Impact Coatings AB (publ)

Good morning and welcome to today's webcast from Impact Coatings. With us today is CEO Jonas Nilsson and CFO Lena Åberg, and they will present the numbers from the first quarter of 2026. We'll open up for a Q&A after the presentation, and you can type in your questions using the form located to the right. If you're calling in and would like to ask questions, please press star 9 to raise your hand and star 6 to unmute when you get the word. And with that, I leave the audience over to you, Jonas and Lena.

Hi everyone, welcome to this first quarter 2026 interim report presentation. Here is the agenda for today's webcast. We will jump directly into Q1 and what the work in Q1 has led to now in April. Our CFO Lena Åberg will take us through the financial, then summary and outlook and a Q&A session at the end. So Q1 highlights and highlights after the period. Q1 resulted in a net sales of 12.7 million SEC and EBITDA of minus 8.8 million. From a financial perspective, Q1 was not great. That's just how it is. Business development is hard ongoing work and the outcome can vary a lot from quarter to quarter. But we are clearly starting to see the work paying off. During Q1, we brought in two new customers in coating services, one in security defense and one in medical technology. We also saw continued test orders with electrolysis and fuel cell applications from existing customers. We would, of course, have liked to have more customers during the quarter, but the work we did in Q1 paid off in Q2. In early April, we added two more strategic customers, one in PEM Electrolysis and one in SOFC. Both are in early stage, but with really big potential. After the quarter, we sold an IC500 machine to Korea, We received the order on April 10 and the usual initial payment we received on April 14. The delivery of the machine is expected to be done in Q3 this year. We also continued a discussion regarding an inline coater system to our longtime customer Lindbergh, who is in the luxury segment. This is in line with the letter of intent that we announced on December 11 last year. So a few words about the machine order which we press list on April 10. This is an order within our electronics segment. The application is metallization of plastic waveguide antennas for automotive radar. The customer is HCA Wave, a Korean supplier of waveguide antennas for automotive radar sensors. And Korea is an important market with its large automotive industry. In addition to delivering the inline coater, we intend to work together with HA Wave to develop new cost-efficient metal coatings for waveguide antennas to support their customers. Automotive radar is already a multi-billion dollar market, and it's expected to see double-digit growth. Many new innovations in the automotive business come from Asia, especially when it comes to electronics and also intelligent software. In a news program Piat Moron last week, they talked about the Beijing Auto Show. Maybe some of you also listen. They said that the Beijing Auto Show is the biggest auto show in the world. The show is running until 3rd of May, so you still have time to go there. Anyway, what came out was pretty clear. A lot of intelligent self-driving cars are coming. And for that to work, cars need radars, lidars, and cameras to understand their surroundings. People are talking about at least five radar units per car, one in each corner, and one in the front. And all of those radars needs antennas. So this is what an injection molded waveguide antenna looks like. It's made from molded plastic because you need a complex structure to guide the radar signal correctly. But the plastic doesn't conduct electricity, so it needs to be metallized. Most automotive radar antennas come in two halves that are soldered together. And then the finished antenna sits in the bumper. So it's a pretty tough environment for the antenna. Therefore, you need a coating that can handle adhesion and solderability. It has to provide good antenna performance and provide corrosion resistance. This is a very good fit for us. We like advanced multilayer coatings on flat surfaces. And antennas, they are basically flat, even if they have some 3D features. If you look at the market, around 100 million vehicles are produced every year. If you multiply that by five radars per car and then by two for the antenna halves, it's a big number. We're not there yet, but this is a first machine to HA Wave, who has a strong position in the Korean automotive value chain and good connections to the Korean car brands. I mentioned that in April we took two strategic orders, one in SOFC and one in PEM Electrolysis. These are test orders, but from two very important players who are now paying customer stress. The orders are a direct result of the work we did during Q1. And now we're continuing that work, taking them from initial sampling to real volumes. SOFC stands for solid oxide fuel cells. One of the application area for them is to power data center. We have talked a lot about SOFC as our strategic focus, but that doesn't mean that we have left PEM. In our coating service center here in Linköping, we have volume production to several electrolyzer manufacturers. And in PEM electrolysis, we see a clear consolidation in the market. Some are pulling out, that means fewer players, but stronger ones. That means bigger volumes and a more stable market. That creates good opportunities for us to grow our market share. The geopolitical tension affects the short term investment willingness, but long term it highlights that there's a vulnerability in the energy system and we need to work on energy independence and energy resilience. This interest in reduced fossil fuel dependence is something good for us who work with technologies that enable flexible and local energy production. In 2025, we did a strategy pivot towards natural gas powered solid oxide fuel cells. We talked about powering data centers, and we also talked about energy resilience. SOFC can convert multiple fuels to electricity. So if there's a shortage of natural gas, you can run them on, for example, locally produced hydrogen. That hydrogen must be produced either in the same SOFC system that is running the other direction, or more likely by PEM electrolyzers. The pen fuel cell market remains in a transitional phase with China as the driving force. But also here, we expect the drive for energy resilience globally and particularly in China to speed up the deployment. So all in all, although geopolitical tensions are bad in the short term, they are creating future opportunities for us. So going back to China, as usual, Chinese New Year's falls in Q1, which leads to reduced activity in our coating service center in China. But this year, it was not just that. We also had a transition between five-year plans, which basically put the fuel cell market in a bit of a vacuum. The old subsidies expired and it wasn't until mid-March this year that things started to become clear again regarding the new subsidy program. The details are not fully defined, but the overall direction and size are. So if you're interested, you can look up the China Comprehensive Hydrogen Pilot Program. I recommend to Google on that. We believe that this program will continue to be the market driver in the Chinese fuel cell market. So let's have a look at the financials. And as said before, the numbers for the quarter could have been better, but we are clearly seeing that the work we have put in is starting to pay off, both in terms of system orders and new customers. At the same time, we have taken actions on the cost side, so we are in a better position as volume starts to come back. So with that, I turn to Lina.

Thank you, Jonas. So let's start with the Q1 summary. Total net sales amounted to 12.7 million SEK and coating services was the main contributor with 11.7 million, of which 4.8 million relates to sale of metals in inventory, part of the transition to the new metals management agreement. The order backlog at the end of the quarter was 4.5 million compared to 2.6 in Q1 2025. Aftermarket has been slow, reflecting the lower activity at many of our system customers. So 1.0 million SEC compared to 3.9 in Q1 2025. Operational costs, but excluding raw materials and supply, was 19.8 million SEC compared to 23.6 million SEC. clearly reflecting the effects of the cost saving measures implemented. And the number of FTE in the parent company has now, after the quarter, decreased approximately 42% since December 2024. So EBITDA improved to minus 8.8 million sec compared to minus 12.4. and EBIT improved to minus 11.3 million compared to minus 14.2. Closing cash balance was 18.3 million SEK and we will come back to details in that cash flow statement. If we take a little closer look at the income statement, all the amounts will be in SEK million and compared to Q1 2025. Even though net sales for the quarter increased 12.1 million, total revenue decreased to 12.6 million compared to 19.7 million. And this was mainly due to almost no change in work in progress this year, while in Q1 2025, it was 8.1 million. Gross margin, though, increased to 62% compared to 52%. And the work with further reductions in cost of goods sold continued. As I already mentioned, operational expenditures decreased and other external costs decreased to minus 4.9 million compared to minus 6.0%. mainly due to reduced consultancy fees, travel expenses and costs for consumables. And personal costs decreased to minus 12.6 million compared to minus 15.8 million. And the number of FTE for the group by the end of the quarter was 47 compared to 61 in Q1 2025. Then depreciations increased to minus 2.3 million compared to minus 1.8 following investments from previous years. We had a currency gain of 0.9 million compared to a currency loss of minus 0.8 last year. And operating loss for the quarter was minus 11.1 million compared to minus 14.2 million. And we move to the balance sheet and I will compare to the year end 2025. The low level of investments, so total fixed assets decreased from 68.6 million to 68.2 million due to depreciations. Inventory and raw materials decreased from 54.7 million to 51.0 and mainly in metal inventories. Receivable decreased by 1.2 million to 22.3 million compared to 23.5 million at the year end. An outgoing cash balance by the end of the quarter was, as mentioned, 18.3 million. Equity decreased from 154 million at the year end to 145.1 million due to the loss for the quarter. Then prepayments from the customers have decreased 4 million to 3.9 million due to invoice sales in Q1. And short-term liabilities decreased 9.5 million to 33.4 million mainly due to repayment of the 5 million short term loan in the parent company, but also due to decreased accounts payables. Looking at the cash flow statement with the comparison with Q1 2025. Cash flow from operations before changing working capital was minus 9.1 million compared to minus 11.7. And cash flow from change in working capital was minus 5.3 million compared to plus 8.5 million. And the negative cash flow effect from this year is mainly from payments of short-term liabilities, including payments of the costs connected to the rights issue of approximately 3 million, and also the decrease in customer prepayments of 4 million. So cash flow from operations was minus 14.4 million compared to minus 3.2 in Q1 2025. Cash flow from Investing activities only 0.1 million compared to minus 2.4. And cash flow from financing activities was minus 5 million this year due to the repayment of a short term loan. In total, this resulted in a negative cash flow of minus 19.3 million compared to minus 5.6. and a closing balance of 18.3 million compared to 26.3 million in Q1 2025. That was the financial update. So we go to summary and outlook.

Thank you, Lena. So Q1 was not a strong quarter from a financial perspective. That's clear. But what we are seeing now is that the work we have been doing is starting to convert into business. We are adding new customers. We are getting test orders and we are starting to see system orders coming through. And that's the key. Our business is built step-by-step from test orders to coating services, to volumes, and finally to systems. And with the sampling orders we have got, we can confirm that SOFC is the right long-term strategy. But with that said, we don't stop working with PEM, with antennas, and with our other segments. At the same time, we have continued to adjust the cost base so we are in a better position as volumes are coming back. So while the numbers in this quarter are not where we want them to be, we do see a clearer path forward now than we did a few quarters ago. And with that, we open up for questions.

Thank you for this presentation, Jonas and Lena. We open up for Lara from ABG. Can you please unmute your phone by typing star six? Welcome, Laura.

Hi. Thank you. Laura from ABG. Just a couple of questions from my end. Firstly, in your report and also in your presentation, you mentioned that coating services orders have been delayed a bit. Was this customer-specific or would you say it was broader? And would you say that activity has normalized now in Q2 so far?

No, this was customer specific. And it's not due to lack of need of coatings. It's due to delays in the supply in the plates and PTLs to coat. So there has been some delays in the supply chain. So we have not got the raw material in time, which means that some of the orders have been delayed. You can also see that we do have an order backlog for coating services when we go out of quarter one. So it's not due to lack of interest.

Okay, very clear. Thank you. And another one on your metals agreement that you press released in December. You announced that the new metal agreement would reduce working capital needs by around 30 million kronors. And in Q1 you wrote that the positive one-off of the 4.8 million was flagged as accelerating that transition. So basically, my question is how much of this 30 million has been realized so far and what's the expected timeline for the remainder?

Yeah, you can regard the 30 million like a frame that can be used. And with the transition now, with the expedited transition from the old agreement to the new agreement, we have better, we can apply that new agreement more rapidly. So what we have is we have a supplier that keeps metal in stock for us and we also have 90 days invoice of metals from that supplier, which we can use if we want to. Of course, everything comes with a cost. So there's no free lunch. So this is something that we can use when we want to use it, but we don't have to use it and we don't have to take the cost. So it's It's basically a month-to-month decision how much of that we are using.

Very clear. Thank you. And you obviously highlight solid oxide as a key long-term opportunity. But as you know, the development cycles are long. So what's sort of a realistic timeline for the first system order here? Do you have any customers that have come quite a long way along the line or what should we expect?

Yeah, we do have several paying customers in the area of SOFC. And as reported now, after the quarter, we took one very important strategic customer in this area. And we can also say that the collaboration we have with Ceres Power uh, is, is good in, in this respect. Uh, if you look at, at service power, they, they, they publicly announced who are the licensees and this collaboration, it, it gives us access to, to, uh, their, their licensees. Uh, so, um, we are making progress, uh, but at the same time, it's very hard to say exactly when will be the first system order.

Yes. Thank you. Also, you mentioned the Chinese hydrogen pilot program that was announced in March. Have you seen any sort of tangible pickup here and customer dialogues or maybe in the pipeline? Since the announcement was still too early, would you say?

We have seen in the customer dialogues, we have seen a clear difference. So before it was announced, everyone was waiting and everyone thought that, well, China is going to continue in the same way as before. But without this pilot program, our customers didn't really know. Now they know that, okay, it will continue. We haven't really seen that in production volumes. We have seen it in some smaller orders and we have definitely seen it in the customer dialogues.

Okay, thank you. And just the last one from me. Aftermarket seems to drop quite a bit this quarter and of course this reflects low assistance customer activity, but do you think with maybe the machine order you announced after Q1 and the broad install base, do you sort of think that aftermarket will recover and what can we see? Would you say that the current running rate is maybe the new normal or should we expect in this segment?

I expect it to recover and there's a correlation between aftermarket services and how much our customers are producing. If we look at China, for example, we saw that in Q1, we had lower activity in our coating service center. It was not only the Chinese New Year. It was also this vacuum between policies. All our machine customers, they experienced the same. They experienced the same Chinese New Year, but they also experienced this vacuum. So the activity was low at our customer sites. And if the customers

are not fully utilizing the machines fully using our machines then of course the need for aftermarket services is is lower okay very clear and that was all from my end thank you very much thank you laura um we have a couple of questions from the audience as well um first question how do you get a collaboration with an industrial player Once again. How do you get a collaboration with an industrial player?

Are you referring to the press release in December that we are planning to bring in? Yeah, I think the question. Yes, yes, we are. So we are planning to bring in an industrial investor during this year as we press released in December. Of course, from an operational perspective, the focus is on customers and orders. That's our primary focus. But with that said, yes, we are progressing according to what we press released in December. For example, we have contracted an advisor for bringing in a strategic investor. So yes, that's progressing.

Thank you. The hydrogen sector is often cited as a growth engine. However, the global adoption of fuel cell technology has faced some headwinds recently. How do impact coating navigate this?

Yeah, if you look in a broader perspective, some years ago, some five years ago, people thought that passenger vehicles would be powered by by fuel cells and not by batteries. The battery technology has improved a lot and also the adoption of batteries has improved. So no one really believes that passenger vehicles will be on a sort of big scale powered by hydrogen. But what we see is that trucks, lorries, buses, heavy transports, they need our other power sources. So we see traction there. We see, if you look at the short perspective, China is sort of the big market for fuel cells. And last year, we increased a lot in our coating service center. So we doubled, so in 25, we doubled the production of fuel cell plates in our coating service center in China compared to the year before, 24. now this quarter has been slow and we believe it's it's due to this this vacuum between policies uh so we believe that it it will continue to to to be the driver the chinese market will be the driver for for fuel cells but with with that said i mean um we announced our strategy pivot uh towards sofc uh and and a big difference between pem fuel cells for for passenger vehicles and SOFC is that PEM fuel cells, that's mainly driven at the moment by subsidies. Now we know that the subsidies will continue. But SOFC market, it has a commercial driving force. So the strategy pivot was from a subsidy-driven market to a more commercially-driven market. But with that said, we don't stop our activities in the pan-fuel cell market. We continue to do that, but we believe that the growth will be in SOFC. Long answer, but I think it answers your question.

Yeah, thank you, Jonas. One last question here from Finvair. What specific operational milestones must be hit to reach a break-even point without requiring further external financing or capital injections?

Yeah, so sell machine. It's simple. We need to sell machines. Coating services is not enough. So we need to sell machines. And the machine order we took now in April is a good start. We do have the letter of intent with Lindbergh also, so that's also good. But we believe that we will sell machines in all our segments during the year.

Thank you both, Jonas and Lena. And I leave now the final words for you from Impact Coating.

So I would like to thank you for listening to this quarterly presentation. And especially, I would like to thank our shareholders who participated in the rights issue in December. So thank you.