AQ Group (AQ) investor relations material

Executive summary

• Q3 net sales rose 21.4% YoY to SEK 2,566m, including 17.9% organic growth; EBIT increased 36% to SEK 259m.

• Strong demand in data centers and defense, particularly in the U.S. and China, drove higher volumes and utilization; all business areas and market segments grew YoY.

• Q3 EBT margin reached 10.0%, matching the minimum target raised by the Board in July.

• Priorities include improving delivery reliability and productivity at selected sites while expanding U.S. inductive-component, defense and power-grid capacity.

Financial highlights

• Q3 net sales were SEK 2,566m, EBIT SEK 259m, EBT SEK 257m and profit after tax SEK 205m.

• Q3 sales growth comprised 17.9% organic growth, 2.2% acquired growth and a 1.3% currency effect; currency contributed SEK 28m.

• 9M net sales increased 11.1% to SEK 7,500m; EBIT rose 18% to SEK 739m, EBT reached SEK 736m and profit after tax was SEK 586m.

• 9M growth comprised 10.9% organic growth, 1.5% acquired growth and a -1.2% currency effect, or SEK -84m.

• Operating cash flow was SEK 269m in Q3 and SEK 631m in 9M, down YoY as higher working capital tied up cash.

Outlook and guidance

• Targets are annual growth above 15% and EBT margin of at least 10%; organic and acquired growth targets are 10% and 5% per year, respectively.

• Data-center delivery backlogs are targeted for recovery in Q4; improvement work aims to raise output for semiconductor customers.

• With Norlake facilities fully utilized, potential annual revenue is just over SEK 300m; the assets are also stated to support $35m of sales capacity.

• U.S. inductive-component deliveries are expected to double in coming years; management expects more than a year before Norlake volumes reach levels indicated in the acquisition release.

• EPS target is to double every five years; EPS doubled between 2021 and Q3 2026, adjusted for the share split.