Insplorion AB (publ)

The time is 16.00 and we are here to listen to Insplorion.

We welcome you to this presentation of Insplorion's Q1 report, which is followed by a question time. With us from the company we have Johan Rask, who is the CEO, and Per Gilliam, CFO. And with that said, I'll hand it over to you, Johan and Per.

Thank you very much, Adam. As I said, my name is Johan Rask and with me here is Per, our CFO, and we will talk a little about the quarterly report and also hope that there are a few questions that hopefully we can answer in a good way. But we start with A few key comments and then it's Per's turn.

Yes, the first quarter for 2024. We have a net income of almost one million SEK and the revenues are related to the projects that we had yesterday. We will show a slide on this a little later, but it is primarily hydrogen projects. The total revenue is 1.6. The costs are still activated, which is linked to the hydrogen sensor that we activate. We see a clear improvement in the result, if you compare it with the first quarter last year, but also the whole year 2023. And it is primarily the top line that increases, but also a reduced cost base. due to good cost control. The cash flow for the quarter is 5.5 million minus. The liquid funds we close in the quarter is 5.6 million, but then we also have to keep in mind that we have CO2 that comes as a capital contribution right at the beginning of the second quarter. So it was 5.9 million before costs, 5.4 after. The current events during the quarter were that we presented this ATEX certification, i.e. for a sensor to be able to sit in potentially explosive environments. That timeline, Q1 2025, we published during the quarter. We have also entered a new pilot study of our prototype MPS P1 in chemistry this time. Very exciting. Johan has been on the delegation trip to the USA. We can talk more about that later, but we looked at California and Texas and how they build out the hydrogen gas infrastructure there in the USA. And CO2, it feels like we touched it, but it was recorded at 72%, so we are very pleased to get it in. That's probably it. Hamlet, let's see if there are any questions later on the numbers, but otherwise.

We can make sure to add that the TO2 is also signed completely without guarantees. We are also happy with that, which means that the money goes into the company and works. I thought, Per has actually covered a lot. I'll do a quick recap a little bit about why we're doing what we're doing, what we're doing and how we're doing it, and what results we've achieved. Hydrogen is an extremely important key to a sustainable future. This picture is a collection made by the Hydrogen Council and Drisa McKinsey, where they looked at changes in the number of projects and expected money to be invested in the area. This period was from May to October last year, and only during that period did the number of projects increase. with almost 400. And in the amount of dollars, the figure rose to 570 billion dollars, which is estimated to be invested by 2030 in the area. Both of these two were 36% respectively 30% increase, so an incredibly dynamic area where a lot is happening. And what is our key here is that in the entire weather chain, sensors will be needed Either for safety or for process control, or both. And what we add is a number of things, and it can vary a little from situation to situation. But specificity, that is, we only measure hydrogen, even in the presence of other gases, is incredibly important, so that you know what it is that you actually measure. To be very fast, of course, it is important even in the context of processes, but when it comes to safety, it is of extremely critical importance, of course, and is very fast. To be able to work in environments where you have no or little oxygen is also an important question for customers, because you want to include your hydrogen installations in environments where you reduce the amount of oxygen. And here we also have the ability to measure its sensor-optical nature, which means that we can read, for example, with fiber optics, and we can also separate the sensor element that is in the gas from the electronics, which also provides a safety dimension. Basically, this is a flexible platform that we can adjust for different situations by looking at surfaces, layouts and materials, and more. How do we do this? Practically, it looks like this. This is NPS P1, our prototype that we have sold and sell for pilots, testing in different applications and environments for customers. We'll get to that later. Here commercial deliveries occur and we have discussions all the time with different customers and situations where you need to measure or want to measure hydrogen, but for various reasons have a problem doing so, then you come to us. The big news that Per touched on here is that we have decided to launch an ATEX certified leak detector in Q1 2025 and we call it MPS P2. We see this as very important to be able to take larger volumes and larger businesses. An important ticket to play. If you look at the results that we have obtained here this year, the new quarter is what you see on the far right within Process Chemistry, a large European company that wants to measure hydrogen in a quite corrosive environment. and you can't find anything that works there. We are agreed that we will deliver an NPS P1 detector to them for a value of approximately SEK 300,000. It is a very exciting area where we see potential in the future as well. In the other areas of the project, the work continues. On the energy system and the marinas, there are leakage detectors that are supposed to be delivered. In the aviation industry, we look at the validation of technology and detection using optical fiber. We have done a lot of work on this during the spring. So exciting, we are moving forward. In parallel with this, we also have many other discussions with customers and cool types of projects and what you want to look at as products. If you look forward, So we have a three-part strategy, we run three parallel tracks. One is to sell NPSB 1 and our prototypes for validation projects, pilot studies, system design. And it can be different applications, both track search security or process monitoring for that part. Step 2 or parallel process 2 is to certify all ATACs, or cost protection, NPSB 2. Super important. In parallel with this, we also work with taking in partnerships. And then there are two aspects when it comes to partnerships there. One is marketing of NPS P2, but it can also be cooperation within specific applications or segments where our technology can add value, but where we need a partner to develop a final product or system.

And that was really what I was going to present, Adam. I hope there are some questions. Great, thank you Johan and Per.

Then we open up for questions and the chat and Q&A function is open here, so you are always welcome to listen in and also ask your questions. But we can start with a question about the exciting project you talked about, Johan, which is now in four quite split into different areas. How do you see the balance between these different areas? Because of course, the proof of strength is that your platform is very broad, but of course also a challenge for the focus, I can imagine. How do you see the balance?

Yes, I think you should divide it into two parts. One is where we deliver leakage detectors. It may happen that the customers are quite different, but what they have in common is that they want to measure leakage of hydrogen to areas or areas where there should not be hydrogen. That is actually what is in common. So where we deliver that type of product, there is really no concern about being able to handle it. If you look at a collaboration project, more similar to what we do on the airline side, those can become a little more problematic and have too many. Maybe you should sit and have a handful, I think. But if you look at the next step, with larger volumes and larger deliveries, and as I mentioned earlier, this with commercial tour, and where we will have and will seek partnerships for that, That will be an important factor, because as you can see, many of these customers are in quite different industries, and then it's about getting the scope there. So that will be an important question for us, and it can be variants between exclusive partnerships for certain fairly well-defined market segments, to non-exclusive distributors agreements for the geographical areas, where the distributor may cover a lot of different customers based on their geographical proximity.

We'll take a closer look at that.

Exciting. And you mentioned in the beginning your delegation journey to the US as well, as you did earlier during the quarter here. Are there any extra interesting insights or outcomes already now that you can bring from the meetings you had, meetings with other delegates or activities that took place during the trip?

Lots of things, I have to say. It was of course very valuable, both the company that we were with and that went over with, all in all, PowerCell, Otto Grinstil, with several, but most of all, all of the companies. We met about 20 companies in all parts of the world, all from Siemens Energy, Shell, Air Liquide, Port of LA, with several. It was important, good contacts and a lot of insights as well. One insight is that this is happening here and now. Another thing is that in the US, you are perhaps a little better at creating spores, and a little carrot to get the industry going. And you also have an understanding for, and we probably have that here too, but that you need to get this value chain a little bit in place at the same time. It is not an idea to have heavy transports that will go on hydrogen gas if there are no gas stations, and if there are gas stations, hydrogen gas must also be produced This can be done both locally and via transport and storage. It will be a multidimensional system, so to speak. So it will be very exciting. Another more general aspect that you can take with you when looking at this market is that Texas, which is a lot of oil and gas industry, Today, a large amount of hydrogen is produced there, what we call grey hydrogen. But there is a lot of infrastructure, and there is also access to a lot of cheap natural gas in the USA. There you will probably have to work quite a bit with what we call blue hydrogen, that is to say, you work with carbon capture, you capture the carbon dioxide and in that way make the hydrogen that is produced more climate-friendly, if you put it that way. While in California, there is a lot more on what is called green hydrogen, which means that renewable energy is used through electrolysis to produce hydrogen by splitting water. Even if you personally think that in the long run, and I think everyone also thinks that green hydrogen is perhaps preferred, But from the perspective of where our sensors will be used, it doesn't really matter if it comes from blue hydrogen or green hydrogen or gray, it is still safety and efficiency that matters in the entire value chain. But these two areas have a slightly different view on how or what they will invest in. Texas also sees that they will be a very large net exporter of hydrogen to Europe above all. There is also something to take with them. and other contacts with more and more. So exciting and good.

I can understand. Is there anything that will continue running here now, also the contact with these other actors?

We already talked to a lot of these actors, some we will talk more about, and some are a little new. That's what I can say.

A question maybe more directed towards Per and the numbers here, because we saw a Significant increase in net revenue compared to the previous quarter. Is it mainly about the factoring of these commercial projects or is there something else in the background that is interesting to know?

It's related to the slide we had up here earlier with the greenhouse gas projects we have underway. There were 2.8 million total orders there, so of course we are in the process of delivering those projects and fulfilling our obligations and moving forward, so we invoice afterwards. So the majority is linked to the ongoing greenhouse gas projects.

And as you mentioned, the market already knows that the time for ATX certification is almost a year away now. But of course you are also curious about how the work with the certification goes, even though I understand that it is part of what you still do in the company. But has anything new happened on the certification front since last?

Yes, it's going well. Everyone who has been an employee in certification work knows that it is It can be a bit tricky. There are quite a lot of deviations that need to be made. What is good enough? What level should you go to? What path choices can you make in order not to take on too much, and at the same time not to do too little, so that you don't get through it in vain. And we have a lot of decisions around that, of course, but I think we have found a good line that we follow there. So, kudos to the group here. som tittar och driver de bitarna. Jätteviktigt, men som sagt, det är otroligt viktigt att man hittar den här rätta balansen i alltihop, annars så kan tidsaxlarna rätt driva iväg, så det håller vi ett nogsamt öga på.

Det var så bra det.

Närmare med slutet på de frågorna jag hade här, så uppmår jag igen om det är någon som har några frågor, så det är varmt välkommen att ställa dem i chatten, och under tiden så Let's finish with the classic question here. We know that you can't give too clear answers to these questions, but is there anything that Martin and Exa have a clear eye on when it comes to forestry and the way forward now?

It's a classic question, but I think you should actually look a little bit and look at what's happening in the environment when it comes to hydrogen and hydrogen projects. and things like that, so that you can join us there and see what happens. If you also have tips for us, you are welcome to send them, of course. But I think it's about understanding what's going on and how important this transition is, and how important hydrogen will be there. Then there's the other part, and that's that we execute on our strategy. On the commercial side, of course, several businesses, that's what we want to do, and that's where we have dialogues. It's always hard to time to decide when such things will happen and exactly what will happen and such bits. Of course, you also want to have paid well for what you do in that. ATEX, the progress on the ATEX side, there may not be a lot of details that we can present from time to time in the course of running work, but you can expect that we will do that. And then also partnership and for commercial purposes now, but also segment där vi kanske kan göra lite olika samarbeten och specifika projekt. Det är ju de sakerna vi har sagt att vi ska fokusera på strategiskt framåt. Så man klart har respekt för bandbredd och resursbitar och sådana saker, men det är det jag tycker att man ska förvänta sig att vi jobbar på att leverera resultat.

Superspännande. Så med de orden så

Vi avslutar dagens session. Vi tackar Johan och Per från Insporum för detta samtal. Och för även spänningen framåt.

Stort tack, Ola.

Ha det så gott.