Speaker #1: And CFO Dana Burström. If you're calling in and would like to ask a question, please press star 9 to raise your hand, and star 6 to unmute yourself when you get to word.
Speaker #1: You can also type in your questions using the form to the right of the broadcast. And with that said, handing over to you guys, and I'll be back for the Q&A.
Speaker #2: Thank you very much, and I welcome you all to the presentation of the Q3 results for Prevas. The agenda for this short meeting looks like this: we will start with this introduction, then we will have a review of our financial performance for the third quarter, then we will have a market update, and we finalize this meeting with a Q&A session.
Speaker #2: So, looking into the third quarter of 2026 for Prevas. Prevas delivered a stable performance in the third quarter of 2026, with improving key metrics.
Speaker #2: We can see that Prevas is returning to a positive organic growth after 6 quarters. This means that we are delivering a net sales of 357 million SEK compared to last year's 355.2 million SEK.
Speaker #2: Despite the fact that we are lower number of employees. The EBITDA for the quarter was 30.1 million SEK compared to last year of 30 million SEK.
Speaker #2: And the EBITDA margin was unchanged, 8.4%. We can see that we had a very positive development of the operating cash flow for the quarter.
Speaker #2: We delivered 31.9 million SEK in operative cash flow compared to last year of 21.3. The EPS for the quarter was 1.37 SEK compared to last year 1.34.
Speaker #2: So all in all, Q3 was a clear step in the right direction for Prevas. We managed to grow our turnover and we delivered 8.4% of EBITDA.
Speaker #2: We less employees. This reflecting increased efficiency thanks to all the different actions we have taken in Prevas, and the sales focus have been working on for the last quarters and also during the third quarter.
Speaker #2: Another fact is that we have a higher deliver volume in areas with higher value add in this quarter, where we actually have higher margins in those offerings that we have been growing in the third quarter.
Speaker #2: Looking then into more of the details, what is driving the improvements we make in Prevas? Looking into Sweden, we can see that the EBITDA grow with 12% versus Q3 of last year.
Speaker #2: And we reached an EBITDA margin of 9.7% in Sweden. And the reason for this is absolutely quite simple: high utilization, improved efficiency, thanks to the actions we have taken, but also that we are especially in Sweden increasing our part of the business where we deliver in higher value projects, with higher margins.
Speaker #2: And that is improving the margins we make in Sweden. Then I'm very pleased to see that in Denmark we are once again back to profit after 3 loss-making quarters.
Speaker #2: Now Denmark is back on track. We deliver an EBITDA margin in Denmark of 7.9%, and this once again is thanks to higher utilization and improved efficiency.
Speaker #2: The team in Denmark has been working very, very hard in order to adapt to a more tough market that we have seen, and this now pays off.
Speaker #2: We also see in Denmark a growth. And the growth is in cybersecurity and defense, the two priority areas we see in Denmark right now.
Speaker #2: We also see that we actually are net growth in terms of employees in Denmark. If you compare the first month in the quarter and to the end of the quarter, we have actually have a net growth in Denmark in terms of employees.
Speaker #2: Which of course is promising for the future. Looking into Finland, we can see that during the third quarter that Finland is improving, but we need to do more.
Speaker #2: We can see that EBITDA reached now a positive EBITDA of 0.7 million SEK, 1.5%. This is still below our ambitions, of course. We need to improve.
Speaker #2: But we have taken measures in Q2 that we see the results now in Q3. These measures has made us increasing the utilization and also made our cost base substantially lower.
Speaker #2: During the second quarters, we signed orders that contributed positively to the third quarter's results. But one thing that has affected the quarter negative is that the defense orders we made in Q2, the plan was to start them immediately in Q3, but unfortunately these defense projects has been postponed.
Speaker #2: They are now started, but they started later than planned, and this influenced the quarter negatively, but natural we will see a positive effect of these defense projects when we move into the coming quarters.
Speaker #2: We also see a growth in data centers in Finland recently. We see this in other parts of Prevas as well, but most particularly in Finland we see an interesting growth in that area, which of course is very welcome in the Finnish market.
Speaker #2: That still is quite tough, to be honest. Our focus is very simple in Finland. It's we focus on sales, we focus on turning our orders into revenue into margins, and to improve our profitability.
Speaker #2: We have a new organization in place since Q2. We have a motivated team, and they work extremely hard to prove that Finland can and will deliver strong margins.
Speaker #2: I'm so convinced that we will see this in the future. So with this, I hand over to you, Helena, to talk a little bit about our cash flow and the financial position we have in Prevas.
Speaker #1: Thank you, Magnus. A study in the beginning, cash flow from operating activities amounted to 32 million SEK in Q3, compared with 21 million SEK, the corresponding quarter last year.
Speaker #1: This represents a continued strong recovery compared with a corresponding period in recent years. The higher cash outflow from financing activities compared with last year was mainly explained by the repayment of the 13 million SEK drawn on the overdraft facility in Q2, 2026, combined with a positive impact of 11 million SEK from new borrowing in the corresponding period last year.
Speaker #1: Cash at the end of the quarter amounted to 1 million SEK, compared to 7 million SEK last year. And net debt in relation to rolling 12 months EBITDA was 0.9.
Speaker #1: Our financial targets is not to exceed 2.0 over time, meaning that we remain well within our financial targets. And equity ratio stands 54% compared with 50% last year.
Speaker #1: Magnus, back to you and market update.
Speaker #2: Thank you very much, Helena. Thank you. So a view on the market. What we see is a rather similar market compared with Q2. Q2 of 2026.
Speaker #2: The conditions continue to vary across customer segments, industries, and regions. We continue to see very strong demands in defense, in the energy sector, in data centers, and in cybersecurity.
Speaker #2: We also see a weak demand in pulp and paper industry, and the main part is in Finland, where we see a weak demand. A continued weak demand in that area.
Speaker #2: We see clear signs of recovery in Denmark. We also see positive signals from the export industry in the Nordics. Except for automotive. And talking about automotive, the segment automotive and transportation, as you can see in the industry breakdown, represents 6% of the total group revenue for Prevas.
Speaker #2: The car companies, like Volvo Cars, is only a small fraction of these 6%. This means that Prevas is not directly exposed to recurrent difficulties that we see in the car industry.
Speaker #2: Of course we are affected on an indirect level when companies like Volvo Cars is making big reductions in terms of personnel in the Gothenburg area, but we have no direct effect for Prevas related to those kinds of reductions.
Speaker #2: We can also see in the industry breakdown that the share of our revenue for defense has increased from 15% up to 17% for the first three quarters of 2026.
Speaker #2: Then I also would like to emphasize that the top five customers of Prevas, represent around 25% of the revenue for the third quarter of 2026.
Speaker #2: So we are positioned in a good way. We have many different segments that we work with, and we have a very many different customers and we are not high dependent on specific customers.
Speaker #2: Looking a little bit more into the defense area. Defense continues to be a key growth driver for Prevas. During the third quarter we managed to produce 6% of organic growth within defense.
Speaker #2: Sweden and Denmark actually increased by 19%, which is a strong growth. The reason that the group only comes in on 6% organic growth for defense is that Finland had a very strong comparison quarter last year, with a big project project delivery including a lot of material.
Speaker #2: So underlying we continue to grow in defense. The sales in the third quarter was 61 million SEK, rolling 12 we are now at 283 million SEK in turnover towards the defense industry.
Speaker #2: And for the third quarter that equals 17% of the group sales and last year was 16. Something else that happened during this quarter, and also the previous quarter as well, is that we signed contracts now with new customers in the defense area.
Speaker #2: It takes quite a long time to come into new customers in this area, but we now see that our devoted works pays off. So we have signed new customers attracted new customers in the area, with nice growth potential in Sweden, in Finland, and in Denmark.
Speaker #2: Then I would like to talk a little bit about some other growth areas in Prevas. We have an area called enterprise asset management, EAM, we are a partner with Octave when we work as a reseller for their software within enterprise asset management, and we support our customers to improve the way they work with the maintenance of their assets, creating a lot of customer value in this.
Speaker #2: During this first three quarters of this year we have managed 35% of organic growth in this very prioritized market for us. We have signed several large orders in 2026.
Speaker #2: Totally well above 100 million SEK in orders in this area for companies like Lunera, Oslo Stad, etc. And what we deliver is, of course, services.
Speaker #2: We help our customers to improve but we will also get recurring license revenue from as a part of these deliveries within EAM. And then we have the cybersecurity area.
Speaker #2: What we see in cybersecurity is that demand is actually accelerating even more there comes more strict requirements right now like the CRA regulation that actually drives this demand even more across products and production the areas where Prevas are present.
Speaker #2: Then we have data centers. This is an area that is quite new to Prevas. We have seen a rapid growth from very, very low levels in 2025 and we now grow into 2026 in this area.
Speaker #2: We delivered traditional Prevas services like automation services, piping design, electrical design, etc. towards customers within the data center area. So what you see is that we have specific areas with growth.
Speaker #2: And what do we do in order to meet this growth? We are starting up recruitments. In Q3 we started recruitments and we will continue to recruit for the forthcoming quarters as well.
Speaker #2: To meet these specific customer demands. Then I would like to talk a little bit about AI in Prevas. It's on everybody's lips right now, the topic of AI.
Speaker #2: I would like to share it into two parts. First, what do we do for our customers? We work with AI solutions where we sell AI as a part of our supplies and solutions to our customers.
Speaker #2: One example is within AI powered vision systems where we use the latest AI technology on the edge to solve problems that were impossible to solve in the past.
Speaker #2: And all this of course due to the fantastic technology within AI. We work with intelligent software and data solutions in our customers products and processes.
Speaker #2: So that is one part. Another part is that we utilize AI to deliver faster and with higher quality. Within software development today, throughout Prevas, we work with agentic software development.
Speaker #2: We work with AI supported testing. And we use LLM assisted LLMs to assist with data analysis of log data, etc. So we are very agile and active in utilizing the benefits of AI to improve our deliveries to our customers.
Speaker #2: And that is one part. The other part is inside of Prevas. We also utilize AI to be more efficient internally. One part is in sales and bids.
Speaker #2: We use AI. We have made applications and solutions that make our process to make bids offers and concept more efficient. We also utilize AI in our own internal support functions.
Speaker #2: Automating administrative services with AI agents. This is new technology. It's quite it's brand new but we are very active and utilize the possibilities that come through the technology.
Speaker #2: We also use this for increased efficiency in analytics. And then as a summary, the business we make in Prevas is linked to the development of physical products.
Speaker #2: Manufacturing systems, industrial operations, it's not a pure software solution that we are selling to our customers. We are linked to the physical world. And I know that AI will automate parts of the engineering work.
Speaker #2: And it's fantastic. But it does not automate the responsibility for designing the correct products, solving the right problems, building and operating real world industrial products and production system.
Speaker #2: Doing that you need to have domain knowledge. You need to have people. You need to have what Prevas is offering. So going forward, I'm convinced that we will see there will be more value to be created through the combination of engineering expertise, the senior premium expertise that Prevas has, the deep domain knowledge that we have in Prevas.
Speaker #2: And of course AI as a part of this. And we see AI as an opportunity for Prevas and act very agile to utilize this opportunity in the future.
Speaker #2: And then I would like to short give one example of what we actually do in AI because one thing is talking and another thing is delivering value.
Speaker #2: For Alema a world leader in manufacturing of steel rods, we have together with them developed AI based machine vision system for automated quality control of steel rods.
Speaker #2: I could talk 10 minutes about this case and I will not do it but it's very, very complex and it's very, very high value for the customers and we utilize the latest AI technology.
Speaker #2: Doing what we do now was impossible I would say six or nine months ago. So we are an agile company utilizing the benefits of AI.
Speaker #2: And then a summary of the third quarter of 2026. Prevas delivered a stable performance in Q3. We returned to positive organic growth. We delivered an EBITDA margin of 8.4% which is a significant increase from the second quarter and in line with last year actually the EBITDA in SEAC was slightly above last year as well.
Speaker #2: We improved the cash flow substantially we increased the EPS so the key metrics were developing in a very good way in the third quarter of 2026.
Speaker #2: Why is this? The reason is that we have operational improvements delivering results in Prevas. Sweden delivered higher EBITDA and an organic growth. Denmark returned to profitability.
Speaker #2: Finland improved we increased utilization we have lowered the cost we have a new organization and a motivated team that now work very hard to secure that Finland will come back on track in terms of profitability.
Speaker #2: Looking into the priorities ahead. We need to convert the demands we see in the priority areas that I presented to you into profitable growth.
Speaker #2: The focus is very simple. We focus on sales. We focus on high utilization, cost control, which end up and the consequence will be profitable organic growth for the company.
Speaker #2: Another priority for us of course is to improve the profitability in Finland. And then we will continue to recruit in areas where we see strong demands moving Prevas towards profitable organic growth.
Speaker #2: And as a summary, from my point of view, I think Prevas has taken clear steps forward in the right direction in the third quarter of 2026.
Speaker #2: This quarter confirms that our focus and actions we take pays off. And now with this with and we now focus to convert this strong demands we see in selected areas into profitable organic growth and also to continue to improve the profitability in Finland.
Speaker #2: And with this I thank you for listening and now we move on to the Q&A session.
Speaker #1: Yes. Thank you for that presentation. We will now open up for a short Q&A session and as mentioned earlier if you follow the webcast you can submit your questions via the form found to the right of the broadcast.
Speaker #1: And if you call in and would like to ask question please press star nine to raise your hand and star six to unmute yourself when you get word.
Speaker #1: We can begin with a caller whose number ends with 8659. Please press star six to unmute yourself.
Speaker #3: Good morning everyone. Dafina from ABG here. Thank you for the presentation. My first question is on organic growth with which turned positive in the quarter.
Speaker #3: How much of this came from price increases, high utilization, and volume respectively? Thank you.
Speaker #2: Hello thank you very much for a very good question and the answer to this is as you say split between different parts. Actually we have increased the volumes in areas where we have a higher margin and higher value add and that has increased the average prices in in Prevas.
Speaker #2: So that is a part of the explanation. Another part is that we our utilization our efficiency has increased so that's also one part. A third part for this is that we also have seen an increase in in our subconsultants the revenue for for this quarter and also a minor increase in in revenue from materials.
Speaker #2: So so it's a it's a mix of of different aspects that has created this this growth. And we need to remember also that we are less number of employees this year compared compared to last year.
Speaker #2: So all in all from my optics I believe it's it's a proof that we have taken the right actions in the quarters before Q3.
Speaker #3: And and just on pricing have you seen any change in your ability to raise prices with customers? You spoke a little bit about that but are price increases now in line with or above salary increases this year?
Speaker #2: I I would put it like this. The average prices in Prevas has been adjusted and are now in line with the salary increases we have seen for the year.
Speaker #3: Okay. Thank you. And Finland has been a tough market and you made some restructuring changes in previous quarters. What are the main factors behind the improvement now and when do you expect margins to return to normalized levels?
Speaker #2: When we expect to get back this is something that will take time. I look into Sweden we are very close to 10% in Q3 and and we we expect to continue to to have a positive development in Sweden.
Speaker #2: Denmark went up to 7.9% and of course the that's a consequence of the action we have taken in Denmark. And we now have a more positive market.
Speaker #2: So so there also we have a positive journey ahead. Of course looking into Finland when we make 1.5% of EBITDA that's where we have the big margin growth to make and that is also where we focus together with the very motivated team to increase the EBITDA.
Speaker #2: So so definitely our focus is to increase the EBITDA to a a more reasonable level that's that's for sure. But we don't give forecasts I can't actually say when when we expect that to happen.
Speaker #3: Yeah. Okay. Thank you. And just on the segments you mentioned strong demand in data centers how large is this area for Prevas today roughly and also on just pulp and paper is that a large exposure for you in Finland?
Speaker #2: I started the second question. Pulp and paper used to be a big part of the business we make in in Finland. And it has reduced substantially compared to a couple of years ago.
Speaker #2: So so in that sense the the we have already taken the hit from from the lower demands in the pulp and paper industry. So that is one one part.
Speaker #2: And and then the other question about data centers it's an interesting new business for us but it comes from very very low levels in 25.
Speaker #2: So it's not a huge part of Prevas yet but in percentage we see very strong growth right now especially I would say in Finland.
Speaker #2: But also in Sweden we see growth in these area as well. And I I can't give you a figure for that now. Sorry.
Speaker #3: Okay. That was all for me. Thank you so much.
Speaker #2: Thank you.
Speaker #1: Thank you so much for those questions. We can go straight ahead. The first question that we have is have you been able to sign new customers during the quarter diversifying from Valmet in Finland and Novo in Denmark?
Speaker #2: Yes we have. Both in in taking in Denmark for example we have growth in in defense area where we have signed new customers. Actually one example is a company called Quadsat that we actually have now a reference case on our web page so that is something we can talk about.
Speaker #2: So that is a a new customer we're working with with hardware design for drones for for for defense. So definitely we have signed new customers in Denmark.
Speaker #2: And and in Finland we see as as I was mentioning about the data centers where we have now also that those are new customers to the Finnish operations for this year.
Speaker #2: So that we're starting to grow right now. So definitely we we have found new customers. In in both Denmark and in Finland.
Speaker #1: Yes. Thank you. Thank you. While we are on the track on Finland will defense orders in Finland materialize more in Q4. How much will they affect Finland's salience and margin?
Speaker #2: We don't give forecasts but I can say that these projects will of course support the development in Q4 in a good positive way for for Finland.
Speaker #2: That that's for sure. They were postponed but they are now up and running. But it's not only those projects that are our Finnish operations.
Speaker #2: So it's a it's a many different projects that we are running in in Finland. But natural will help for Q4 definitely will.
Speaker #1: Yes. Thank you. Do you expect AI to drive change to the hourly billing model to to fixed price and the more value-based billing models?
Speaker #2: Yes. Talking about AI it's a it's a it's a dramatic development in that technology. And I was mentioning in in in this presentation we are working very agile in the AI area in order to adapt and and of course business model is is one part of that.
Speaker #2: And we are looking into that all the time to move our business towards more like value and outcome and solution-based pricing. Although to be honest this is something that we've been working with for many years in the consultancy industry.
Speaker #2: So it's nothing new in that sense but the intensity in in driving this change has increased now due to to AI. I personally believe that AI will will make the core strengths of Prevas even more relevant because we will combine the deep engineering expertise we have the the the domain knowledge from our customer from our customer products et cetera and also the accountability that we have built over the years together with our customers.
Speaker #2: That will together be boosted by AI in terms of deliveries we make for our customers. But that was a long answer to a short question.
Speaker #2: Yes we look into different kind of business modeling moving into the future. And looking into the customer side we don't see a massive change now in terms of how they want to make business.
Speaker #2: Because we are working with the within the industry and it takes time to to make the changes. But natural will see this switch over time.
Speaker #1: Yes. While you are talking about AI how is AI affecting customer demand and your ability to charge for the value you create?
Speaker #2: I I believe that AI as such is is affecting not only us but our customers and what we see right now is that the customers are implementing AI on a broad basis.
Speaker #2: We are in we are also investing a lot in AI and looking right now we have I would say a strong customer demand generally speaking also in software development because when you when you start to implement changes you also need support in the changes and there we came in with our engineering expertise our domain knowledge and our accountability to support with this.
Speaker #2: So so we see that the the customer demands will change and we need to change in order to align to the those changes. But we are very positive to that the what we stand for in Prevas will still be very very relevant in the future.
Speaker #2: And we will be boosted by AI.
Speaker #1: Yes. Thank you for that. Sweden's IBDA margin is close to 10% compared with 8.4% for the group. What will it take for the group to reach the same level and when do you think that is achievable?
Speaker #2: Put it like this. It's up to us to work hard to ensure that the other parts of the group also reach 10%. And I was mentioning Denmark is very much on the right track.
Speaker #2: They have been for a while but now we also see that in the figures for Q3 looking into Finland we continue to work with the with this new organization with the motivated team to turn Finland into profit again.
Speaker #2: So I'm very convinced that we will reach 10% margin. That is fully realistic for a good nice fantastic company like Prevas. With with all of the the the strong resources we have.
Speaker #2: And the customer base we have. But when we don't give forecasts. So I I can't set a defined time for when we will reach it.
Speaker #2: But I'm totally sure that we will reach it.
Speaker #1: Thank you for that. You write that it pays off recruitment picked up in several units during the quarter. Where in the organization are you hiring and what do your recruitment needs look like going forward?
Speaker #2: Yes. One area where we are recruiting is within EAM Enterprise Asset Management to meet the these huge orders that we have signed that is one area.
Speaker #2: We are recruiting in cybersecurity to to meet the demands in that area. We are recruiting also towards the defense customers. So we recruit in the areas where we see concrete demands.
Speaker #2: That that's the areas where where we now focus on on recruitment.
Speaker #1: Yes. Thank you for that. Operating cash flow improved to 49 41.9 million. But cash and cash equivalents to that 0.8 million at the end of the quarter.
Speaker #1: And 11.3 million of the overdraft facility was utilized. How do you view the liquidity situation and does the balance sheet leave room for acquisitions going forward?
Speaker #2: I I can ask the last question first. Looking into our balance sheet we we have this target of 2.0 and we are now on 0.9 whereas it's rolling 12.
Speaker #2: The debt to invest in relationship to the rolling 12 EBITDA levels. So we have a very strong situation in the balance sheet and we are open to look into acquisitions as well.
Speaker #2: The first question related to the more detailed part of the cash flow I actually hand over to Helena to to answer that.
Speaker #3: Yes. And as said we do have a solid financial position and a strong balance sheet. And that is for sure an enabler for doing acquisitions in the future.
Speaker #2: Okay. Thank you Helena. So Elliot any more? Interesting questions.
Speaker #1: That was actually the final one for today. So with that we wrap up today's broadcast. A big thank you to Magnus and Helena for the presentation and for the Q&A.
Speaker #1: And thank you to everyone who sent in questions, called in and tuned in. I wish you all a pleasant rest of the day.
