QleanAir AB (publ)

Hi and welcome everyone to the Clean Air Investor presentation for Q1 24. My name is Sebastian Lindström. I'm the CEO at Clean Air and joining me in today's call is Henrik Ressmaik, our CFO at Clean Air. Henrik and I will go through the presentation and then open up for a Q&A towards the end. So starting off with the numbers for Q1, in short, In constant currency, we achieved a growth of 3%, but due to the weakening of the Japanese yen over the last 12 months of about 11% versus the Swedish crown, it ended up in a slight decline of 1.6%. We delivered sales of 119 million in the quarter versus 121 last year. The negative currency effect amounted to 6 million second a quarter related to the Japanese yen. Our recurring revenues were stable on par with last year at 75 million in the quarter and over 300 million by the end of March. Our gross margin achieved was 69% versus 71 last year. Main reason is the product mix between cabin solutions and clean rooms in the quarter. Our cabin sales in Japan was in Q1 still affected by the lower stock of renewals in Japan on the three years anniversary of the pandemic. And as we have referenced before, our cleanroom business has been weak in margin due to historical lack of cost inflation protection in our contracts. And in Q1, we still delivered on projects won back in 22. We do, however, see the numbers moving in the right direction over the course of the quarter. Our EBIT margin is an improvement over Q4, but around 4 percentage points behind last year. This is, of course, partially due to the lower gross margin and the negative currency effect in Japan of about 2 million. We have continued to invest in our sales activities, but this has been compensated by our lower costs centrally. Our operating cash flow was zero in Q1. This is, of course, due to the lower EBIT, but as well the balance between accounts payable and receivables in the quarter. Henrik will expand more on this on the financial section. Our EPS, or earnings per share, were 0.53 crowns. Summoning up the quarter, we still have work to do, but the momentum Good. And we have good track.

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All right, so sorry for that, some technical disturbance. I don't know exactly where I lost you guys, but summing up the quarter in this slide, we still have work to do. But we really have a good momentum and we have very good traction on the initiatives that we've already taken. Looking at it from a regional perspective, APAC continues in a solid way, considering the lower renewal stock of contracts on the three years anniversary of the pandemic and the lower value of the Japanese yen against the Swedish crown. Just as a note, air cleaners in Japan grew triple digit in the quarter. EMEA continues its growth path and grew 4% with very continued strong performance on the air cleaner side. And this despite known cancellation of contracts related to schools in Germany. US had a strong quarter in line with growth momentum of last year, close to 50%. It is evident that our increase in sales presence is starting to pay off as our pipeline is stronger than ever before. Our focus in the US is on margin improvements. We continue our focus on the short and mid-term objectives of cost control, sales efficiency, and customer focus. As introduced in earlier calls, we call this the Clean Air Wheel. It's a combination of operational improvement and strategic acceleration. The inside of the wheel on the left side of the slide is our operational improvement, ensuring that we grow organically and improve our profitability. This portion must spin. It is through our operational performance we earn the right to strategic investment. In this respect, our focus in Q1 has been on securing the improvements in the US that we laid the platform for during the last half of 2023. We can already in Q1 see a gradual improvement. We have also, during Q1, continued our investment in improving our build-up of sales in Europe with focused training investments in Germany, France and Sweden. The outside of the wheel is our strategic acceleration. We've just completed our workshops across all geographies together with our sales and service teams to identify the next products and technologies to develop. Already in the next quarter, we expect to launch the first new solutions that we picked up from the last year's spin of the wheel. In this quarter, I have replaced the customer cases that we usually have with a little bit of a broader perspective on what we do at Clean Air. In essence, we provide the freedom of clean air, meaning we take care of maintaining people, product and processes in the best possible indoor environment. We provide in this way, peace of mind for our customers. We do so with our positioning to be specialized provider of premium solutions. We really go to the bottom of the challenges of our customers to come up with the appropriate solution. And we do so with the purpose of making a real difference through clean air and the promise of freedom of clean air. We really understand the complexity of the indoor environment whether it's an office, a school, within the healthcare or industry. We understand that there is a combination of solutions that are required. One solution cannot fix it all. In principle, you need three things to complete the solution. In the background, you need HVAC, which is the general ventilation system of any building. Its main purpose is to bring fresh air into the building and maintain the health of the building itself. This HVAC as well provides a first line of defense against particles from the outside. However, any indoor environment is connected to the outside through windows and doors, and more importantly, people, product, and processes themselves are sources for particles and generate particles from inside the building. To support the HVAC in dealing with the people, product, and processes inside, you need primary and secondary filtration solutions. Primary filtration capture particles directly at the source, but they can't capture it all. And that is where secondary filtration comes in. to capture those particles that were not captured in the primary solutions. At Clean Air, our focus is on primary and secondary filtration. Our cabins are primary solutions, capturing the smoke straight from the source and thereby preventing any secondary smoke harm. Our clean zone solutions are primary as well. They secure a low particle environment by blowing HEPA-filtrated air over a certain product or process or creating a low particle environment in protection of a person working with a product or process that otherwise could be harmful. Our clean room solutions are secondary filtration. providing a safe background environment for critical processes, for us, primarily in the pharmaceutical compounding area. And our air cleaners are often deployed as secondary filtration, lowering the particle in a certain area or, for instance, improving a recovery time in a surgery room. Through our long experience, In providing specialized solutions for our clients, we have developed a strong know-how and versatile products that can play a variety of roles in securing a great indoor environment. Our FS70 has been purposely designed to handle a variety of tasks. It can be used to create a positive pressure in a room, safeguarding the integrity of this room against activities in the outside of the room, pretty much like a clean room. It can also be used to create negative pressure in a room and thereby protecting the outside from activities within that room. FS70 can also provide a clean zone by blowing particle-free air over a certain process or over an operator in the process to safeguard work safety. And of course, we can do a combination of these with one and the same product. This versatility of our product and the knowledge of our teams put in use is what truly makes Clean Air unique. To sum it up before handing over to Henrik and the financials, We deliver great value to our clients. The base of our business is well balanced. We operate across three regions and our three top geographies, Japan, Germany, and the US, all rank in the global top economies of the world. We have three product categories where air cleaners and clean rooms are growing steadily double digit. We have a very low customer dependency and serve over 3,500 customers around the world. Our regional supply chain have provided us protection against logistic disturbances in the world and allow us to respond quickly to market needs. We continue to grow our recurring revenue over 300 million as we close the first quarter. 2024 Q1 report is not extraordinary, but it is stable in both revenue and profitability. And a number of measures have already been initiated that expect to yield results in 2024 and beyond. And we can see during the first quarter that figures are starting to move in the right direction. With that, I'd like to hand it over to Henrik to take you through the financial update.