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5/6/2025
Hello and welcome to today's webcast with Fremont. With us presenting today, we have the CEO, Donald Gidlund, and CEO Martin Granlund. If you have any questions, please feel free to use the form located to the right, and we'll think that up during the Q&A section. And with that said, please go ahead with your presentation.
Thank you. Today's agenda is mainly about the Q1 result, but we always add a specific topic. And as we have many new shareholders during 2025, we actually would like to zoom in and explain the revenue streams a bit more, and when and how it's reported. So please raise any questions in the chat, and then we will try to answer as many as possible after the presentation is done. So welcome. Just to start with a recap regarding Fremont. So Fremont, we were founded 2017. What we do is we develop advanced 3D printers for metal applications. The technology is called ePBF, so electron beam powder bed fusion. The focus area we have is really related to complex and high performance materials and parts. This is where our technology is highly suitable. Errors are typically after complex and high performance components is in defense, energy, and medtech. So that is our three main focus areas. Having that said, our technology is not dependent on any specific materials, but we focus on tungsten, which is mainly for defense, energy, to a certain point, medtech as well. Titanium, which is mainly for orthopedic implants, but also could be related to defense. And then copper, which can actually be in defense energy as main segments. Where we try to differentiate as a company within 3D printing is that we have a modular system. So the key focus is really to shorten down cycle times, which means to increase the productivity. As 3D printing has mainly been successful in prototype printing, Freeman really now tried to take this to the next level and now compete the traditional manufacturing. Our customer base has so far mainly been academia. So focus really a lot on universities, research institutes. The reason is also that they can enable the industry to really develop new materials and components that will drive value for AM. But also because of the fact that our first machine was really related to the academia side and our research. But now we have an industrial machine, EMET, in place that was launched during last year. We are number two in the world when it comes to EPBF, and we have so far sold 32 machines globally. If we look into our three focus areas, sorry, defensive and then energy and medtech, I would say all of them are really undergrowth. And I would say due to the geopolitical turmoil that we're having, I would say that the defense and also energy are more impacted in a positive way. So I would even say that the numbers that you see on the screen here most probably is outdated. I think now with the EU also announcing huge ramp up in defense, I would expect to see even a bigger growth moving forward. Freeman, at this moment, we are exposed in all these three areas, as you can see on the screen. And these are publicly announced engagement, but we also have a few that we haven't and cannot expose so far. And during end of last year, medtech is, and this is specific to orthopedic implants. This is the most mature industry that has adopted additive manufacturing mostly. And here, of course, it was really a great breakthrough when we signed agreement with two orthopedic implant companies. So if we zoom in then on Q1, and to summarize, I would do it in three bullets. So first, just to find cash for non-profitable tech companies, that has been a challenge over the past year. So that's why I'm very happy that we managed to close a rights issue in a successful way during Q1, 90 million in gross, so before any cost deducted for the transaction. And then we have also a potential addition of 53 million in 2026 connected to this. The other part on a positive note is our commercial efforts over the past year is starting to pay off now as well. And we ended this quarter with a record high order book. And then last but not least, and as I mentioned on the previous slide as well, I mean, after having a positive development on medtech end of last year, we saw a strong demand in the first quarter now within our two other focus areas, energy and defense, both when it comes to paid projects, but also when it comes to machine sales as well. Since a few quarters back, we have started to report our paid customer products as well. And as you may recall from the previous webcast, we informed also that we have started 28 projects during 2024 until now in Q1 as well. And what you can see here on the screen is a few of the active ones now that we have in Q1 and where we also can see some good progress as well. So if we start with the new projects in Q1, the first one is Fusion for Energy. This is the EU part in the largest fusion energy research project globally, ITER. So of course, we're extremely pleased with the fact that we were selected to lead this study. The other part is a successful phase one now into phase two, and that is within defense and that is with Saab. And also a similar situation when it comes to UKAA, so the UK Atomic Energy Authorities, where we have had an engagement now for the past, almost two years, very successful from starting with material qualification, and now we're actually in production scalability. So I think this really demonstrates that the freemen really provides a true value throughout the Hawkenau process. And on top of this, we also got the machine order from UKAA. If we then should zoom in, as I said initially, just to explain a bit more the revenue streams and how that works at freemen. So first of all, when it comes to our academia customers, that's really a personal transactional business. Their purpose is really to do material research. So this is why it's quite rare that the University Research Institute is purchasing a product from freemen. Typically, they buy a machine, and in some cases, we support them regarding their research as well. But if we zoom in on the industrial side on the projects, then we need to define this more in a client that has no additive operation or exposure at this moment. Then we typically start with a material qualification, and this we charge for, and just to average, this is around 25 up to maybe 100k Euro that we can charge. If it is successful, then it moves into application testing. Same kind of thing there. It's something we would charge the clients for. In some cases, also industrial clients like IHI that we have as a client, they would invest in a freemate one and do the research themselves. If we have a successful application testing, we move into proof of concept. Here, if we move into a proof of concept, the customer can either purchase an email and do the proof of concept themselves, or they purchase a project from freemate to do this. What's new during Q1 as well is that specifically for Tungsten, we have got requests from project customers within Tungsten. If freemate also can support in manufacturing Tungsten projects as well, which we have decided as a company to add as an additional business model on top of selling equipment and services. If you're an industrial client in additive already, then most of the time you have already been through all material qualification, you have designed your product, then you move more into the proof of concept to really qualify the freemate system in regards to productivity, et cetera. Here, typically, you purchase a machine and do your proof of concept before you then go into volume machine orders, which then in the end will start to generate off the market and recurring business as well. So I hope that at least explains a bit better the different kinds of revenue streams that we're having. So with that said, I would like to hand over to you, Martin.
Thank you, Daniel. Let's have a look at the top line of 2.9 million in the first quarter of 2025. The main drivers were projects and aftermarket. We continue to see a strong development in the project pipeline. The aftermarket is solid. Over time, it increases, but it increases slowly. And this is, of course, in line with the increased footprint that we have with the freemont machines in North America and in Europe. There were no machine deliveries in the quarter, which, of course, negatively impacts net sales. One machine order has quite a big impact, as you know. The small amount of machine revenue that was recognized in the first quarter is related to rental machines, where the customer actually rents the machine on-premise. Looking at the order book, so we were at an all-time high, 19.3 million in the order book. And the order book represents revenues, sorry, received POS, which we haven't yet invoiced. The mix is to the larger part, machine orders and to a smaller extent, projects, which we expect to then convert to sales in the near future. On the next slide, we're having a look at the operating cash flow, the black line, and also the inventory, which are the dark green bars. We've also mapped it towards the order book, which you saw on the previous slide. I see the timeline has fallen off, but it's Q125 to the right and then six quarters back, of course. The operating cash flow is decreasing. We saw a minus of 13 million, approximately. And the drivers for this are, of course, the increased inventory. We are building in anticipation of POS, and we are building on the back of received POS. And that increases our inventory and negatively impacts our operating cash flow in the future. The short term, we also see that account receivables are increasing. So that's invoices sent, but we haven't converted those to cash yet. So cash conversion will happen in the near futures for those invoices. So the receivables increased quite a lot at the end of the first quarter. And looking at the payment schedule, I'll talk more about it in a second, but we have 30, 60, 10. So 30% is typically paid at order of a machine, 60% at delivery of the machine, and 10% at the successful site acceptance test. Then we have occasional rentals, which are also a drag on the operating cash flow, as it costs a lot to build a machine, but the revenue is then stretched out over time. The inventory, as I mentioned, is at an all time high of 17 million. It locks up cash, but of course, the positive is that the high inventory should be seen in relation to the order book that the company has. So we need to deliver on those orders. I'd like to go into a little bit on the purchase order to revenue recognition, have a closer look at the order book conversion. So how does the order book convert into P&L and how does the order book convert into cash? So typically you've probably seen we press release some of the orders, the bigger ones, the machine orders, and that's what we do. So that's when we create the order book. At order, we typically invoice 30%, as I just mentioned, so that sort of hits the order book, but then goes right out, and then we have 70% left in the order book. So we have a 30% down payment. This is industry practice. The idea is to cover the costs of manufacturing the machine. For some machine types, it does. For some machine types, it doesn't, but almost. But it's an approximation. 60% is invoiced at delivery, which can be two to six months later. It varies a lot, and I think there are mainly three factors behind the varying timeline. The first one is the machine type. The Fremont one, which we've sold since 2019, is fairly quick from order to delivery. We have fairly quick turnaround times on those. The new machine, the emailed ID, we have longer delivery times. It's a more complex machine to buy. There are longer lead times for purchases, procurement for this machine, which makes the lead times extend. And then we have the third variable, which is the customer site preparations. So the customer needs to do preparations on their site to be able to handle the machine and to install the machine at their site. So we're a little bit dependent on the customer how soon they will get the premises prepared. When we have done the last part, the SAT site acceptance test, only when we have a successful site acceptance test, that's when we recognize the revenues in the P&L. So even if everything has been invoiced or 90% has been invoiced before, it's only at the very last invoice where the net sales is recognized in the P&L, together with the cost of goods. So there is quite a lag. And I think this should be the expectation looking at the order book, how soon the order book will be converted into sales. But we should bear in mind that the order book also includes some odd items like rentals, which can be extended over a longer period of time, which blurs the picture a little bit. But this is a typical example. Just mentioning something about projects as well. So the projects that Daniel spoke about before, they have very different payment schedules, very different deliverables agreed, milestones, etc. So there is no typical example of a project, how it's invoiced. It's very much case by case, depending on what is agreed. So no sort of typical example when it comes to those. But machine sales, you should expect what you see on this picture. Thanks.
Excellent. Thank you, Martin. So let's wrap up Q1, which was one of the most intensive, but also, I would say, most positive quarters for me personally, since I joined Fremont a bit more than two years ago. I think the geopolitical situation is really changing the winds for AM and also for Fremont. And especially, I would say, in two of our focus areas, which is defense and energy, because here AM, so additive manufacturing, can actually play a critical role both when it comes to innovative manufacturing. So new type of materials, new type of applications that are really demanded at this moment, but also from a distributed manufacturing point of view. So one of the key risks that sensitive parts are exposed to at this moment is that you need to source different kind of parts, subassemblies, etc., to getting the component together. When it comes to additive manufacturing, you place the 3D printer where the part is needed, and you can manufacture it locally. During the quarter, I think we also then managed to demonstrate that Fremont is, in a good position both in energy but also in defense, where we got additional orders from SAP from a successful phase one, but also where we expanded our collaboration with UKAA. And UKAA is one of the leading parties when it comes to development of fusion energy. And in the end, even they also purchased an email machine, which of course was very rewarding. And also the fact that we managed to get a product order from through Fusion for Energy, which is related to ITER, which is the largest fusion research product globally, was of course highly rewarding as well. And all of this led to that we ended up the quarter strong with a record high order book, as we mentioned, of 19 million. So last but not least, I think this year is Fremont's eighth year as a company. Our ambition is to continue to execute on our strategic growth journey towards being a successful commercial company. So with that said, we open up for questions.
Thank you for that presentation. And let's open up the Q&A section here. Starting with the first question, with 12 million SEC in the 2024 order book, plus UKAE of 8 million SEC and two Fremont one, shouldn't the order book be closer to 25 million SEC instead of 90 million SEC, even after the Q1 revenue?
Thanks. I'll answer to this one. It's a good question, right? So to again, explain the from receiving the purchase order to recognizing revenues in the P&L. So when we receive the purchase order, that's one moment where we recognize the future revenue in the order book. And up until recognizing the net sales, we actually do send invoices, but we don't recognize them. So you see them in account receivables or in prepaid income at the latest stage. So that's where you see them in the balance sheet and they will be converted into net sales when we have completed the site acceptance test. So look at order book plus account receivables, prepaid income and net sales.
Thank you, Martin, for clarifying that. How do you approach communication with the market regarding ongoing and future collaborations and business opportunities? And also, how do you decide what level of details to share, particularly concerning the phases of various partnerships, but also for projects?
Also, very good question. I think we have tried to be more and more transparent. With that said, we try to not, of course, over communicate as well. We really try to zoom in on and communicate on the all the paid customer projects that we receive. But also, as we show today, trying to also show progress, not on all, but on the major ones that start to progress through the different kind of phases. As we know, this is important to be informed about, to be aware of, as the intention is to it should lead to sales of machines and especially the industrial machine. But it's a balance and we try to keep it as much into the most interesting projects as possible.
In Q1, you strengthen your collaboration with sub dynamics through a second project order on defense applications. Have you observed increased interest in your technology as a result of the current geopolitical climate?
Yes, I can answer that. I would say yes. Our technologies, as I mentioned initially, are really suitable for more complex applications and high performing parts. Not only defense, also energy is to industries that really have a high demand and an urgent demand of this as well. During this geopolitical situation, those two specifically are really in focus. So I would definitely say that the geopolitical is turning from a headwind that we had to educate our customers about the value of additive manufacturing into more tailwind as well.
Speaking of geopolitics here, have you noticed any impact from the US tariffs?
Not at this moment, no.
In Q1, you also made significant progress in the diffusion energy through an email order from UKAEA and project orders from UKEA and Oxford Sigma. Could you elaborate here on how these orders are strategically important for Fremont?
Sure. I think as energy is one of our key focus areas and also UKAEA is one of the leading parties when it comes to fusion energy development. It's of course, I mean, really of strategic importance for us as a company to to have a client like UKEA. I think it has already proven that due to the successful collaboration with UKEA over the past two years, it has also generated more interest from other parties. So I would say that some of the other product orders that we have received as well has been a lot thanks to UKEA. Customer references in our key focus areas is definitely of strategic importance. And
we'll take a final question here before wrapping up the Q&A section. After the end of the Q1, you announced a new project order and a collaboration with Fusion for Energy, which is the EU's organization supporting I2. Could you share more details about this exciting initiative and the specific role that Fremont will play?
Sure. Yeah. So Fusion for Energy is the, I mean, let's turn it on. Actually, I2 is the largest R&D product within Fusion globally. And actually, the whole world is contributing and the European part is actually hosted by Fusion for Energy. So this specific project, we will lead. It's about qualifying tungsten as a material. And it's also, again, just to make a short recap. Tungsten is the material with the highest melting point in the periodic system. So of course, one of the key features is that it can resist heat. And if you look into a Fusion reactor, we're talking hundreds of millions of Celsius in there and also a lot of radiation. So that's why tungsten is really suitable for that type of application. Secondly, what also will be tested in this product is that you can also get copper on the back of the tungsten plate. So you can also then transfer the heat out to the cooling system through copper. So really to join the tungsten and the copper part is also part of this product, which we also do with a partner found offer. The product will be running for approximately 50 months and Freeman is leading it from that perspective.
Thank you very much, Daniel and Martin for presenting it today. And thank you everyone that you need for this webcast with the Freeman. And I wish you all the best of the day. Thank you very much.