Hello, ladies and gentlemen, a warm welcome to the MilDef Q3 Investor Conference call this morning, with a special focus, of course, on the third quarter of 2023, as well as the first nine months of the year. This call will be presented by my colleagues, Daniel Ljunggren, CEO, and Viveca Johnsson, our new CFO. We expect approximately 45 minutes to be sufficient for this full meeting, the presentation and the following Q&A. A friendly reminder, ladies and gentlemen, is to keep your mics muted if possible. Please open up your mics for the Q&A or state your question in the chat, and I will moderate the lineup of questions. Also, for your clear and open information, we record this meeting. So again, a warm welcome to the MilDef third quarter presentation, 2023. With no further ado, please take it away, Daniel Ljunggren and Viveca Johnsson.
Thank you very much for that, Olof, and a warm welcome to everyone in this conference call, and also a warm welcome to my new sidekick here, Viveca Johnsson, as the CFO. This will be her first quarterly report with MilDef. I will just move on and jump directly to what we say, the highlights for the third quarter here in 2023. Continuous strong net sales growth. Isolated in the third quarter, we saw a sales growth of 38%. That is not in line what we have seen in the 2 previous quarters, but still, if we zoom out and look at the first 9 months, we have a sales growth of 89%. On a rolling 12-month basis, 78%. So I think that we can say that we continue to have a strong net sales growth.
I also will highlight this, and if we look at the long-term financial performance of MilDef, we can see that we now are performing an operating profit on the last twelve months that is on all-time high level. And on top of that, I also will mention that we still have a strong order backlog going forward. We see an order backlog now of SEK 1.3 billion. So we have a lot more to empty the order backlog and delivering to our customers. This is also something worth mentioning here on the highlights. In the third quarter, we unfortunately see that the security situation in our world has not improved.
I think in the context of that, it's worth mentioning that MilDef has never been more relevant and what MilDef deliver has never been more relevant during the 26 years history in this company. I think that is also worth mention as well. If we look out further and see, and we have talked about this a couple of quarters now, the military spending is steeply going up, and we see in high demand landscape, and we see that it will be here to stay. If we look 5-10 year out from today, I think we can say that we we'll have a high demand landscape, and it's here to stay. Also worth mentioning is that I see a new dynamic on the market.
Our end customer had, if we go back a couple of years, limited limitations in time, or they have a lot of time, but limitations in terms of money. And now I think that the limitations is about time, and they have a lot more money to spend. And I think that is a dynamic worth mention and a dynamic that I think will benefit MilDef if we look further out. Worth mention also as a highlight in the third quarter is that MilDef have continued to invest in and improve our product portfolio. We have invested in a couple of new products that we hopefully can help us fill up the order backlog going forward. And I will come back a little bit later on slides going forward to the products that we now have released.
Some key figures for the third quarter here in Q3. We start with the net sales, ended up on SEK 226.5. That is a 38% increase if we compare to last year, Q3. If we zoom out and see the first nine months, we can see an increase, as I said, on 89%. We also can see that on a rolling twelve-month basis, we see that we perform a strong growth on all our geographic market we operate on. We can also see that on a rolling twelve-month basis, that we have exceed SEK 1.1 billion.
I think that is worth to remember that we have made a, a tremendous movement in the long-term financial performance of MilDef, where today are performing a rolling 12-month basis that is almost double what, what we did if we go back 12 months, let's say. If we jump further on to the EBITDA, I will say that we have seen a very strong improvement in profitability the last 12 months, and I think that also proves our scalability in the business and the business model we have. I'm also glad to announce that our gross margin here in the third quarter ended up on 50%.
If we take year-to-date numbers when it comes to the EBITDA profit, I will just mention that I think it's a good movement we have done from the previous year, where we had SEK 70 million, SEK 16.6 million, the first nine months, and now this year, the first nine months, we are performing SEK 108.2 million. I think that it's what I'm talking about when we have done a movement and financial performance is good, even if the third quarter wasn't as good as the two previous quarters here this year. Order intake is something that we don't feel that we are very satisfied here in the third quarter. There is a major volatility quarter by quarter in our business.
I saw that there were good order intake of minor orders, but we also saw a delay when it comes to a couple of potential major orders going forward. They were postponed in time. We ended up in the third quarter on 107.7 SEK. We still and that was 42% increase if we compare to a strong order intake previous year. But also, if we zoom out and look at the first nine months, we increase our order intake by 21, more 21%, and that indicates that we can continue to grow our strong net sales. And also worth mentioning is that we don't yet see any material impact post the Russian invasion of Ukraine.
We're still waiting for the military spending to start rippling down and affecting MilDef's net sales, order intake and order backlog. Also, if we move on to operating cash flow, which I think is very, very important for us, we are a fast-growing company. We need to have control. We don't tie up too much money. But I also want to highlight that when we are closing the Q3, we normally have our highest inventory level, and that is the same what we can see here this year. And that is, of course, due to the delivery readiness we have for a high deliveries in the last quarter here so...
But also here, if we look at the year to date, January to September, we can see that there is an improvement in the company, and I will predict that the working capital will be normalizing, go back to historical level, and that will have a big impact on the operating cash flow going forward. Some Q3 business headlines. I think you all have already seen it in the presentation, and maybe some have seen it on the website or other places, that we have now launched a new brand. And what I hear from customer and employees and other interests is that we see a very good feedback from the new MilDef look and how we have presented them. So I'm very happy to see that we now have taken MilDef into the next modern brand.
I will also highlight that we have talked about our increased ambitions on the U.S. market, and in the third quarter, we have seen a couple of good orders, contracts coming in, and we closed a U.S. contract worth $3.5 million. The U.S. market is by far the biggest military market in the world, and I think that we have a great untapped potential on that market going forward. I will also highlight one of the new products that was released here in the third quarter, created a very good interest from customer at some of the biggest exhibitions we have here in the third quarter. And it's a MilDef Tactical Android Device.
It's a small handheld unit, Android-based, that is, sits very well what we can see forward going with the dismounted soldier and soldier, how we can digitalize the soldier going forward. So that is something I have big hope for going forward, that it can be a very good product. Also worth mentioning, some other, product development we have done in the third quarter that I also think will, create a good sales going forward is a new panel PC technology, where you, where this is already used today in some of our platforms, and we have increased the technology around that, and that is also something that I see a big interest from our customers.
Let me zoom out and talk a little about the market that we see going forward, and this is probably I have seen this market for a while now, and I just want to highlight what I see on the market. And I see that from our end customer, that there's still a very great need of modernization and digitalization in the defense sector. There is a big debt to pay for the military. They have decreased their spending, and they also haven't had the most modern technology, so now they are trying to catch up, and I think that is something that MilDef will benefit for going forward. Also, something I would like to mention around the market is that we today see the largest increase in military spending in Europe in the past 30 years.
We need to go back in early 1990s, something to foresee the military spending we see today. And as I said, hasn't really started to rippling down on MilDef yet, and I think that is connected to this number three here, that a lot of countries are still in their defense planning process. And we are, as a company, late in the cycle. We have seen that they have started to place, orders on the big platforms, the vehicles, et cetera, and that is something that we can benefit from going forward. So hopefully, we will see that the effect, from the increased military spending will starting to rippling down here.
Also, very interesting from a, a company with a strong Swedish root is that we see the potential NATO boost going in when Sweden hopefully will get their NATO membership applied, and that is something that we keep on monitoring, and we think that in the long term, that will be a better benefit for MilDef. And by that said, I would like to leave my, the word over to Viveca Johnsson, who will walk you through the financial summary. So please, Viveca, take it away.
Thank you, Daniel, and good morning, everyone. We start with zooming out the picture a little bit from the isolated quarter into a rolling twelve months picture of the net sales, which is another all-time high for the MilDef Group with a 78% growth from the same period last year. We have good growth in all geographies that we measure, so that's also something that we are quite happy with. Along the right-hand side, you see the gross margin, which is on a solid level, 48%+, and in the third quarter, it was turning from the net sales to another all-time high. We look at the EBITDA, and we have almost 200% growth from this period last year, which we are, of course, quite happy with.
As Daniel mentioned, this is the scalability in the business model. If we get the good volumes, we, we get the good profitability, and here you have that illustrated in the rolling twelve months EBITDA. From profitability then back up to order intake, rolling twelve and year to date, first nine months of the years, growth is north of 20%. The isolated quarter is not the success that we were hoping for, but if we do zoom out to a longer time period that is probably better to view MilDef on, given the volatility between quarters, we are still growing. Furthermore, again, as Daniel said, the military spends that is trickling through the system has not yet reached the MilDef offering. That should bode well for the future.
From orders to orders, order backlog, which is usually where the orders end up, we are remaining on a historically high level here, a small increase from the position last year and, finalizing on almost 1.3 billion SEK. This is including deliveries for both 2023 and, and for a much longer time as well, so 2026 and beyond. And on the next slide, we will be looking into that duration, which is also showing the longer business cycle that MilDef is operating with. So on the top left-hand side of this pie chart, you see what is for 2026 and beyond. The top right-hand part, the dark gray or almost black part, is the 2023 delivery position.
This is slightly lower than we had last year, although we do think this bodes for a good delivery in the fourth quarter of 2023. The final financial slide, so let's turn to the balance sheet side of things. The working capital, and if we start by discussing it as a percentage of sales, we are now on 35%, which is coming down from the position we had last year after the acquisition of the Handheld Group. Daniel mentioned that we built some inventory to secure deliveries for the fourth quarter of 2023 and the first month quarters of 2024 as well.
We do think we have reached a new platform level of working capital, where we will not, going forward, need to add as much working capital per sold Swedish krona given, and then we can meet the targets previously shown to you, where this percentage is coming down somewhat. And on our right-hand side, we are looking at net debt in relation to EBITDA. Another one that was up and peaking around the acquisition of the Handheld Group, which is now on a more solid level of 2.1, which is below our long-term target of 2.5, and with continued good profitability development, we will most likely be able to show an even lower number there. And with that, Daniel, I give it back to you for some future outlooks.
Thank you very much for that, Viveca. It's very healthy to zoom out and see the long-term picture of MilDef and the financial performance over a longer time than just one quarter. It's quite volatile in our business sometimes, and I understand that, maybe in some ways, our third quarter didn't really meet up the expectations. But if we zoom out and see nine to 12 months, I think it's strong numbers there. Future outlook, what I see going forward and what we should prioritize going forward, this is something that I mentioned during the whole 2023, that is continue from the company's strong focus on customer deliveries in 2023. It's very important for us to be successful going forward as well, that we meet our customers' requirements when it comes to deliveries here.
Also, super important for the MilDef going forward is that we can capture the increased market opportunities in EU and NATO. There will be a lot of opportunities that we need to turn into order backlog instead, and going forward, revenues and cash flows. So important times here, 6-12 months going forward, that we have an offering, that we have an business model that can capture all these market opportunities.... We will continue to work hard, and we will continue to improve our working capital and operating cash flow. This is very critical for the business going forward. We are growing fast. We are tying up more cash in inventory et cetera, in our working capital, but we also need to find smarter ways to work harder with this so we can improve the operating cash flow.
That is something that we will focus on going forward as well. Also worth mentioning, that I said before that I think in the US market, by far the biggest one, we have an untapped potential. I think we have a product portfolio that can do even more in the US, and there is really high volumes in the US, and we will try to do what we can to win more business on the US ground. So we will continue to accelerate our US expansion. Last bullet here will be around the NATO. Hopefully, we can now see that the Swedish membership in NATO will be applied, so we can also be aligned and be within the NATO and membership in the NATO family.
I think that will be a very important in the long term, at least for MilDef and the position of MilDef. As I said, even if I understand that our Q3 numbers didn't really met the expectations on the market, I still have positive expectations for the rest of 2023. We go in, we closed the third quarter with a strong order backlog. We see a more active market, even if we didn't see that in the order intake here in the third quarter, we continue to see a more active market. And due to that, I predict that we will continue have a strong sales, a strong order intake, and a strong profitability for the full year 2023. That's my expectations here and now.
With that said, I think we are in the Q&A session, and the report and the presentation is done. Let's move over and see if there is any questions.
We have a few questions, actually, and the first question comes from Hans. "How does the weak Swedish krona affect the MilDef sales?
It's, of course, giving us some extra boost on the top line there. I would say, on the other side, we also purchase a lot of products from Taiwan, so we have on the margin side, we are also have an effect there. So, but of course, it's boosting the top line a little bit when it comes to this weak Swedish krona.
Thank you for that. The next question, series of questions comes from Hugo Lisjö. "What are your thoughts regarding the order backlog? The value of the order backlog for the remainder of this year is lower than it was one year ago. What are your thoughts on this?" Is the first question.
Yeah, I, I think we need to see that we also have, things that is not in the order backlog, that we also will, be able to track down as revenue when we go into the, to that quarter. So, I understand what Hugo mean, and hopefully we can boost that even more, those numbers going forward. And, we also know that we, previous year postponed, some major orders, and hopefully, we can as focus on delivering this year, we will hope that we can make all the deliveries that is expected in the, in the fourth quarter.
Another question from Hugo regarding our place in the value chain, in a sense: "We've seen news that certain subcontractors for Hägglunds have received orders related to the significant CV90 contracts. Do you have any updates regarding your potential involvement in delivering to the CV90 orders?
I'm not going to go too much into detail when it's future business opportunities, let's say. But of course, we are one of the sub-suppliers that we are talking to BAE Hägglunds around this, and I know that they have a massive order backlog. They will be delivering a lot of CV90s going forward, and we have a good history with BAE Hägglunds, so I would be surprised if we don't have a good dialogue with BAE Hägglunds, which we are having at the moment. So hopefully we will see here in the fourth quarter that things are improving in terms of order intake.
Thank you, Daniel. And final question from Hugo: "In January, you received a prototype order under your extensive framework agreement." I think that he means the, FMV agreement. "Can you provide an update on the progress of this project?
I can do, and I can also mention that there is a long cycle, sales cycles. We haven't got the serial volumes order, so we're still waiting. We have done a tremendous good work this year when it comes to the R&D and developing new products, et cetera. So now we have framework agreements in place, the products are developed, so now we are waiting for the final piece, the big serial volume orders.
Thank you for that explanation. Over to Viktor Lindström. "Now, with the recent acquisition and established office in the US, do you expect the cost base to grow at lower levels going forward?
I do that. I expect that we will see synergies on the cost side. We will see that we are now starting to consolidate our business, for example, in the U.S., but also in the U.K., for example, connected to Handheld. I hope, and I will see, and our prediction is that we will have cost synergies going forward, and that will have a great impact on the P&L and our profitability going forward. So we are in that process of consolidating our business in U.S., in U.K., and it takes a little bit time before we're starting to see the cost synergies, but in 2024, we will absolutely see them.
...And, as you can see in the Q3 report, the U.S. market, sales for MilDef are growing quite substantially. Final question from Victor: Do you see any delayed order in Q3 that move into Q4?
Yeah, as I said, we saw a good order, still continued good order intake of small orders, but for a company of MilD ef's size, we need, and we have seen that in the past quarters when we have had a good order intake, that we need those one or two big orders, and they have been delayed in time. So we have not seen any big orders, or we have not announced any big orders in the third quarter, and that is what I mean. I think that the potential big orders has been delayed in time, and hopefully now we can see in the fourth quarter that we now can close those business and turn it into order backlog.
Thank you. And on the same note, approximately from Adam, we have not lost orders. They have just been delayed. Is that correct?
I would say that it's a correct picture, yeah. And, for those who have been with MilDef at the time, do you know that it takes time? It's very tough to have a right when it comes to timing of order intake. So in isolated quarters, it can be very lumpy, high volatility, but, normally, in the end, we are not losing the business. It's just lacking in time.
Thank you, everyone, for those good questions. We'll just idle on for a few more seconds so that somebody can shoot over another sharp question. Before we do that, I ask you to dwell on, well, let's say, like this, MilDef has never been in this situation before, been larger or more relevant for its customers and possibly also shareholders. What do you expect for the remainder of 2023 and moving into 2024, Daniel?
As you say, I think that MilDef is in a very good position. I think that we will see a high demand landscape that will have a good impact on MilDef. And we also see that we have resources. We have invested in our product portfolios. I think we have done a lot of things right, and now we are, so to say, waiting for the increased military spending post-Russian invasion to start and to rippling down to MilDef. We are in. We have the framework agreement in place, we have the portfolio in place, we have the capabilities in place. So even if we have grown a lot the past years, we're still waiting to be able to accelerate even more. And I'm looking forward to do this together with all the employees at MilDef to take this to the next level.
That is the closing of this call today. Thank you, ladies and gentlemen, for taking part of the MilDef journey going forward. Thank you very much, Viveca Johnsson, and welcome to the MilDef family. Thank you, our CEO, Daniel Ljunggren, who has been a part of the MilDef family for plus north of 10 years. So thank you for following this call. 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 understand the MilDef continuing journey. So stay tuned for more. Have a fine day. Stay safe.
Thank you very much. Bye-bye.