Ncab Group Ab · OMXSTO:NCAB
Ncab Group Ab — Investor Day (September 2023)
86 slides from Ncab Group Ab's investor day presentation, Sep 4, 2023
Slide 1: Capital Markets Day 2023
CAPITAL MARKETS DAY 2023 NCAB GROUP
Slide 2: Agenda
13:00 Welcome Christian Salamon - Chairman Agenda 13:05 Technical info on Q&A Gunilla Öhman – IR Manager and Moderator 13:10 NCAB and our business concept Peter Kruk - CEO, Anders Forsén - CFO 13:40 Growth case – Segment Europe Benjamin Klingenberg – Vice President Europe 14:10 Factory management, s
Slide 3: NCAB and our business concept
Peter Kruk Anders Forsén CEO CFO NCAB and our business concept NCAB GROUP © 3
Slide 4: Everything needs a PCB and each PCB is unique
DIGITALIZATION, ELECTRIFICATION AND IOT... Everything needs a PCB and each PCB is unique NCAB GROUP © 4
Slide 5: Mission and vision
16 45 615 31 companies markets specialists factories MISSION VISION PCBs for demanding customers, The Number 1 PCB Producer on time with zero defects, produced wherever we are. sustainably at the lowest total cost. NCAB GROUP © 5
Slide 6: Our attractive niche – HMLV
OUR MARKET Our attractive niche – HMLV MIX High-Mix Low-Volume Higher product value <USD 2,000 per order line (HMLV) Higher quality demand High Harder to buy direct Less price pressure >USD 2,000 per order line High-Volume Low VOLUME High Low NCAB GROUP © >50 sqm per order <50 sqm per order
Slide 7: Industries we serve
Industries we serve NCAB GROUP © | Seminar no. 11 7
Slide 8: Integrated PCB production
BUSINESS MODEL Integrated PCB production NCAB GROUP © 8
Slide 9: Customer integration
BUSINESS MODEL Local presence IRL Customer Business knowledge, Local language and Personal relationships integration Production engineering Cost, Quality & Sustainability PCB unique know-how Tech advise, Customer eduction and Design+ Matching needs with optimum manufacturing location Process integra
Slide 10: Factory integration
BUSINESS MODEL Local presence IRL Factory Business knowledge, Local language and Personal integration relationships Experienced team of 120+ specialists Continuous presence at factories Securing supply Preventive and reactive quality assurance Regular full quality and sustainability audits Securing
Slide 11: Our history
Our history NCAB GROUP © 11 11
Slide 12: A history of Growth
MILLION SEK 4 458 5 000 A history of Growth MSEK REVENUE 4 500 4 000 3 500 3 000 2 500 2 000 Ulf Anderssson AB 1 500 1 000 500 0 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Slide 13: NCAB Development since IPO
NCAB Development since IPO NCAB GROUP © 13 13
Slide 14: NCAB Development 2017 – 2023-06 LTM
NCAB Development 2017 – 2023-06 LTM Net sales growth MSEK EBITA improvement %-units 4398 15,2% MSEK Net sales EBITA Margin Organic growth incl. currency and Scale advantages, divestment Russia SG&A improvement 1399 7,7% Acquired growth EBITA Margin Gross margin MSEK Net sales improvement NCAB GROUP
Slide 15: A different company
2017 – 2023-06 LTM A different company 2017 2023-06 LTM CAGR Total growth Net Sales 1 399 4 398 23,1% 214% Gross Profit 422 1 510 26,1% 258% % 30,1% 34,3% SG&A -305 -793 19,0% 160% EBITA 108 669 39,3% 519% 7,7% 15,2% Net Profit 40 436 54,2% 982% Return on Equity 38% 39% Solvency 19% 38% NCAB GROUP ©
Slide 16: Lean balance sheet and strong cash flow
Lean balance sheet and strong cash flow Cash flow 2018 2019 2020 2021 2022 23-06 LTM Acc 2018-2023 EBITA 144 161 202 413 632 676 1 596 Operating cash flow 70 143 194 48 569 750 1 206 % of EBITA 49% 89% 96% 12% 90% 111% 76% We have acquired companies for approx. 1 500 MSEK, i.e. organic and acquired
Slide 17: The future of NCAB
The future of NCAB NCAB GROUP © 17 17
Slide 18: Global PCB market production 2022
GLOBAL PCB MARKET Production 2022 CHINA $M 43.542 EUROPE USA $M 1.897 JAPAN $M 3.369 $M 7.287 ASIA (EX CN & JP) Global PCB market $M 25.646 of ~82 BUSD Source: Prismark NCAB GROUP © 18
Slide 19: Consumption 2022
GLOBAL PCB MARKET Consumption 2022 CHINA $M 26.400 EUROPE USA $M 7.300 JAPAN $M 7.100 $M 5.500 ASIA (EX CN & JP) $M 36.600 NCAB GROUP © 19
Slide 20: HMLV Consumption 2022
GLOBAL PCB MARKET HMLV Consumption 2022 CHINA $M 5.900 EUROPE USA $M 4.500 JAPAN $M 4.000 $M 2.200 ASIA (EX CN & JP) $M 8.200 Global HMLV market of ~25 BUSD Source: Internal, E&Y NCAB GROUP © 20
Slide 21: HMLV market breakdown & NCAB market shares
HMLV market breakdown NCAB SHARE ~1,9% & NCAB market shares AMERICAS 16% ASIA NCAB SHARE (EX CN/JP) ~ 0% 33% EUROPE NCAB SHARE 18% ~7,5% Global HMLV market of ~25 BUSD JAPAN CHINA 9% 24% NCAB SHARE ~ 0% NCAB SHARE ~ 0,4% NCAB GROUP © 21
Slide 22: Market Development
Market Development CAGR 100 ~ 4% 99 92 90 85 80 82 80 CAGR 78 CAGR ~ 7% 74 ~ -1% 70 62 64 65 CAGR 62 61 60 62 61 ~ 7.5% 59 60 50 40 30 20 10 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Global market of ~82 BUSD in 2022 with projected CAGR of 4% 2022-2027. Source
Slide 23: A clear strategy for high-pace profitable growth
A clear strategy for high-pace profitable growth! GEOGRAPHICAL EXPANSION MARKET CONSOLIDATION Expand geographically to new markets using Consolidate market and explore economies of M&A to accelerate process scale for cost and capability advantages 100% FOCUS ON PCBS INCREASE MARKET SHARES Maintain 1
Slide 24: Financial targets mid term
FINANCIAL TARGETS MID TERM This is where we are aiming Net sales (MSEK) EBITA (MSEK) Net debt/adjusted Distribute cash EBITDA less than 8,000 1,000 2x Available Approx. 50% of net profit in 2026 in 2026 NCAB GROUP © 24
Slide 25: Growth case – Segment Europe
Benjamin Klingenberg VICE PRESIDENT EUROPE Growth case – Segment Europe NCAB GROUP © 25
Slide 26: Wording “Europe” in NCAB terms
Wording “Europe” in NCAB terms We have divided geographical Europe into 2 segments: Nordics + Europe Countries of segment Europe: Benelux, Germany, Switzerland, Austria, France, Italy, North Macedonia, Poland, Spain, UK, Ireland Eastern Europe for future development NCAB GROUP © 26
Slide 27: PCB demand
SEGMENT EUROPE PCB demand 25 000 20 000 19 275 15 000 10 000 5 250 5 250 4 950 4 365 4 305 5 000 3 000 2 250 1 650 1 395 450 60 0 pe y l ri a UK e a ly x nd nd n ga an nc lu i Ita on ai ro la la st ne rtu Sp a m Po er ed Eu Au Fr Be er Po it z ac G st Sw M Ea Marketsize in million SEK NCAB GROUP © 2
Slide 28: Growth
SEGMENT EUROPE Growth 2 500 2 360 2 193 2 000 1 476 1 500 860 1 000 673 633 500 0 2018 2019 2020 2021 2022 2023 LTM Revenue [million SEK] NCAB GROUP © 28
Slide 29: Growth strategies
SEGMENT EUROPE Growth strategies ORGANIC ACQUISITIONS New markets: Strong focus in several Eastern Europe markets Stronger focus on Switzerland Belgium Portugal NCAB GROUP © 29
Slide 30: Locations of the top EMS companies in Germany
Locations of the top 25 EMS companies in Germany EMS customer NCAB offices NCAB GROUP ©
Slide 31: Industry sector sales
SEGMENT EUROPE / GROWTH STRATEGY ORGANIC Industry sector sales Medical, Power & Energy, Defence, Railway, Aerospace Requirements can be specific for each industry sector We build trust by „speaking the same language“ Key Account Managers that are industry sector specialists NCAB GROUP © 31
Slide 32: Sales mindset and customer service
SEGMENT EUROPE / GROWTH STRATEGY ORGANIC Sales mindset and customer service Acquired companies have sometimes similar, but often a different approach. A lot of training, coaching, BLITZ sessions, academy. Progress visible and measurable. NCAB GROUP © 32
Slide 33: Multiplication of an acquisition
SEGMENT EUROPE / GROWTH STRATEGY ACQUISITONS Multiplication of an acquisition NCAB has a name in the market. Targets approach us. Acquired companies often have a different way of working. Customer overlap <10% Product / capability extension NCAB GROUP © 33
Slide 34: Characteristics of potential acquisitions
SEGMENT EUROPE / GROWTH STRATEGY / ACQUISITIONS Characteristics of potential acquisitions Many companies founded in end of 1990 – 2000th. Owners will retire and have no potential succession. ~10 million EUR Revenue. Good alternative to green field – relationship + trust takes 1-2 years. NCAB GROUP ©
Slide 35: Know-how dominance
SEGMENT EUROPE / GROWTH STRATEGY ORGANIC Know-how dominance 40% of PCB engineers in Germany will retire in the next 10 years. AI is growing, but the PCB is such a specialized product with many variations. NCAB GROUP © 35
Slide 36: Factory management, supply chain & Sustainability
Chris Nuttall Anna Lothsson CHIEF OPERATING OFFICER GROUP SUSTAINABILITY DIRECTOR Factory management, supply chain & Sustainability NCAB GROUP © 36
Slide 37: Challenge
Challenge 99,3% QUALITY Market needs 97,0% ON-TIME Who can produce our PCB? > 2 700 FACTORIES GLOBALLY NCAB GROUP © 37
Slide 38: What is NCAB Group Factory Management?
FACTORY MANAGEMENT What is NCAB Group Factory Management? Specialists who maintain and develop a supply chain that matches the needs of our customers, the market and assist our local companies in the supply of PCBs for demanding customers, on-time with zero defects, produced sustainably at the lowes
Slide 39: Why do we need Factory Management?
FACTORY MANAGEMENT Why do we need Factory Management? Strong relationships Best in class service Order management / delivery Daily, onsite, follow ups focus Rapid response / ICU Market leading audits Increased security Prioritisation within factories Technical knowledge2 Presence = control Local lan
Slide 40: Global Presence
FACTORY MANAGEMENT Global Presence NCAB Factory Management Factories 9,000 Km NCAB GROUP © 40
Slide 41: How many?
FACTORY MANAGEMENT How many? NCAB Factory Management Factories +31 +3,160 +130K +366M Main Factories Customers Orders Shipped 2022 PCBs 2022 NCAB GROUP © 41
Slide 42: Market Leading Performance
FACTORY MANAGEMENT Market Leading Performance NCAB Factory Management Factories 99.6% 601 96% 84 Main Factory QP% DPPM Main Factory DP% Customer Satisfaction YTD YTD YTD Index NCAB GROUP © 42
Slide 43: How to maximise factory output?
FACTORY MANAGEMENT How to maximise factory output? 1. Sourcing the right factories to work with 2. Only approving the factory for what it is good at 3. Monitor, maintain and improve quality 4. Secure logistics with proactive approach 5. Ensure the Sustainability of operations 6. Dedicated factory st
Slide 44: 2,700 factories
2,700 FACTORIES G NCAB GROUP © a 250 p o th e r P r te n i n f e- ti a o r as l m 230 s e c a n a ti o ss d n m id a o n te 15 weeks en STAGE 1: s 100 o f ts po an te d Short list generation n t fi n ia a 50 lc ls Be FACTORY MANAGEMENT an ho nc d i rt hm d a lis ar te t ki s 25 ng O ns i te R n e e
Slide 45: Our way of conducting audits
SUSTAINABILITY Our way of conducting audits 1. Opening meeting 2. Reviewing documents 3. Factory tour 4. Employee interviews 5. Closing meeting 6. Audit report 7. Follow-up audits NCAB GROUP © 45
Slide 46: Improvements
SUSTAINABILITY / AUDITS Improvements Fire fighting equipment Emergency exits signs Emergency evacuation drills Chemical handling First Aid kits and training Employment contracts Food samples canteen NCAB GROUP © 46
Slide 47: Improvements
SUSTAINABILITY / AUDITS Improvements Waste water and air emission permits Waste handling and recycling Personal Protective Equipment Employee insurances Young workers rights Health checks Wage and over-time calculations NCAB GROUP © 47
Slide 48: Only approve a factory for what they are good at
FACTORY MANAGEMENT Only approve a factory for what they are good at TECH. NCAB GROUP © 48
Slide 49: Only approve a factory for what they are good at
FACTORY MANAGEMENT Only approve a factory for what they are good at What the factory What the factory is claim they can do good at and what we will approve them for NCAB GROUP © 49
Slide 50: The broadest & deepest offering
The broadest & deepest offering Covering all technologies Supporting current and future needs securing transition for customers Multiple sources reducing supply risks and secures commercial terms NCAB GROUP © 50
Slide 51: China remains the engine room
GEOGRAPHICAL SOURCING SOLUTIONS China remains the engine room 2022 Spend by Geography 2018 Spend by Geography TAIWAN 6% EUROPE 7% EUROPE 5% USA 1% USA OTHER 2% 1% CHINA CHINA 85% 93% NCAB GROUP © 51
Slide 52: Recent additions to our supplier portfolio
GEOGRAPHICAL SOURCING SOLUTIONS Recent additions to our supplier portfolio SOUTH KOREA 4 new factories High technology focus TAIWAN 1 new factory MALAYSIA High technology focus 2 new factories Aerospace & defence Flexible technology THAILAND 1 new factory + 1 add SINGAPORE factory (2024) 1 new facto
Slide 53: Sustainability strategy
SUSTAINABILITY Sustainability strategy Together with our suppliers and customers we want to create a more sustainable industry with growth and profitability for all. We believe that strong relationships and transparency are key to achieving this. NCAB GROUP © 53
Slide 54: Our sustainability journey
SUSTAINABILITY Our sustainability journey NCAB GROUP © 54
Slide 55: Sustainability strategy
SUSTAINABILITY STRATEGY NCAB GROUP © 55
Slide 56: Ensure the sustainability of operations in our PCB factories
SUSTAINABILITY Ensure the sustainability of operations in our PCB factories Choosing the Sustainability Renewable energy and right factories audits energy efficiency Sourcing process biennial, at least 2 2700 FACTORIES Code of Conduct persons 2-3 days Waste and water management Quality audits Yearly
Slide 57: How to minimize risks and drive positive change?
SUSTAINABILITY / ENVIRONMENT How to minimize risks and drive positive change? Design for Manufacturing Right product in right factory Quality assurance Production Process – for multilayer PCBs NCAB GROUP © 57
Slide 58: Optimized design reduces the environmental footprint
Optimized design and high quality performance reduces the environmental footprint; less scrap means less wasted material and less energy, water and chemicals used in the supply chain. NCAB GROUP © 58
Slide 59: Green-house gas emissions need to be cut
SUSTAINABILITY / CLIMATE IMPACT – CHALLENGES AND OPPORTUNITIES Green-house gas emissions need to be cut by half by 2030 Upstream activities Reporting company Downstream activities Overview of GHG Protocol scopes and emissions across the value chain NCAB GROUP © SOURCE: https://ghgprotocol.org/ 59
Slide 60: CO2e emissions 2022
SUSTAINABILITY / ENVIRONMENT CO2e emissions 2022 TOTAL INTENSITY 107 855 24.19 (92 404 in 2021) (28.71 in 2021) tCO2e tCO2e/MSEK (scope 1-3) (scope 1-3) LONG-TERM GOAL Reduce total GHG-emissions (Scope 1-3) in accordance with the 1.5 degree target of the Paris agreement. TARGET • Be fossil free on S
Slide 61: CO2e 2022 customer example
% OF CO2e Transport 28% CUSTOMER X 32 3153 CO2e 2022 CO2e / 1000 SEK TON CO2e IN TOTAL Production 72% TRANSPORT % CO2e and PCB spend shipped in different transportation categories 100% 100% 100% 862 50% CO2e TON CO2e 0% 0% 0% 0% 0% 0% PCB Spend 0% Boat Air Road Rail PRODUCTION % CO2e and spend in di
Slide 62: Our journey continues
SUSTAINABILITY Our journey continues Suppliers Transparency Improve social and environmental Annual sustainability reporting performance (auditing, follow-up, share Nasdaq ESG portal knowledge) CDP (Climate Disclosure Project) Customers EcoVadis – 2023 Sustainable product development (materials, cir
Slide 63: M&A and integration processes
Anders Forsén Hassan Elsayed CFO MERGERS & ACQUISITIONS M&A and integration processes NCAB GROUP © 63
Slide 64: NCAB Growth Strategy – M&A
MERGERS & ACQUSITIONS NCAB Growth Strategy – M&A M&A is an important component to reach 8 Billion SEK 2026 Access to new customers Access to new employees and competence Target to over time grow with 10% per year through acquisitions NCAB GROUP © 64
Slide 65: Acquisitions done after the IPO (June 2018)
MERGERS & ACQUSITIONS Acquisitions done after the IPO (June 2018) Year Revenue Gross profit EBITA EBITA-margin EV Multiprint Denmark 2019 61 12 7 11% 50 Altus USA 2019 43 16 9 22% 57 Flatfield Netherlands 2020 297 80 24 8% 65 BBG USA 2020 280 61 18 7% 109 Prevent Italy 2021 225 65 34 15% 203 sas-ele
Slide 66: Successful integration
INTEGRATION PROCESS Successful integration Continue acquisition Cultural Value creation target alignment and / fulfill operations talent synergy and customer retention objectives activity NCAB GROUP © 66
Slide 67: Our integration process creates synergies
INTEGRATION PROCESS Our integration process creates Marketing synergies IT Shared tools, Finance One brand – one company systems and Economies of platforms scale Operations Factory and logistics Sales Sustainability Strong relationships – customer contacts and visits Acquired companies to be fully i
Slide 68: Synergies
INTEGRATION PROGRESS Synergies Increased revenue Higher quality and better service Broader factory panel Factory management Improved gross margin Purchasing power Logistic solutions Improved profitability due to scale Improved working capital NCAB GROUP © 68
Slide 69: Strong result from acquisitions
INTEGRATION PROGRESS Strong result from acquisitions Companies Summary of companies acquired 2019 - 2021 2019 – Multiprint Year before LTM Growth/ acquisition 2023-06 improvement 2019 – Altus Revenue 1 352 1 634 21% 2020 – Flatfield Gross profit 369 516 2020 – BBG 40% % 27,3% 31,6% 2021 – Prevent EB
Slide 70: M&A Pipeline
GROWTH OPPORTUNITIES M&A Pipeline Approx. 200 companies identified trading with PCB Short list. 51 companies Europe/Nordic North America East Total No. of targets 28 10 13 51 Estimated revenue 1 300 1 600 800 3 700 (MSEK) NCAB GROUP © 70
Slide 71: Two new acquisitions focusing on quick turns
LATEST ACQUISITIONS Two new acquisitions focusing on ”quick turns” DACH and Silicon valley – two key markets Complements our existing business well Quick turns is a profitable and exciting niche Prototypes and quick turns first step for new customers Combined add SEK 350 million in yearly net sales
Slide 72: Concluding remarks
Peter Kruk CEO Concluding remarks NCAB GROUP © 72
Slide 73: A history to be proud of
MILLION SEK 4 458 5 000 A history to be proud of MSEK REVENUE 4 500 4 000 3 500 3 000 2 500 2 000 Ulf Anderssson AB 1 500 1 000 631 MSEK EBITA 500 0 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 20 2
Slide 74: Strong Unique Selling Points
Strong Unique Selling Points Customer presence Purchasing power Factory presence providing a lean providing substantial providing maximum process leverage performance NCAB GROUP © 74
Slide 75: Opportunities to continue growth journey
Opportunities to continue growth journey Global leader with market share A strategy for continued of 2% in a growing market profitable growth NCAB GROUP © 75
Slide 76: Decentralized & Entrepreneurial Culture
Decentralized & Entrepreneurial Culture Local decisions makes us more responsive and drives better business NCAB GROUP © 76
Slide 77: Our Common Framework
Our Common Framework Mission Define what we do, and for whom Vision What we are striving for Values The way we act, and what we stand for Strategy The path we are choosing, and the choices we are making to take us towards the vision NCAB GROUP © 77
Slide 78: Quality First. Always. Strong Relationships.
Quality First. Always. Strong Relationships. Makes the difference. Full responsibility. Easy to say. Harder to deliver. NCAB GROUP © 78
Slide 79: Trainings to build culture and capabilities
LEARNING & DEVELOPMENT Trainings to build culture and capabilities Onboarding sessions Sales Technology Leadership Business Development Global workshops and live sessions NCAB GROUP © 79
Slide 80: NCAB Academy Online courses
LEARNING & DEVELOPMENT NCAB Academy Online courses NCAB GROUP ©
Slide 81: What gets measured gets done
What gets measured gets done We are a sales focused organisation Incentives on Sales Growth, Contribution Senior management is invested in the company LTIP tied to value creation in company and share development Close dialogue with companies Monthly reporting on performance, goals and activities Qua
Slide 82: Decentralized but leveraging scale
Decentralized but leveraging scale Industry Sector Business Development Leveraging global know-how to accelerate local growth Technology and Sustainability Leadership Technology council and dedicated resources in sustainability Digitalization and Cyber Security New IT platform ready for rollout in 2
Slide 83: Group Management
CEO P. Kruk Group Management CFO Sales A. Forsén H. Goff Sustainability Marketing A. Lothsson S. Magnusson IT Operations A. Juviken C. Nuttall People&Culture E. Holm Nordics Europe USA East P. Jensen B. Klingenberg R. Balson A. Liu NCAB GROUP © 83
Slide 84: Capital Markets Day 2023
NAB Grom CAPITAL MARKETS DAY 2023
Slide 85: Proud of our history but it's just the beginning of our journey
19 93 19 94 19 95 NCAB GROUP © 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 Proud of our history 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 but its just the beginning of our journey 20 20 20 21 20 22 20 23 20 24 20 25 20 26 20 27 20 28 0 2 000
Slide 86: Thank you
ncabgroup.com Thank you Follow us