I-Tech AB

Hello and welcome to today's broadcast with iTech where CEO Marcus Jönsson and CFO Magnus Janell represent the report for the second quarter of 2025. After the presentation there will be a Q&A so if you have any questions for the company please submit them using the form to the right. And with that said I hand over the word to you Marcus.

Thank you very much Ludvig and good morning everybody to this Q2 presentation from Møndal. It's me Marcus Jönsson and Magnus Janell here by my side and we'll just dive straight into the material. So for any newcomers to iTech, we will just have a brief introduction. So iTech is a biotech company with a unique technology targeting anti-fouling coatings for ships. We're a knowledge-based company and our production is outsourced. We estimate that we are on today around 3,000 out of a global fleet of 110,000 commercial vessels. So plenty of opportunity to grow going forward. We are addressing some of the key challenges for international shipping, which is the emission reduction of CO2, prevention of the transfer of invasive species, we'll talk a little bit more about that, and also then emission to water of chemical substances. So our solution is well positioned to help shipping companies and ship owners to address these challenges. The solution stems out of Swedish biotechnology and it is a drastic improvement in terms of performance, both to prevent barnacles from settling on the ship and also the amount of chemicals that is needed to achieve the desired effect. We are at six of the nine largest paint companies today and working actively with all our target customers. So during the Q1 presentation, we talked about the market outlook a little bit, sort of the start of the year with the turbulence around the global trade, etc. It sort of called for a discussion of what can the implication be for high tech going forward. So we would say in Q2, of course, the preconditions has continued to evolve. But looking more specifically at shipping, then I think it's positive to see that the charter rates have maintained at a sort of a very good level, around $25,000 per day, which is sort of an indication that at least that is stable, the demand is stable. If we look at the deliveries of new ships, new vessels, that is predicted to increase this year by about 9%. And that is well on the way as far as we see. The worrying signal is the contracting of new vessels and the turbulence we saw in the beginning of the year. We have seen so far a significantly lower contracting rate, coming, of course, from a situation with very strong growth in 2024, but it has markedly slowed down in 2025. It's not an issue here and now, but of course, if this prevails, that could be a challenge for us in around three years from now. But let's see how that evolves. So that was the quick introduction. Now I will hand over to Magnus to take you through today's results.

Thank you for the introduction. That brings us into the quarter of the first half of this year. And as you all have seen, I guess, in the report, we're coming in with a quite slow quarter. But we would like to share this picture first to really emphasize that we are coming into a slow quarter from two exceptionally strong quarters, where we saw a huge growth and very nice purchases from our customers. We can see that both, as we wrote in the report, there are some short-term inventory build-up in our customers, which we foresee that it is really short-term, but also the turbulence that had been in the market during the start of this year, that that has had some negative effect on us. I think it's really, we need to emphasize that the macro conditions for the shipping, they are still very positive. So when we look into the result of this quarter, I think we also need to see the whole picture. But let me take you through the quarter first. As you have seen, we had a net sales with 26% lower than Q2. I know the expectations have been very much higher, of course, from our side as well. But given the different... events during the quarter this is unfortunately the result. We have of course also talked about this during the last five years since our previous sort of reduction over a quarter in Q4 2023 that it is a little bit stochastic still the business. So it can go up and down in the quarters and as you've seen it was two exceptionally good quarters in the beginning and it There will be variations. I need to emphasize that again. And of course, the exchange rate hasn't played in our favor. Of course, we have lost roughly 13% only on the exchange rate. So what is positive in the quarter, though, is that we are still increasing our gross margin. It continues. And this increase in the gross margin is a combination of new supplier some process improvements, and of course, also price pressure on the existing suppliers, so to speak. And coming out of the quarter, we're ending at 21% EBITDA market, which is good, but bad for us. But I think also positive is the strong cash balance that we are still growing, even that we have a dividend during the quarter with 34% compared to last year. But as I said, I think we need to look at the full picture and the first half here gives a little bit more flavor of where we are, where we combine the first two quarters. And here we show double-digit volume growth. The exchange rate makes that just or almost double-digit net sales growth. But we're coming out with a very good EBITDA margin of 30%, which is where we should be in our view, so to speak, and the operating cash flow is also good. So taking into account, of course, Q2 is a bad quarter, but we also need to look on the full picture of the first half year and the trends moving forward. And just to round up the financial part, so to speak, we're having a situation where still it's very much Asia. We have 99% RSAs in Asia. But what has happened over the quarter into this first half year is that Korea has taken over a little bit more again with a little bit drop of the portion of the sales in China. So that... Maybe it doesn't say anything for the long term, but I think what we also need to emphasize again is that all the customers we have, the smaller customers below the number one or number two are growing significantly, although all back from a low level, but they are continuing to grow.