QleanAir AB (publ)

So a warm welcome to the Clean Air Investor presentation for Q4 2025. My name is Sebastian Lindström. I'm the CEO of Clean Air and joining me in today's call is Fredrik Sandelin, CFO at Clean Air. Fredrik and I will go through the presentation and then open up for Q&As at the end. But let's dive straight into the numbers. So 113 million in sales in the quarter. 9.1% growth over last year. We of course had a strong headwind on the currency side in constant currency. So in constant currency, we grew 20% in the quarter and growth in all product categories, a very strong achievement of our sales teams. Our new products, focused on solutions for critical problem areas of the industry, are continuing to drive growth and mitigate the difficult market conditions. Our recurring revenues remain stable at 67 million, a slight increase from previous quarter, and stable versus last year if you take currency effects into account. Our gross margin continues to strengthen thanks to a higher rate of renewals on the air cleaning side, products targeting more critical problem areas of our customers, and the cost improvements we made over the past two years in the supply chain in Europe and overall in the US. Our EBIT margin of 13.1% was a big improvement over last year, minus 5.3%. Our EBIT for Q4 was $14.8 million versus $5.4 million last year. Last year, we suffered from the absence of the Curexa contract. Cash flow was strong. Our very focused work on balance sheet items like inventory and accounts receivables have really paid off. And together with our strong operating profit, our net debt is at the record low level of $118 million. Our EPS makes a strong jump to 0.87 kr per share, 1.88 per share for the full year. Real money, as Warren Buffett would have put it. The board is proposing no dividend for 2025. And summing up the quarter, we still have work to do, and we'll keep our focus on the three objectives towards a long-term profitable growth, cost control, sales efficiency, and customer focus. Now over to the product categories. From our Q3 report, we started to report on product segments down to gross margin. So we will now add this slide on our product categories in our investor presentations. Overall in Q4, we show both growth in revenue and stable or improved gross margins across all product categories. On the cabin side, we maintain a stable revenue, slight increase over last year. We have a strong base of renewals to finance companies in Japan throughout 2025, which helped compensate for the weak currency of the Japanese yen. Growth in cabin business in Japan was 27% in local currency for the quarter. New cabin sales in Japan grew as well. Our charge into smaller and medium businesses and the Horeca channel is progressing well. For cabins in Europe, German holds our performance down, but in Q4, 7 out of 12 markets grew in the quarter on cabin solutions. Cabin solution gross margins remain stable across both geographies. Moving over to air cleaners, our targeting of more critical industry segment is paying off. Air cleaners in Europe grew 24% in the quarter through very strong performance in Europe and particularly in France. In Japan, we had a decrease in revenue mainly due to that we still had sales in Japan for Q4 2024 on the HEPA side. The industrial air cleaner volume in Japan continues to increase. On the margin for air cleaners, we continue to see positive effects on gross margin, from an increased proportion of renewed contracts, new products targeting more critical application areas and a much more efficient supply chain in Europe. We expect this journey to continue as we focus on solutions built to solve real specific problems at our industrial customers. Over to the clean rooms. These products are only sold in the US market and with a particular focus on compounding of medicine at hospital pharmacies. In 2024, we had a situation with one large client, Curexa, where they did not fulfill the agreement, and we had a substantial impact on 2024 for the full year, but in particular for Q4. Revenues are now back on track, and the work we performed back in 2023 and 2024 in respect to cost of goods sold and efficiency in installations show full benefits in 2025. The high margin in Q4 is largely related to a renewal of six rooms with a long-term client via a finance company. If we back that out, we see that the underlying business is at an healthy and improved margin of 55 to 60%. We have both a strong backlog and pipeline on the clean room side. But due to a project planned for Q1 that has been delayed until Q1 2027, we will see the strength in the US in the second half of 2026. Now, let's look at the regional perspective and starting off with Europe. It's an important region for us accounting for almost half of our sales in Q4 and where we have our biggest installed base of over 6400 units. We've had a great finish of the year in Sweden, France, Finland, Poland and Belgium with double digit growth for the quarter. The economic environment with long sales cycles continues in Germany and the DACH region overall. Our figure shows that our strategy to focus on more critical areas of our clients helps. Moving on to Japan with 40% of our sales, here we have an important installed base on the cabin side, but are growing the industrial air cleaner base. Japan is our third largest market on air cleaners today, almost tying Sweden for second place. Given the strong renewal base in cabin solutions in 2025, Japan grew 1% in Swedish kronor, but as much as 19% in constant currency for the quarter. Overall, the business is very stable. And to finish off the regional review, we have the US. The team in the US has made a strong recovery from the past years. We have over the last two years worked through our cogs, our installation cost, our organization, and it is now clearly visible through our P&L. In 2025, we make the best profits ever in the cleanroom business in the US. Overall, we see a stable demand And as we have alluded to before, we only see marginal effects on our profitability from tariffs as less than 5% of the cost of our clean rooms is sourced outside of the US. The market environment. So let's look at some of the stuff and the activities that we're doing across our markets. So the market environment is in part tough out there. But we maintain a high activity level, as seen here on this slide shows a sample of where we've been pushing our solutions to help and support new clients and to grow our business in the past quarter. Notably, the higher degree of digital marketing. We have during 2025 made investments to optimize our websites towards SEO and tailoring to the needs of AI. The high level cuts across all regions from Japan in the East to US in the West. When it comes to our focus, we stick to our three prioritized objectives, cost control, sales efficiency, and customer focus. Summoning up for 2025, the key steps taken were starting off on the cost control side. We have clearly materialized improvements in COGS, especially in the U.S., Our consolidation of the supply chain for service material that we concluded for Europe by the second half of 2024 is clearly supporting our gross margin improvements. Our value engineering projects within air cleaners and cabins are on track, and we should start seeing benefits of this in the second half of 2026. Moving over to sales efficiency. The whole process of the clean air wheel that has given us new bespoke solutions for oil mist and now welding has really improved our time to market. On the operational side, the more decentralized structure in Europe with full responsibility for sales, service and marketing in the three regions within Europe, Nordics and Poland, France, Benelux and DACH. has really sharpened our approach. When it comes to customer focus, we continue our explorations for further bespoke solutions for the industry. Oil mist in the food sector and further segments in welding are in the works. We are now in the midst of the regional workshops with all sales and service teams to iterate our strategic plan for 27 through 2030. We continue our work on SEO and AI and have launched a restructured website much more targeted at our focus areas. And before handing over to Fredrik and the financial section, let me summarize the key takeaways from my perspective of the quarter. We have had great success with our product launches, our structured approach with annual workshops with our sales and service teams, selected clients really delivers. Product launches that we have brought to the market in the past 12 months accounted for 20% of unit sales in Q4 in air cleaners. Our clean room business is back on track with the best bottom line result ever for 2025. We have worked through our working capital and have a solid financial position with a net debt of 118 million today compared with 164 million a year ago. With that said, I hand over to Fredrik.

Thank you, Sebastian. Let's now have a look at the numbers. To the left, we have the quarterly sales, quarter after quarter. Last quarter, revenue was 130 million SEK. Adjusted for the negative currency effect we had in that quarter, revenue was 125 million, an increase of 20%. The negative currency effect was almost 12 million, and that was a result from a stronger Swedish krona in relation to all our other currencies. But the main effect comes from the Japanese yen, the US dollar, and the euro. And as you can see, revenue-wise, we are ahead of the corresponding quarter last year. Recurring revenue is in line with previous three quarters. Compared to the corresponding quarter in 2024, it is a decrease, but adjusted for the currency effect, it is slightly ahead of last year. To the upper right, we have gross profit and gross margin. For both gross profit and gross margin, we see an improvement compared to the corresponding quarter last year. Gross margin is back to the level we had in early 2023. To the bottom right, we have operating profit and operating margin. After a negative trend for two years, we now for the last year presented a positive trend and we are now back on a level we had more than two years ago. The reasons for the improvement in profitability is a combination of supply chain improvements leading to lower COGS, lower personnel costs in Q4, higher rates of renewal for air cleaners and a strong quarter, particularly in the US. On the left hand side, we see the split between recurring revenue, revenue from sales of agreements to finance companies and revenue from product sales. And to the right, the corresponding split for the installed base of units that we hold on our balance sheet, sold to finance companies and units sold directly to customers. The installed base is stable over time and revenue split is primarily affected by the decline for recurring revenues because of the cancellations from the German schools that started in 2024. Now, there are very few of these contracts left on our books. Looking at the installed base to the right, we see at the bottom the units we have on our own books. Book value of these units is only 36 million Swedish kronor, and they generate revenues of around 270 million this year. So we have an asset-light business model with low capex. I would like to highlight that our base for renewables have come back to more normal levels in Japan. These renewables typically follow a three-year cyclical pattern. 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. Still, we don't get the full benefit as the Japanese yen has lost value towards the Swedish krona during this three-year period. For the last three years, the Japanese yen has lost 26% in value against the Swedish krona. Our recurring revenue, i.e. long-term customer contracts, are stable at a high level. Adjusted for the currency effect, revenues in 2025 is almost in line with 2024, with a reduction of less than 1%. In this economic environment, customers tend to go for more short-term contracts rather than to choose a three- to five-year contract. We believe that they, over time, will convert these short-term contracts into longer maturities. Churn to the right is back after a high level in 2024 to a more normal level. Retention rate when our customer agreements expire is high. To the left, you can see that our recurring revenue is relatively stable over time, even if our total revenues fluctuate. Total revenues in 2025 compared to 2024 shows a slight increase and currency adjusted increase is 6%. To the right, you can see that our profitability is heading upwards again after a trend with negative development for the last two years. We have had a strong cash flow, both in this quarter and year to date. Operating cash flow is 25 million SEK in a single quarter, and that is very good for us. Of these 25 million in the quarter, a large part comes from our operating result. For the full year, the operating cash flow is 80 million SEK. Here we see a combination of good results and from our focus on reducing working capital. Both inventory and accounts receivable have been reduced. We have a stable financial situation. Net interest-bearing debt continues to come down and is now at a record low level. One reason for that is that we amortize around 40 million SEK per year on our term loan from our cash flow. Equity to total assets ratio continues to improve and is now at 38%. And with that, I hand it back over to you, Sebastian.

Thank you, Fredrik. And to close off the session in front of the Q&A, What we do at Clean Air is important. We dedicate our work to improve the health of people, the quality of products and the performance of processes. And we do so throughout our three product categories, cabin solutions, air cleaners and clean rooms. And looking at the amount of clean air that is delivered through our solutions, we estimate that we cleaned over 7.79 billion cubic meters of indoor air per month by end of Q4. And it matters. Air pollution is a key challenge for human health. People die prematurely from exposure to polluted air. We spend an important part of our lives in indoor environments, and indoor air can often be more polluted than outdoor air. So with that, I hand back over to the Q&A.