Welcome to Inderes TV. NYAB just published its Q3 earnings results this morning, and as always, I have the CEO here with me. Welcome to Inderes TV. Thank you. All right. Let's start with the quarter itself. So Q3 and H2 is the peak production season for NYAB. At Q2, you described a business moving from design into execution. Given this, how would you sum up Q3?

Well, I would sum up Q3. That's a broader question. But the execution is going, we have quite high revenue growth. I think it's 27% in the quarter. For the first time, we exceed 2 billion revenue in a quarter, just above 2 billion SEK. And that is a milestone for the company. I've had it in my head for a few years that when we reach that, and my original guess was actually Q4 2026.

So a bit ahead of schedule.

Yes, a quarter ahead of schedule. But what we see is high demand, and there's a lot of investments that need to be done from industry and within infrastructure and energy. So we can see that from our order backlog, order intake, and our growth in general. So yeah.

Mhm. And after a slow Q1 and strong Q2, how much of what we saw in Q3 is seasonality and how much is a generally higher underlying run rate going into 2027?

I would say that in Sweden, it's pretty much the same as historically. If you're talking about the seasonal patterns. But in Finland, it's quite a heavy shift. Historically, in Finland we have always had very good earnings in H2 and far too weak earnings in H1 due to too low volumes, meaning that fixed costs have eaten up the earnings in H1. But Finland is now at a new level, with this quarter's growth of 126% and performing quite well still margin-wise with that heavy growth. So that is structurally changing for the years to come.

And then on margins, which has improved throughout the year, but in this industry, our reported margin is partly an estimate until the projects close. When you look at this quarter's results, how much of it comes from simply running more volume through the organization and how much from individual projects and how they are developing?

It's a bit difficult to say, but in general, it's project business and it's successive profit recognition until the project is finalized. And historically, NYAB has performed better in Q4 than we do in Q3. There are quite similar quarters, but Q4 has always been a tad bit better. And that comes just from the fact of how we handle the successive profit recognition, and most projects get finalized in Q4.

And then a follow-up on that. So several Nordic peers saw quite large margin swings this quarter due to revisions on projects in progress, in both directions. How do you keep that kind of volatility out of your own numbers?

By actually being conservative. That's the most important part, that you. Have respect for the unknown, because there are always things unknown. It's a natural part. I've been active in this industry since I was a teenager. And that's the culture of the company. We were quite hard with it. So we do what we can to smooth out both quarter effects, timing effects, and to be quite realistic about the future.

Mhm. And speaking of margin, I think the rolling 12-month margin now is 6.2, which is still below the 7.5 target that you have standing here today. What are the two or three things that need to change for NYAB in order to reach that target?

Yeah. To the context, we have been quite clear with the market that we won't reach our margin goal. We reach three out of four goals, but our margin goal, EBIT-wise of 7.5%, won't be reached in 2025 and 2026 due to the PP part of the consulting business. So there's no surprise. And to reach our goal. We can't, of course, have a volume of approximately, give or take 10% of the company's total revenues. That has close to zero margins. It's not harder than that.

Yeah. Makes sense. And then, of course, we have to talk about the order book, which saw a notable increase this quarter with both Uppsala and Schwaben entering the book. How secure does 2027 feel to you at this point, and how much still has to be won?

2027 is quite secured already. I mean, we are always selective. The demand for our services is very much higher than our revenue and very much higher than our backlog. So we will continue the same way to build a good, strong order book as a foundation for the future. There are a lot of perennial contracts, even if the numbers of our backlog at the moment are very, very high. It's not that much of a revenue increase expected in 2027. I mean, you have followed us for some time. So you know that our like. Standard level of growth is a bit above 10%, and we're not. Shifting from that view. Really.

Yeah. Right. And as the book gets longer and more concentrated in a handful of very large projects, does that change the way you think about risk in the business?

Yeah, it does. And that's one of the main reasons why we have. Been very eager to sign collaborative contracts to get close with the client at an early stage. We can give them the maximum value there with our knowledge. And it heavily decreases our risk because we are there for the planning and the designing of the project before the execution of the project. And in many cases, it's also a collaborative contract that actually gives no price risk. So that is, of course, an important part of our growth journey.

Yeah. And this get in early through design and then win the execution phase has become an increasingly bigger part of your strategy lately, which we have seen with Uppsala and Svenska kraftnät. And you're also trying it out now with SSAB, which you have two early works agreements with. Would you say that this is sort of the core of how NYAB now wins work, and what's the hit rate that you realistically expect from it going forward?

There are so many different markets in the market, so the hit rate varies, but it's correct that from the coming revenue, the clearly highest growth and the largest portion of the existing backlog and the expected backlog are. Collaborative contracts, or phase one. Phase two of the work. There are different types. So. What it really means is that we. As we always have done, we find the best ways to grow. Without increasing our risk, to have a scalable business model.

Yeah. And I think getting early into this design phase lowers the risk somewhat because you are the ones that sort of construct.

Yeah.

Design the project.

Yes. It heavily decreases the risk. Even, I would say.

Yeah. And speaking of SSAB, you signed one during the spring and one during the summer. Where are those conversations? At the moment on the large execution phases.

We're at very good terms with SSAB. They are a trusted client of ours and we have a great collaboration with them. I can't date it, but I think that we want to work with them and they want to work with us. So let's see when we have a contract signed.

And then switching over to data centers, which have at least gone from nothing to two projects during the year. And the sector itself is moving very fast across the Nordics. How big part of NYAB do you want data centers to become, and how do you sort of avoid building a business on projects that may never get financed?

Yeah. First of all, deals and business with data center developers, we have two clear criteria. The first steps. The first step is then their culture. Do we believe in working with them and for them? Because they are the client, they pay, so they get to decide. But we must know. What culture they have and, of course, that their financing is in place. So as I view it with data centers, it could very likely be a bubble. We could build much more than the need is in a couple of years. Humanity has done that before. So. So why not now? And for us, I mean, we are an EPC contractor and we can design and we can help with permitting and other things at the early stages.

But for us, the risks aren't there. Still, we don't want to put too many of our key personnel and key resources into data centers. Because we have trusted industry clients that have an annual demand that we want to serve and help with. So we don't have a percentage, but we're not hunting data centers to short-term boost our margins, so to speak. It's a balanced. What you win in the long term is always to have balance and lower risk. It's the same with sports. You can talk with Arteta, Arsenal manager. Very boring football, but he wins the league. Yeah, sure.

And then switching to markets. So Sweden has been your engine for several years now. And peers in the industry are sort of describing a two-speed market where grid and electrification is being strong at the moment. While more ordinary groundworks are somewhat weak at some places. Looking at Finland, meanwhile, it's growing fast for you at the moment. Much due to the Mikkeli contract, but at a lower margin than Sweden. How do you see those two markets at the moment? And what needs to happen for Finland to get closer to the 5 to 7% target that you are aiming for in that region?

I would say that we can already be there for Finland, it's projects, it's timing effects. And you also always have. Some uncertainties in final margins. But I think that Finland now has the base and is built for the last year. It has been built steadily in a way that you see now with the order backlog and the revenue growth, that it is both good and stable, then. Finland still has, as you mentioned, structurally lower margins than Sweden. But if you execute very good and very well in civil engineering in Finland, you can reach the Swedish margins. It's possible, but it's much harder, meaning that they will have to be much better than the Swedish team to reach it. But it's still possible.

And then you have, just since we're talking about it, when we are showing consulting as to exemplify where the problems are within consulting, it's within the PPE business where the market declines, the offshore market, which lowers our revenue there with 25%. But if you take our consulting business in Finland, they have steady and good growth and a clear margin improvement for all of these years and what it looks like, I can be very hopeful that that will be the case coming year as well. Mhm. Mhm.

So then just a short comment on the sort of market outlook for Sweden and Finland. I know that you have mentioned that Finland is somewhat subdued at the moment, but yet we're seeing 120% growth now in the quarter. Could you just give a short comment on the market outlook for these regions?

Yeah. I mean, the market in Finland is heavily improving. Finland is quite a small country. It has quite a big effect when they are growing in certain areas. Historically, you have seen them in solar parks and wind farms, and now they are the Nordic leader in data centers. So, I mean, the market grows for that reason. Then they still have a lot of investment needs and investment plans in the metropolitan area when it comes to infrastructure, and there are always maintenance and services that need to be done. But I would say that Finland's really slow period. They have been at the bottom. It has stabilized and now it's growing through data center-related investments.

And then if we zoom out a bit. So looking at your revenue, it has grown roughly three times in the recent years. You have also taken on your largest contract ever with Uppsala. You changed most of the leadership team, and now you've also permanently appointed a new CFO. What does NYAB need to get right internally over the next couple of years for that growth to translate into the returns that you're targeting?

I would say that the returns we are targeting, I'm very confident with our long-term goal. I wouldn't have it otherwise, and I have been very clear with the market that we won't reach the EBIT margin. 2025, 2026. My plan is to be very clear, early 2027, about the possibilities or the outlook there. I haven't given up that it could be achieved for now. But.

When you have this growth pace, you must always be awake and you have to change with the company. You need different types and individuals. What stays the same is the culture, and the culture is to be balanced, clear-sighted. Focus on being great instead of big. And the size will come through the greatness because the demand for your services will increase because you give the clients value. So I mean, we're not Nvidia. We don't have to figure out quanta or whatever will happen in the future. I mean, it's just to be a. Reliable, straight-up guy that has good relations, no matter if it's bank financiers, owners, clients, or subcontractors. And that stays the same. And that is the key. Then everything else can be done and needs to be changed at times as we grow and go forward.

Yeah, exactly. You don't have to reinvent anything.

No.

Be better, smarter, and more efficient and those kind of things. And then lastly, looking into 2027, you have a record order book now. Much bigger organization, different market mix than two years ago. What do you think investors should watch most closely now as we head into 2027?

It's pretty much the same as usual. I mean, to ensure that our business model, where we have been quite clear with that, we have a strong free cash flow, that that is intact over the full year. And to just follow the progress and our strive to margin improvements. And. As I view it. We have pretty much the same when you say that we have tripled in size for the last year. Yeah. Years. Yeah, yeah, yeah, for the last years. I would say that with this level now, it's about doubling with as little risk as possible in a few years to come. From where we stand now, so. And. That will come through doing. Doing the right things and delivering quality and being balanced. So that's pretty much the same recipe.

Of course we need a bit more quality. And we have great new country managers in both Sweden and Finland that have a really high level. And they are equipped to make good contributions for the coming steps. And yeah, I'm quite happy with the position we are at at the moment.

Sounds good. Johan, thank you so much for joining me here today and thank you for watching. Thank you.