• Order Intake: SEK21.2 billion, a 40%+ increase year-over-year.
• Organic Sales Growth: 17.5% for the quarter, 21% for the nine months.
• EBIT Growth: 38% in the quarter, with margins improving to 8.8% from 7.5% last year.
• Cash Flow: Strong cash flow of SEK3.2 billion due to large customer payments.
• Order Backlog: Record high of SEK190 billion, up 37% year-over-year.
• Net Income: Increased by 48% in the quarter.
• EPS Growth: 48% increase in the quarter.
• Net Debt: SEK0.5 billion, with a net debt to EBITDA ratio of almost zero.
• Cash Position: SEK10.6 billion, with SEK6 billion in undrawn credit facilities.
• Equity-to-Asset Ratio: Increased to 38.9%, above the target of 30%.

• Warning! GuruFocus has detected 2 Warning Sign with SAABF.

Release Date: October 22, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Saab AB (SAABF) reported a strong order intake of SEK21 billion, marking a 40% increase year-over-year.
• The company achieved 17% organic sales growth, with a 21% increase over the nine months.
• Saab AB (SAABF) has a record high order backlog of SEK190 billion, indicating strong future demand.
• The company is expanding its production capacity with new facilities and increased workforce, aiming to meet growing demand.
• Saab AB (SAABF) reported a strong cash flow of SEK3.2 billion due to large customer payments.

Negative Points

• The aeronautics segment is still burdened by startup costs and under absorption due to low-rate production for the T-7 trainer aircraft.
• Dynamics experienced slightly lower margins due to the mix of business units and delivery timing.
• The company faces challenges in industrializing products for high-volume production, requiring redesign and automation.
• Supply chain resilience remains a concern, requiring continuous monitoring and adjustments.
• Saab AB (SAABF) has seen an 8% year-on-year increase in CO2 emissions, despite efforts to improve energy efficiency.

Q & A Highlights

Q: Can you elaborate on the capacity investments and whether Saab will meet demand in 2025? A: Micael Johansson, CEO, explained that Saab is increasing its workforce and optimizing current facilities to boost production. New production lines and automation will be implemented towards the end of next year, with full capacity expected by 2026. This includes new facilities in India and Michigan.

Q: Could you provide insights on the Swedish defense bill and its implications for Saab? A: Micael Johansson noted that the Swedish defense bill aligns with previous Defense Committee reports, focusing on reliability and availability of materials, including maintenance and munitions. Saab is well-positioned to support these needs, with ongoing programs for Gripen and submarines.

Q: Surveillance and Dynamics margins showed fluctuations. Can you explain the reasons and future expectations? A: Micael Johansson stated that Surveillance margins were strong due to project completions, while Dynamics margins were affected by product mix. Surveillance is expected to maintain double-digit margins, while Dynamics margins may fluctuate slightly but remain high.

Q: What is the likelihood of exceeding the sales growth guidance, and can you provide more details on cash flow expectations? A: Micael Johansson indicated confidence in reaching the upper end of the 15%-20% sales growth guidance, but did not provide specific cash flow details beyond expecting positive cash flow by year-end.

Q: How is the T-7 trainer program impacting Saab's aeronautics segment? A: Micael Johansson explained that the T-7 program is in its early stages, with startup issues affecting flow. It will take a couple of years to stabilize, but it is expected to be a long-term franchise program with significant potential.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.