Speaker #1: Joining us today are CEO Jonas Nilsson and CFO Lena Åberg. At the end of the call, we will have a Q&A, so you're welcome to submit questions using the form located right at the webcast.
Speaker #1: If you're calling in and want to ask a question, please press *9 to raise your hand and *6 to unmute your line when you've been handed the word.
Speaker #1: With that said, I will hand over to you, Jonas, and Lena. Please go ahead.
Speaker #2: Hi everyone, and welcome to this presentation of the third quarter report. Today I am at a hydrogen technology world expo in Hamburg. I'm here mainly to talk to our customers, the customers of the customers, and prospective customers that are here.
Speaker #2: So, let us hope that the Wi-Fi is with us today. Here is the agenda for today's webcast. We will start with highlights and business momentum for Q3, and one of the highlights is, of course, that we have a positive net income for the quarter.
Speaker #2: Our CFO Lena Åberg will take us through the financials, then summary in Outlook, and a Q&A session at the end. As I said, I'm in Germany now, and last week I was in Asia also to meet customers.
Speaker #2: I had lunch at the Port of Ningbo with the chairman of a company that supplies hydrogen fuel cell systems for trucks. Ningbo is in China.
Speaker #2: I was also given a tour of their test center, and their exhibition center. Until now, they have been buying their fuel cell stacks from external suppliers, but they are now preparing to manufacture their own.
Speaker #2: So the harbor in Ningbo is the world's largest port by total cargo tonnage. And it is said that the Chinese authorities use satellites to monitor CO2 emissions and that is one of the reasons why hydrogen-powered trucks are used in the area.
Speaker #2: There are three hydrogen refueling stations near the port, and seven across the city. The hydrogen is a byproduct of the nearby industry, and the company I visited, they have their own pipeline which the chairman showed me, and buys the hydrogen for 25 Chinese yuan per kilogram.
Speaker #2: And that is actually cheaper than diesel in Sweden. But what really struck me was how proud the chairman was when he told that the company had delivered 613 vehicles.
Speaker #2: Many of which had been operating around the clock for several years. And this was before we looked at the fuel cell stacks. When we got to them, we could point out that they came from a manufacturer that actually uses our coating.
Speaker #2: So without realizing it, he had been telling us about the performance of fuel cell systems that use our coating. And of course, that was very useful information for me.
Speaker #2: We were not discussing laboratory tests or theoretical performance. We were talking about real vehicles, operating in real commercial applications, year after year, with our coatings.
Speaker #2: So back to highlights for Q3. Order intake was moderate, with 9.5 million sec. We do have a steady inflow of new paying customers. More than 70 since we started monitoring this three years ago.
Speaker #2: 11 previous quarter and 5 this quarter. We had decent net sales, of 27.5 million mainly from machine sales to HA wave, but also deliver coating services orders and aftermarket.
Speaker #2: Plus 9 million net sales of recovered metals. This totals 36.5 million in net sales. And the net income for the quarter was positive both with and without the sales of recovered metals.
Speaker #2: So here are some pictures on the top left picture. You see the IC500 for antenna coatings installed in the production hall of HA wave.
Speaker #2: I think you have already seen it on LinkedIn. If not, start following Impact Coatings on LinkedIn and you will get some regular updates that are not at press release level.
Speaker #2: Actually, I wasn't Korea last week. And I was talking to Mr. Yu, the CEO of HA wave, he was happy and he was proud of the company he had built and of course he also talked about his expansion plans.
Speaker #2: Another thing you have already seen on LinkedIn is the factory acceptance test of the machine that was shipped to Denmark actually shipped yesterday. To the left you see our Nils, who has played a central role in all our deliveries to Lynberg.
Speaker #2: Then you see Nils Mikkelsen, head of PVD at Lynberg. And then we have Petter and Daniel, our COO. So order intake for the third quarter was moderate, but now in Q4 we got an order for an IC2000 from a research institute in Romania.
Speaker #2: This is interesting from several aspects. Firstly, we won in competition with two of our main competitors. Secondly, we talk a lot about using the same machine type all the way from prototyping to serious production.
Speaker #2: This is possible through our unique design of our machines. Others they use batch coaters for prototyping and then transfer the process to huge linear inline coaters.
Speaker #2: We make the prototyping in the real machine. We start production in the real machine. We ramp up in the real machine. And add more machines as the volumes grow.
Speaker #2: And this is of course ideal for volatile markets. Looking at some of the big linear inline coaters on the market, they consume four times the floor space.
Speaker #2: They are four times as expensive and also they have four times the throughput. So our concept is better for volatile markets because you can add machines when the demand increases.
Speaker #2: I forgot to mention redundancy, but I think you get the point about this. So it takes we can take next slide. So well on this slide my colleagues has gone a bit bananas with AI.
Speaker #2: But what we want to illustrate is that we have five regions now selected for the four-year long hydrogen pilot program in China. And as I told in the beginning, I was in Shanghai last week for customer meetings.
Speaker #2: It doesn't look like the picture, but the main message is that the Chinese market starts moving again. Right now we are running one shift production in our coating service center in Shanghai.
Speaker #2: And actually I tried to invite our whole team for dinner last Thursday. But they had to work overtime to get ready with that day's production so unfortunately we had to cancel.
Speaker #2: At the last quarterly presentation you got a guided tour in our coating service center in Linköping by Peter. The center in Shanghai it's a little bit more advanced with more automation.
Speaker #2: We have a fully automated cleaning line with 12 stations for detergent cleaning, ultrasonic cleaning, drying of the plates. They are actually dried with heat and vacuum to get all of the moisture out of the inner channels of the bipolar plates.
Speaker #2: After cleaning they go to coating and there is a robot loading our IC2000 which we call Vilma who do the coating. And as some of you might know all our machines they have names.
Speaker #2: Dependent on size of the plates and type of coating Wilma is capable of 8000 bipolar plates per day as long as someone gives her a bit of care and changes her so-called targets which is the raw material between the shifts.
Speaker #2: After coating we have a fully automated visual inspection system and a last station is laser marking and packing. There is a movie clip from our Shanghai coating service center on our homepage so I recommend you to go to our homepage and have a look at that movie clip.
Speaker #2: Right now we can handle the production in Shanghai with one shift and some overtime as I mentioned. But I'm looking forward to go back to full two shift production.
Speaker #2: In Sweden we don't have the same degree of automation as in China. But we have more machines and we do a lot of customer samples.
Speaker #2: This quarter we welcomed five new paying customers. And the start of the customer journey is typically to deliver paid samples. In Sweden we also run serious production of coatings of earrings.
Speaker #2: We do coatings of components for the Swedish company Exeger. We do coatings for pulse measuring devices to make them sweat resistant. And also some other special applications.
Speaker #2: But in terms of money coatings for PEM electrolyzers is the biggest business that our coating service center in Linköping. And it's mainly for the European and the North American market.
Speaker #2: Energy is our focus area and especially SOFC. SOFC development and customer samples for solid oxide fuel cells are mainly done in Sweden although the market is focused on Asia.
Speaker #2: That leads us to new customers. So in total we added five new paying customers during the third quarter which is along the target of approximately two per month.
Speaker #2: In total we have added 18 new paying customers this year. Looking at the picture it might seem a little low with only one new SOFC customer.
Speaker #2: But to put it into perspective the SOFC companies they are quite big. And we have delivered samples to four of the top five in this market.
Speaker #2: Given their size they are also thorough in testing and what we see is longer evaluation and qualification cycles in the SOFC market compared to the PEM market.
Speaker #2: So with that I leave the word to Lena who will guide us through all the figures in the report.
Speaker #1: Yes maybe not all thank you Jonas maybe not all the figures but the main parts anyway. So we will start looking at net sales as Jonas mentioned group net sales for the third quarter increased and mounted to 36.5 million.
Speaker #1: Compared to 15.2 million last year. And it comprised of coating systems sales of 16.6 million. Coating services of 17.8 million. And aftermarket sales of 2.1 million.
Speaker #1: But as Jonas mentioned coating services net sales include recycled metal sales of 9.0 million compared to 1.4 million last year. And the subsidiary in China accounted for 1.7 million of the group net sales.
Speaker #1: And gross. Margin for the quarter was 56% equal to Q3 2025. If we look at group net sales from January to September it amounted to 58.9 million.
Speaker #1: Compared to 31.5. And coating services net sales includes. Recycled metal sales of a total of 13.8 million compared to 1.8. Last year. The subsidiary in China accounted for 4.4 million of the group net sales.
Speaker #1: And the gross margin was 58% so far this year compared to 52% last year. If we look at the main costs for the quarter in the chart personal costs decreased 3.3 million to 9.4 million.
Speaker #1: Compared to 12.7 million in Q3 2025. And it shows the continued effect from the cost reductions. The full-time equivalents by the end of the quarter was 43.
Speaker #1: Compared to 54 last year. And the bottom chart shows the quarterly development of EBITDA and EBIT where the group as mentioned reported a positive both EBITDA and EBIT and net income.
Speaker #1: So the EBIT was 3.8 million and net income 3.6 compared to minus 12.1 last year. And if we look at the year to date figures January to September personal cost decreased to 34.2 million compared to 43.8 million.
Speaker #1: Again reflecting the implemented cost reductions. And the average number of full-time equivalents for the year so far was 45 compared to 61. Operating a loss January to September was minus 20.3 million compared to minus 41.9 million.
Speaker #1: If we look at the quarterly development of the main parts of the balance sheet there are small changes in fixed assets compared to the year end.
Speaker #1: And even though we have depreciations and they were larger than investments but there are on the other hand increase due to some currency effects from the subsidiary in China.
Speaker #1: Inventories have increased so far this year mainly in work in progress. But where we are now in we have now in Q4 delivered another machine so short-term receivables have increased mainly from prepaid costs and accrued revenue.
Speaker #1: And total liabilities which for Q3 2026 is only short-term liabilities have increased mainly in accounts payables. And cash ending balance was 14.1 million compared to 37.4 at the year end 2025 but with less changes from Q1 2026.
Speaker #1: Now we will move on to look at cash flow. So if we look in the chart we can see that cash flow from operations before change in working capital was positive.
Speaker #1: 6.1 6.0 million. And cash flow from operations amounted to minus 4.0. Looking at the year to date figures January to September cash flow from operations before change in working capital was minus 14.0 compared to minus 34.8.
Speaker #1: And the improvement of approximately 20 million is a mixture from the increased sales improved margin and lower costs especially personal costs. Cash flow from operations amounted to minus 20.7 million.
Speaker #1: Compared to minus 36.1. And there is a low level of investments minus 1.8 million. Looking at cash flow from financing activities it amounted to minus 1.0 million.
Speaker #1: In Q1 the parent company repaid a short-term loan of 5 million SEC and in Q3 a new short-term loan of 4 million SEC was raised.
Speaker #1: The corresponding period of the previous year included new borrowings in the subsidiary in China of 23.2 million. So total cash flow for January to September amounted to minus 23.5 million.
Speaker #1: Compared to minus 19.6 last year. And at the end of the period the group's cash amounted to 14.1 million. Compared to 12.9 in September last year.
Speaker #1: And with that I leave the word back to you Jonas for the summary.
Speaker #2: Yes. Thank you Lena. So if we look at summary and outlook we had good net sales and a positive net income. During the quarter and now in Q4 actually yesterday we shipped the machine to Denmark also now in Q4 we won the order to ICSI Romania and going forward we will continue to focus on sales and customer development at the same time cost control cash flow and improve margins remain essential as we work towards long-term profitability.
Speaker #2: And with that we open up for questions.
Speaker #3: Thank you for that presentation. We will now as stated open up for Q&A session. And as stated before you're welcome to submit questions using the form located to the right of the webcast.
Speaker #3: And if you're calling in and want to ask a question please press star 6 to unmute your line when you've been handed the word.
Speaker #3: With that said Lara from ABG the word is yours.
Speaker #4: Hello just a couple of questions from my end. Firstly you said that net income was positive even without the recovered metals. Could you just maybe give us a feel for how much the metal sales contributed and how else should we sort of think about them going forward?
Speaker #2: Lena will you take that or shall I take it?
Speaker #1: I can answer that. I think I have an approximate figure at least. So I would say that the margin for the metals the aggregated in this quarter was a bit below 30%.
Speaker #1: So that's the effect.
Speaker #4: Okay. And how should we sort of think about these metal sales going forward? Is it recurring is it a recurring part of coating services?
Speaker #1: It varies a bit because since we changed to a supplier a new supplier that agreement allow us to decrease capital binding in the metal inventory.
Speaker #1: And it is used from time to time and it's also a timing mix because sometimes we are not able to return material at the same time as we purchase we have to make a gross have to make the purchase and then make the sales.
Speaker #1: Instead of making a net a combined net purchase so to speak. So it it varies depending on time and yeah. So that's why we want to point it out separately.
Speaker #4: Okay. Clear thank you. And it also sounds like things are sort of picking up in Shanghai. What would it sort of take to get back to two shifts and when do you think that will happen?
Speaker #2: Yeah today we are we are sort of right at the limit what we can handle with one shift. But there there is there is no sort of benefit in it's own to go to two shifts.
Speaker #2: It's it's all about customer orders going to two shifts of course increases also the the the cost. So right now we are doing some overtime to avoid taking the cost for two shifts but if we look at the four casts overtime might not be enough to fulfill the customer demand in the forecast we have from the customers today.
Speaker #2: For for the rest of the year. So so with those forecasts we need to go to two shifts but maybe we can sort of yeah work with with overtime or other means to to make it work with one shift but we are right at the limit.
Speaker #4: Okay. And on SOFC sales when do you expect them to start generating meaningful revenue? Maybe I mean given the longer qualification cycles would you think that will mainly come through coating services primarily or should we also expect some system sales in in the near term?
Speaker #2: We we expect system sales for SOFC and the reason why we expect system sales is that the volumes are much higher for SOFC than than for PEM.
Speaker #2: So so for PEM it it makes sense to to start with prototypes in in coating services ramp up in coating services and then when you see that the volumes are big enough you invest in in your own machine and and we have seen that to some extent on on the PEM fuel cell market.
Speaker #2: On SOFC looking at the forecast from from the customers they the forecasts are more like okay you you qualify the coating and then you you go for your own machine because the volumes already from start are are so big so it's it makes sense to invest in in your own machine already from start.
Speaker #2: And this of course is good for us because it's it's brings the revenues earlier. We can sell a machine very early already when the customers starts the production otherwise we will have a ramp up period through coating services and then then we can sell a machine.
Speaker #2: So I I expect that we will see either a ramp up during next year in coating services for for SOFC or we can have machine sales relatively soon.
Speaker #4: Okay. Grace thank you. Also you mentioned that the HA wave CEO talked about expansion plans. Could that potentially turn into a second machine order think?
Speaker #2: The the according to his expansion plans he he need more than one machine then it's of course dependent that he has to be successful in his expansion but according to his plans yes.
Speaker #4: Okay. Sounds promising. And you mentioned that you're in Hamburg this week. What would you say is currently sort of the mood in the European electrolysis market?
Speaker #4: How are sort of the discussions going?
Speaker #2: Yeah I I I just arrived yesterday night so I will go to the to the fair right after right after this webcast. So I I so so I I haven't sort of seen the mood at the fair but to to answer that question in a different way I I almost have a full full schedule for today with already pre-booked meetings and and that's of course good.
Speaker #2: So so I believe that the mood will be better this year than than last year.
Speaker #4: Okay. Okay. And also if we look beyond HA wave how would you sort of see how do you see the demand for radar and electronic coatings developing?
Speaker #4: Would it sort of take to get things moving in automotive?
Speaker #2: What what what we see in in automotive so so automotive when it comes to decorative radar transparent coatings that market has been somewhat slow and we primarily have customers in in Europe for that machine customers in in Europe.
Speaker #2: And I think everyone is is aware that the European automotive industry is not expanding that much right now. Quite the opposite. They try also to get into the Asian market and and especially the the Chinese market which will lead to to machine sales for us because then we can deliver machines to to their to their Chinese factories however also the the the Chinese automotive industry has has not been been that that healthy the the last year.
Speaker #2: So so I I would say that most of the companies in in the automotive industry they they they have tough times now and yesterday I I talked to to one CEO of an automotive supplier and he he said that his belief is that the the total number of produced vehicles that come in years will actually go down because the the younger generation they they don't buy cars that that much.
Speaker #2: I don't know if this is true but this was what what he was telling me. However if you look at antennas we are not dependent on an expanding automotive business to to sell antennas because this is new functions that will go into the cars and for the safety system of of a car and and for systems for autonomous driving or driver assistance yeah then you need radars and you need one radar in each corner and you need one radar in the front.
Speaker #2: So we're talking about five radars in total for for a car. I also talked to not only our customers but our customers customers i.e. the the companies that that buys the antennas and and makes the radars and in some of their volume forecasts they will consume a lot of antennas so I've seen forecasts where we talk about like 100,000 antennas per day.
Speaker #4: Okay. Very clear. And just finally from my end could you maybe just give us a short update on the process to bring in an industrial partner?
Speaker #2: Yeah so we have contracted an advisor and we are working with that advisor and as we have said before we we are a little bit picky when it comes to bringing in an an investor so we we want an investor that can bring also other synergies not only bringing money to to impact coatings but also to bring other synergies in into the company.
Speaker #2: And we have a had a couple of companies that has visited our office in Linköping and have had a look at the factory in Linköping.
Speaker #2: We have also had visitors in a factory in in in Shanghai so we we are progressing but we are a bit picky.
Speaker #4: Okay. That was all from my end. Thank you very much.
Speaker #1: Okay. We will end with some written in question. Questions. So we will start off with in connection with your collaboration with LT Metal on catalyst coated porous transport layers on PTLs.
Speaker #1: Or PTLs. You mentioned commercialization and mass production. Could you outline the key technical and commercial milestones that remain before the product reaches the market and provide your current estimate of the timeline for the first commercial deliveries?
Speaker #2: Yeah. So LT Metal they they are already a supplier on the market. So they they supply PTLs and we supply coatings of of PTLs mainly platinum and and gold coatings.
Speaker #2: Now we have entered also iridium coatings so what we have done so far together with LT Metal is that we have put iridium oxide on their PTLs to make samples and they have provided those samples to their existing customers so electrolyzer producing companies and those companies are evaluating those samples right now.
Speaker #2: So it's it's the the collaboration is more focused on the commercial part. It's not a a development collaboration. It's not that we should develop some new coating.
Speaker #2: We take our iridium oxide coating and apply that on the LT Metal PTLs we do have an iridium oxide coating they have PTLs we do this together so we offer a a ready to go solution to the customer a coated PTL to the customer.
Speaker #2: Did did I answer the question?
Speaker #1: Yes. Thank you. We will move on. In the beginning of the year you expect the system sales in all four segments during 2026. What status is this?
Speaker #1: What is the status of this?
Speaker #2: Yeah. As I talked about we have taken orders in three of the segments and also in one of those three in in energy we have had decent coating services volumes also we have ship machines in luxury goods and and in electronics so so the segment that that is left is is automotive that that is decorative radar transparent coatings for for cars and and as as we talked about in in in Lara's questions we mainly have customers in in Europe for for those machines they try to get into Asia which is an opportunity for us to sell more machines to existing customers but in in general automotive has been been slow this year I have to say and and it has been slow for for those customers so they are as of today they they are not lacking capacity they they need to get into Asia they need to get more customers to to to to have a need for for more machines.
Speaker #1: Yes. And finally we have a question about the Romanian public tender. Is it official who the contenders were in the Romanian public tender?
Speaker #2: Yes it is. So so we were three companies who placed a bid it was us and it was Hauser and it was Singulars. So so the other two they are yeah two of our main competitors and and we won.
Speaker #1: All right. That was the final question for today. So we will now conclude today's conference call. I would like to extend my sincere thanks to Jonas and Lena for the presentation.
Speaker #1: As well as to everyone who submitted questions and joined today's webcast. I wish you all a pleasant rest of the day. Thank you.
Speaker #2: Thank you everyone. And don't forget to go into LinkedIn and like us and also follow us so that you get all the news that we post on LinkedIn.
