thanks for joining, and put a note in your calendar. Next Q4 report presents itself, the Q1 report on the twenty-third of April. Now over to Daniel to close the meeting.
Thank you very much, Olof, and I just want to have a short closing. And thank you, everyone, for joining in and listening in to the conference call today, and thank you for following the Mildef journey. Take care and bye-bye.