Freemelt Holding AB (publ)

Hello and welcome to today's webcast with Freemelt, where CEO Daniel Gietlund, CFO Martin Granlund and CAI lead Per Voxenius will present a report for the third quarter of 2024. After the presentation, there will be a Q&A, so if you have any questions, you can submit them into the form to the right. And with that said, I hand over the word to you guys.

Thank you. So, hi and welcome to our Q3 webcast. In today's webcast, we will start by giving a bit of a short recap on who Fremont are and also the strategic plan that we are executing on. As if you've been here before, you also know that we deep dive in some strategic topic during this webcast as well. And this time we will focus on various development projects that we are working on and what they mean for Fremont and also our growth journey ahead. So on this call we have, except for myself, our CFO Martin Granlund and also our CLE Per Voxenius who is in charge of our continuous improvements program and especially the industrialization of Fremont. So with that said, I kick off. So Freemult was founded in 2017 by seven engineers with extensive experience from both additive manufacturing but also electron beam powder bed fusion technology. Mailed them from the company Arkham, which was another successful Swedish 3D printing company that GE acquired in 2016. So what we do is to develop advanced 3D printers for metal components, aiming to be the leading supplier in additive manufacturing by leveraging on our ePBF technology. Our focus is in areas where 3D printing offers significant opportunities and value, particularly in the industries such as defense, energy and medtech. And these are also industries where complex and high performance components are in demand. If you look into our technology, it is independent on materials, but our primary materials are tungsten with a melting point of 3,400 degrees. So that makes us ideal for advanced defense applications and also fusion reactors in the energy sector. the other material is titanium which is perfect for implants and then we have copper which is highly suitable for applications in need of high connectivity these materials and applications is where our modular printers using epbf technology offering significantly higher efficiency compared to other machines on the market And I think this has also been valued by our customers so far and has resulted in 28 machines that we have sold since the start. From a go-to-market perspective, we have a two-way go-to-market. So one is that we go through the academia to really enable the industrial adoption by both developing then the material processes and also the application for the industry. and then we go also direct towards the industrial customers as well if you look into our 2030 strategy i mean our goal is to achieve one billion second revenue by 2030 at 25 percent recurring revenue from from the aftermarket business but long term we aim to have more than 40 percent coming from the the aftermarket Now we are pursuing several strategic initiatives to reach this target. And I think here, you know, where our R&D efforts are closely aligned with our research institutes and also the universities that we work with, which will enable us to drive efficient adoption of additive manufacturing within the industries we target. As I said before, I mean, in parallel, we focus on direct enterprise sales and we are also establishing a local presence in strategic markets like Europe and also North America. And to put some further context on this, let me explain and then maybe zoom in on an industrial customer that is having serial production operation. And let's also assume that this customer is using traditional manufacturing technology at this moment when the manufacturing parts. Then it requires two development steps prior to entering into the industrialization phase and when they start to ramp up into serial production through additive manufacturing. For Fremont, the large volume sales of machine will come when the customer is ramping up his serial production. But the good thing for Fremont is that we have a business opportunity in each of those steps that you see here on the screen prior to entering into serial production. And it can either be related to that we sell a project like a feasibility study or a proof of concept where the industrial customer order this product from Fremont, or it can actually also be through our partners like universities or research institute. If the feasibility study for the industrial customer is successful then it moves into a proof of concept and there the industrial customer itself either purchase an email machine or you can rent the email to really run the proof of concept and to achieve those expected kpis as well that they have so i think here by supporting the entire customer development journey um Then we also position ourselves like a long-term partner. And I think we also ensure a much smoother transition and also a faster product time to market for the customer as well. So hopefully this explanation gives you a bit more flavor as well on those different kind of steps and projects that we have announced recently as well. And Per will actually come back and give some further explanation later on as well. Okay, so let's then zoom in on the achievements in Q3. We have received feedback to be more transparent regarding the various paid customer projects that we're engaged in as well. Because these are actually really critical indicators for our upcoming business towards industrial share producing clients. And during Q3, we launched six new feasibility studies or projects, and we successfully completed four projects. And I think this is demonstrating an increasing pace of our innovation. For example, we finalized the first phase of a study with SOB for defense application. And this is about validating our ePBF technology and the potential for producing high performance and complex components in the defence applications. We have also made significant progress with other feasibility studies that has been ordered during the quarters as well. UKAEA, so this is the United Kingdom Atomic Energy Authorities. Here we are actually at the second phase of feasibility study. And now the focus is really on the tungsten tiles for fusion reactors. And I think it's also important to highlight the progress with Sandvik and Mid Sweden University as well. So this cooperation is really to develop material processes for chemically reduced tungsten powder. And why this is important? Because it's really about to become more cost efficient in manufacturing fully dense tungsten components. I would say that one of the biggest obstacles for the additive manufacturing industry so far has been due to the high powder cost. So this is really why this is so important for us. When we can achieve this process, it also means that we can offer substantially reduced cost per printed part to the customer. And I think it's also worthwhile to mention that thanks to this corporation as well, then we have secured 100% European supply chain of tungsten powder, which is also critical. And then last but not least, the increased interest and also the demand in US has actually made us force the establishment of the US application center, in this case, in cooperation with Hammer Industries. And here the focus is on defense and energy applications. During the quarter, we also achieved a major milestone regarding our industrial offering. When we successfully installed our first e-melt machine at VRM in Italy. So VRM, they are a competent center for implementation of additive technologies to industrial clients. And Actually, after having that installed, we also had our first customer reference visit during September at the site of VRM, which resulted, I will say, in the biggest commercial breakthrough ever for Fremont after the quarter when we secured an order from a global orthopedic implant OEM. And what they're going to do, they're going to do a proof of concept on serial production capabilities using e-melt. So this order is a major milestone for Fremont. And it also strengthened our position in the medical sector and represents, which represent actually the sector as well as the industry that has the highest adoption of additive manufacturing for serial production. If I zoom in on a more general business perspective, we continue to engage with academic customers in both Europe and North America. And I think what we start to see as well that we can harvest somewhat from the pipeline that we have established over the past year, why it was rewarding that we finally got two of the Fremont One machine orders in the quarter, one in Europe and one in North America. Coming back a bit to the projects that I mentioned before, we currently also running 11 paid customer development projects and where one has actually transferred from feasibility study into a proof of concept. And I think this is also then reflecting the steady demand for our technology across various industries. So looking ahead, we expect the continued growth in demand for feasibility studies and also, of course, proof of concept projects. And I think this is really telling that more companies are recognizing the value of our technology for industrial applications as well. So this increasing market engagement position us now to transition more of these projects into serial production where larger scale opportunities and the bigger revenue streams lie as well for Freemult. If you look into throughout the year, we have so far initiated more than 20 development projects and we have successfully concluded 10 of them. This ongoing project pipeline, I think, also underscores the growing traction that we are experiencing now in key sectors like defense, energy, and then also medtech. And I think what is evident as well is that our leading position in tungsten, it has generated a lot of interest and also traction. And I think here what you can see as well that Roughly 75% of all the projects that we have been starting during 2024 has been with tungsten. And 60% of all these projects are within defense and energy application, where we also have established a very strong position. So this consistent influx of new projects highlights the expanding interest in our technology and services. So with that said, I will hand over to Per, who is responsible, as I said, for continuous improvements. And Per will share some further details and examples also how the process towards serial production realization works and how Fremont cooperate with customers during that entire process. So please, Per.

So again, I'll talk about feasibility studies and why it is so important to really adopt AEM. When we started developing the EMELS series industrial systems in parallel, we started to really focus on feasibility studies and really engage with customers. And I will give two examples. One is for tungsten, it's plasma facing components and fusion reactors. And the titanium, I will focus on orthopedic implants. So why do you want tungsten in fusion reactors? It's I would say quite simple. It's one thing. It's a high melting point. The other thing is excellent radiation shielding. So tungsten has the highest melting point of all materials. The good thing is that it really shields very well from heat. The bad thing is that it's almost impossible to manufacture with traditional methods. You are very limited in material properties. You're also very limited with the shape you can do. Since tungsten is the material with the highest melting point, you can't really cast it. I usually say it's like boiling water in a kettle made of ice. The kettle melts before the water boils. So you really can't do it. But we have shown with additive manufacturing that this is a possible way forward. So if you look into the example, fusion reactors, ITER is the world's largest research project. It's a 20 billion euro project. And it's a so-called tokamak. And it has a big volume where you have plasma at 150 million degrees. So it's extremely hot. And you need something that shields from the worst heat. And that is called first wall components or first wall panels. Most people think that this is something that will happen in the future. But actually, ITER is being built right now. And they will have 440 panels, each one and a half square meters big. And already two years back, ITER ordered 60 blankets from two European suppliers at roughly 100 million euro each. So these are really high value components. The design was ready, they knew how to do it. It was going to be made in beryllium, the wall of the first part of it. But last year they decided to switch from beryllium to tungsten. That was a very late decision they made. It was actually thanks to the whistleblowers they decided to switch materials. And then we come to the volumes. ITER will need roughly one and a half million tiles. They are already producing the blankets, the producer parts. They are putting them in stock and they are waiting for materials methods to produce them. So again, our focus right now is to build, to learn about materials development. So again, in 2023, ETH decided to shift to tungsten. They decided to use traditional methods, not to use additive manufacturing because they said it was too late. But at the same time, UKAA, the Arctic Kingdom Atomic Energy Authority, the UK organization that builds fusion power plants, They wanted to make the first study to understand additive manufacturing, understand if it was a feasible method to produce parts. So we developed, made bulk parts and produced them. This was highly successful. They were very happy with our results. It will be published quite soon, the data, but it is It's extremely good compared to laser-based methods. It's very good compared to traditional methods. And that led to a second study. Quite often, a second study is, can you please repeat? But the second study in this case is really about moving the technology forward. They zoomed in on some of the tests we've done. They zoomed in on some of the technologies, specifically spot melting. And that is a study ongoing that will be completed in a few weeks' time. That has led to that. We have sold two systems to universities in the UK, both focusing on tungsten, both focusing on this because of the support from the UK. and also that we have a very typical customer that can use it has also led to that we have two new feasibility studies at the later stage being done one for us customer one for european customer those two studies have been with quite complicated shapes quite complicated details so it's not materials development it is more application testing we are doing So what has happened since then? This summer I was at a meeting with something called Fusion for Energy. It's the European part of ITER, a fusion power plant. They told us in June that your technology is interesting. We're interested in it, but it is too late. It will not be included in ITER. but what has happened afterwards when they have started to see the results from uk they've seen what we are doing and see our capability and specifically they see our productivity they have decided to see if am is a way forward for the fusion power plants for this generation and future generations so they will release in november what is called a tdp technology development program They have decided on two projects with two most important ones for the power plant. One of them is tungsten for first wall components. So they will investigate if it is possible to use EM in first wall components because it is a high quality and it is probably at a lower cost compared to traditional methods. And we hope that we have a chance to take part of that. And it would have not taken part if it wasn't for the first study we started last year. And now we are looking into making scalability studies. We are not pushing customers to do this. We have customers coming to us asking us to do scalability studies to see if this is feasible for large power plants and large volumes. We can, of course, not disclose who it is. But we really have pulled that people are coming to us and ask about the possibility to produce tungsten at scale. So again, Fusion Rack is actually happening right now. People are really building on it. And of course, the knowledge here is also is directly transferable for the defense sector as well. So it has also led to a number of defense work as well. So that is in short on tungsten and why feasibility studies are so important. Titanium is a different thing. It's a material with much of a melting point. There are different methods to do it. It is a known technology and all large OEMs use it. All orthopedic implants OEMs use additive manufacturing. It's already in place. It's already in place in the high value parts of the implant sector. The driver in titanium is porous structures, combining that with solid parts. And you want that because it supports bone ingress and you get a longer life of them. So why does OEMs want to make feasibility studies with us? It is a number of reasons, but primarily a second source of manufacturing equipment. They want to be able to have more than one supplier. They want to increase productivity and also increase productivity per square meter. They also want the technology more industrialized compared to traditional additive manufacturing. And that's why the IED suits well. And finally, new product development. For example, if you look at the part up to the left here, to the left you have a hip cup, which is a standard part right now in additive. The right is a femur or it's a hip stem rather, and that is not in additive right now. So that is a possible product moving forward. The same for knees, there are some interesting components there. So what we have been doing in titanium is that, like last year, we developed the bulk properties, solid material properties, but also the properties for porous structures. And we have shown that we fulfill the requirements for orthopedic implants, the size of the struts, the size of the holes, so that it is suitable for implants. And that in turn has led to that in this year, what we have really shown about energy volumes that we comply to all material standards. And as Daniel said before, we have made a breakthrough with one OEM starting to investigating our technology. Of course, we have worked with them for quite some time, but now we're really investing in our technology, investing in the feasibility study. and that has led to that now we are with them we are making a proof of concept study that will be completed next year so that really i think both cases tungsten and titanium really show the importance of feasibility studies how it can drive us moving forward and lead to more sales And again, each new step we see we're doing, they want us to take the next step, not making more test bars, we want us to make really proof of concept, they want us to show that we are productive enough. So we are moving toward to the right thing is scale into production scalability and into production for abroad. So I think that completes my presentation on feasibility studies.