QleanAir AB (publ)

Thank you. Welcome to the Clean Air investor presentation for Q1 2025. My name is Sebastian Lindström. I'm the CEO of Clean Air and joining me in today's call is Fredrik Sandelin, new CFO at Clean Air from 1st of April. Please Fredrik, a few words to introduce yourself.

Thank you, Sebastian. My background, if I take the short version, is that I have for 20 plus years been either the CFO or the CEO of predominantly listed companies. For example, I've been finance director for Autos, I've been CFO for Scanica Hotels, IBS and the Nero. And now I'm glad to be here and look forward to meeting you all.

So I'm very excited to have Fredrik on board. I expect that given Fredrik's background, that we'll be able to accelerate our journey and faster improve our company. Fredrik and I will go through the presentation and then open up for Q&A towards the end. So let's jump straight into the numbers. So given the market conditions, especially in EMEA, we delivered a stable report. Revenue was slightly weaker than last year, but stable gross margins. We delivered 116 million in sales, which was 2.5% behind last year. Currency adjusted 3.2% behind last year. So there was a slight tailwind in currency for the first time in many quarters. The main reason for the decline was lower sales in EMEA, which affected the top line with negative 7 million in the quarter, but was partly compensated for by stronger performance in APEC in Americas. Our recurring revenues remain stable at 70 million amounting to 294 million on a rolling 12 months basis by the end of March. The decline in the rolling 12 months is mainly attributable to the cancellation of school orders that we reported on in Q2 last year. Our gross margin was stable, thanks to the base of renewals to finance companies in Japan coming back to pre-2024 levels, and the fact that we are now getting the benefit of improved COGS and installation costs in the US. EBIT marked a strong improvement over last year, but still off our long-term targets. We achieved an EBIT of 8.4 million versus 11.6 last year. The shortfall versus last year was due to lower revenues and higher costs related to legal expenses on the cleanroom side. Cash flow was better than last year. We've been able to reduce our inventory levels, our outstanding accounts receivable in a good manner. These two measures have been added as focus areas for the regions for 2025, but more on cash flow under Fredrik's section. Summoning up the quarter, we still have work to do. We'll keep our focus on our three objectives towards the long-term profitable growth. Given the uncertainty out there in the market, the board has proposed no dividend for 2024. Before moving on to the regional performance, I'd like to again highlight that our base for renewals have come back in Japan to more normal levels. These renewals to finance companies follow a typically three year cyclical pattern, as I've described in earlier calls. So to understand how this affects the present, You must go back three years and look at the sales to finance companies at that time. So if we look at the low point in Q1 2021 of 20 million, it moved up to 27 in Q1 of 2022. See the circle to the left. And this allows us to renew more contracts in Q1 2025 versus Q4 2024, as you see on the circle to the right. We do not get the full benefit as the Japanese yen has lost value towards the Swedish krona of about 13% in this three-year period. But if you look at this slide and in our report, you can easily understand how this works. So now back to looking at the performance from a regional perspective. Now let's start off with EMEA. EMEA represents about 45% of our revenues. We have an installed base of over 6400 units to over 1800 customers. Our business model is to sell our products on rental contracts, rental contracts sold to finance company and normal product sales. We cover the market both with the direct sales approach, complemented with market partners for certain markets. We operate a regional supply chain, so we do not have to consider the trade barriers between Europe, China and the US. For Europe, the year started very weak. For Q1, EMEA accounted for 42% of total sales. We see longer sales cycles in Germany. We have, however, seen a pickup in the order intake towards the end of the quarter versus last year. We as well, despite the tougher market condition, have been able to improve our gross margin in the EMEA region in the quarter. Given the market conditions, we're increasing our sales and marketing efforts in the region currently. And in Europe, I want to highlight our focus in France, a market that we aim to build up as the third pillar for us in EMEA, next to Germany and the Nordics. On the left side of the slide, I added a customer case from the French team with Snadec. Snadec is a leading subcontractor of the French naval defense. They dismantle and they depollute old ships. We help them in ensuring health and safety in this process. We do not only filtrate particles, but we also provide the solution for environmental surveillance of the site with sensors, et cetera, to ensure worker safety. Surveillance of the environment is an area where we intend to increase our presence in the coming years. We call it MAS, measurement as a service. Second up is APAC, and Japan in particular, Japan represents 45% of the group turnover. We have an installed base of over 3,500 units with over 1,500 customers. In Japan, we mainly offer our product as a service, and we also very often sell those contracts to finance companies. We operate the direct sales force with a limited amount of market partner as a complement. We get our products from within the region and are not dependent on deliveries from the other regions, US or Europe. In Japan, we've been very successful in the search engine optimization and search engine marketing, an expertise that we're now bringing into EMEA in a project led by the Japanese team. Q1 marked a comeback of base of renewals to finance companies. We've passed the low point in Q4 2024. Apart from the improved base of renewals, we're also currently experiencing a stronger than normal demand on the cabin side. Air cleaners continue according to plan in Japan, but due to very strong rollouts, in particular in the first quarter of 2024, the COMS leads to actually a drop in air cleaners in the quarter. On the right-hand side of the slide, you see a case representing our extension of strategy in Japan to target small and medium business owners with secondary smoke prevention solutions. In the case of Relax24, they're an internet cafe with limited floor space, and where we are able to support them with a solution of our one-person cabin, the SF1000X, measuring one meter in depth and a width of 85 centimeters. A unique solution we developed together with our Japanese team in 24 that is built to target this particular market. Over to the Americas. America's account for about 10% of our revenues. The focus in the US is fully on clean rooms, and it is different from the other region when it comes to business model. It is mainly a product sale. We do have some rental contracts, but given the nature of a clean room, the clients are less likely to buy it as a service other than for pure financing reasons. Our clean space product is a very solid product. We have frame agreements and multiple installations at a number of top IDNs. In total, we've delivered more than 100 clean rooms in the US. We have a recurring component as we sign service agreements on the room. This recurring annual revenue is over 4 million Swedish kronor per year. We showed greatly improved margins in the US in Q1, thanks to cost initiatives on COGS launched at the end of 2023 and improvements in our installation cost and efficiency. We're working on expanding our reach through partnerships with other companies calling in on the same customer segments. A great example of our business in the US is the business we have with UNC Health. We started working with the University of North Carolina back in 2015 and have since delivered eight clean rooms to their hospitals, totaling over 3,800 square feet. So we move on to our focus. When it comes to our focus, We're moving on as planned. We stick to our three prioritized objectives, cost control, sales efficiency, and customer focus. Starting off with cost control, we did during Q1 some additional reductions at the central organization. We have launched value engineering projects within both cabin solution and air cleaners, including product line simplifications, especially within cabin solutions. And we finally take advantage of the cost down projects launched in the US end of 2023. We would have seen this benefit already two quarters ago as less profitable older projects would have flushed out from our contract mix. But given the absence, of the large room to Curexa, we had too low revenues to prove it in Q3 and Q4, and instead see the effects now in Q1. Moving over to sales efficiency, we've simplified the setup for sales in Europe, removed the layer of management, and now have four regions in EMEA reporting directly to me. We have consolidated France, Belgium, and the Netherlands, into one region a region we're aiming to build as the third pillar in europe on the side of germany and nordics the german market has been challenging and we are strengthening the technical team to further support the sales team overall there is a strong focus of course on the six new products launched back in 2024 as well as the recently introduced fs60 And I'm happy to report that these new products, already in the first quarter of shipping, make up 6% of our air cleaner volume in Q1. When it comes to customer focus, we completed our third run of annual workshops with our teams across Europe and APAC. Given our strategic decision to leave out the cleanroom side for these two regions, we've been able to go deeper in our exploration for industrial solutions for these markets. We just announced the launch of the new FS60. This lightweight ceiling or wall mounted air cleaner is specifically designed to enhance indoor air quality in industrial logistic facilities where the floor space is limited. The FS60 closes an important gap in our air cleaner lineup. In the background, we continue further explorations to continue to address more critical application areas within the industry and hope to have new solutions to unveil in the fall of 2025. To sum it up, we stick to our plan of developing our company both operationally and strategically As we keep doing the right things, following a very structured approach, we're convinced the financial results will follow. With that, I hand over to Fredrik and the financial section.