QleanAir AB (publ)

So a warm welcome to the Clean Air Investor presentation for Q1 2026. My name is Sebastian Lindström. I'm the CEO of Clean Air and joining me in today's call is Fredrik Sanderlin, CFO at Clean Air. Fredrik and I will go through the presentation and then open up for Q&As towards the end. So starting off with the numbers for Q1, we closed a good quarter, but a quarter with significant headwind when it comes to foreign exchange. We delivered 114 million in sales in the quarter, which meant a decline in reported numbers of 2.3% versus last year. And as I said, we had a strong headwind on the currency side. In constant currency, we grew 10.6% in the quarter. We had some help on the U.S. cleanroom side from the Curexa settlement, but even taking that into account, we showed growth for the quarter. And more importantly, cabin solutions grew 5.7% and air cleaners grew 13.4% in constant currency. our new products focused on solutions for critical problem areas of the industry are continuing to drive growth and to mitigate the difficult market conditions our recurring revenues were 63 million which from a reporting in swedish corner looks far below last year 68 million but again in constant currency we showed growth to 72 million our gross margin remains strong and healthy, all product categories are now above the 60% mark, 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 supply chain in Europe and overall in the U.S. Our EBITDA margin of 13.1% was behind last year's 14.3%. But taking out the benefit of Curexa settlement and adjusting negative currency effects and periodization effects, we slightly improved. Cash flow was negative 5 million. Even though we improved balance sheet items like inventory, accounts receivables, Fredrik will take you through this in more detail in the financial section. When it comes to EPS, our EPS was 0.24 kronor versus 0.18 last year. Summoning up the first quarter, our underlying business is developing well. We continue to hold our strong gross margin that we have improved significantly for both air cleaners and clean rooms over the past two years. in q1 we had an extra push from the settlement with curexa which allowed us to release reserves which we had in our balance sheet back from 2024 when in our view curexa breached the contract this helped compensate for the two clean room projects that had been delayed from q1 this year to the first half of 2027 and for the negative currency effect and periodization effects on personnel cost 125. As we now enter into 2026, we have reviewed our financial targets and now have established new targets that we feel better line up with our plan going forward. The previous targets were to achieve an average annual organic sales growth of approximately 10%, or a range of 7% to 13%, and to achieve an EBIT margin of 15% to 20% in the medium term, and a target of between 30% to 50% of profits for the year to be paid for dividends. The new targets are to organically grow sales by more than 5%, and to achieve an EBITDA margin of 15 to 20% in the medium term, and a cash conversion rate that over time shall amount to at least 80 to 100%. The goal is still to distribute dividends of between 30 to 50% of profits for the year, whilst considering, of course, the company's long-term development potential. We see that our rental model is gaining ground and we have a pronounced focus on strengthening that part of the business. This brings with it three natural consequences. Reported sales grow more slowly than the underlying business as revenues under the rental model are accrued over the contract period instead of being taken directly at the time of sale. Hence, we adjust our growth rate from 7% to 13% to above 5%. Secondly, EBIT during the growth phase is burdened by increasing depreciation. The faster we grow the contract base, the more EBIT is depressed, despite the strengthening of the underlying profitability through the rental model. An EBITDA target will therefore be a better match. And last but not least, through the cash conversion that we have added, we want to show that we've succeeded in converting earnings into cash flow. These three new targets together address exactly this dynamic. The growth target of above 5% reflects reported sales in a mix where a growing share is accrued. The EBITDA margin measures underlying profitability without the depreciation effect. And the cash conversion of 80% to 100% confirms that profitability is translated into cash flow. In our focus going forward, we have a clear target to grow both the air cleaner business significantly and the clean room business in the US, whilst protecting our strong position in the cabin solutions. Our rental model with our product categories, air cleaners and cabin solutions, is developing well, and we intend to strengthen this further. We've been at this for the past three years, and step by step, air cleaners is developing in share. For a particular quarter, it may not be that visible, but year on year, it will for sure grow. In 2025, we started to report our product categories in more detail, and we've been very focused on driving the gross margin on both air cleaners and clean rooms. And it's now great to see that we managed to bring both categories to a gross margin level above 60%. Within air cleaning, this is step-by-step improvement is driven by both an improved service business and the increased level of renewals. Our subscription model will continue to drive air cleaner margin going forward. The cleanroom category had tailwind in the form of Curexa settlement, but as we already informed in the year-end call, we had a rescheduling of two cleanroom projects in Q1 of this year that we will do in 2027 instead. So we knew that Q1 would be lower. And just to note on those two projects, it's with a long-standing customer that have several clean rooms with us. It's something totally outside of the actual build of our clean room. And they have made the upfront payment of about 60% of the amount already. The market environment is still uncertain 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 grow our business in the past quarter. Notably, the higher degree of digital marketing. We've made investments during 2025 to optimize our website towards SEO and tailoring to the needs of AI and AI bots. And we clearly see an uptick in lead generation for Europe and Japan, where we already initiated the program. We have in Q1 started the same journey for our cleanroom business in the US and expect to deliver a new digital approach to this market by the end of Q2. The high activity level cuts across all regions from Japan in the east to the US in the west. When it comes to our focus, our systematic transformation program is on track. with our three prioritized objectives, cost control, sales efficiency, and customer focus. Summoning up the quarter, the key steps taken were, within cost control, you can clearly see we manage our costs, both personnel, adjusted for the prioritization effects, as well as external services costs are well below last year. We continue our value engineering focus within cabin solutions to improve our competitiveness in the cabin solution markets, especially in Europe. When it comes to sales efficiency, we've shifted more mandate and accountability from the central organization to our regions, ensuring a clear customer focus in everything we do. The increased regional activity level shown on the previous slide is proof that this is working. We've started our journey to improve our efficiency through AI tools, both internally and in customer-facing processes. When it comes to customer focus, we have in the past quarter concluded our third annual regional workshops together with the regions. identifying gaps in our offering today and identifying new areas for product exploration to continue to fuel our growth for the future and build our strategic plan for 2027 through 30. We have a number of new initiatives we will be working on for the future. And before handing over to Fredrik and the financial section, let me summarize the key takeaways from my perspective of the quarter. We continue our transformation work to increase our growth. The focus on critical application areas has been key in this. And the currency adjusted growth of 5.7% in cabin solution and 13.4% in air cleaners is proof of this. And we do this with a maintained or increased product margin. We believe that by following this path, we will be able to grow our air cleaner business in the next three to four years to be a significant part of our product mix. We have aligned our financial targets with this plan and to support this plan. With that said, I hand over to Fredrik.

Thank you, Sebastian. Let's now have a look at the numbers. Our strategy is to increase our recurring revenue and they are already at a relatively stable over time rate, as you can see on this chart. Here we have the quarterly sales since the beginning of 2023. Last quarter, revenue was $114 million, slightly ahead of last quarter and slightly behind the corresponding quarter one year ago. Adjusted for the negative currency effect we had in the quarter, revenue was $128 million. The currency adjusted increase of 11%. The negative currency effect in the quarter was 15 million Swedish kronor. And that was a result from a stronger Swedish kronor in relation to all our other currencies. But the main effect comes from the Japanese yen, the US dollar and the euro. For the Japanese yen only, the negative currency effect is close to 11 million Swedish kronor. And the yen is almost down 25% in value against the Swedish corona since the start of 2023. Here we see the quarterly split between recurring revenue, revenue from sales of agreements to finance companies, and revenue from product sales. We have a stable rental revenue with high margins from units we hold on our balance sheet. The 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 their books. The decline for recurring revenue is, of course, also affected by the negative currency effect for mainly the Japanese yen over these years. I would like to highlight that our base for renewals have come back to more normal levels in Japan. These renewals 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. We continue with our quarterly numbers and here we see that our recurring revenue model supports a strong gross margin. Gross profit and gross margin are stable over time at a high level. Gross margin is close to 70% for most of the quarters since start of 2023. The stable gross margins are also supporting our EBITDA performance. We have a new set of financial targets that Sebastian mentioned before. And as you can see, the trend for the EBITDA and EBIT margins follow the same pattern. On this slide, we now see the rolling 12-month numbers. Recurring revenues are driving gross margin. You can see that revenue is stable. The relative share of recurring revenues are stable. We have a stable gross profit. The gross margin is stable and at the high level. For the last two years, they have been in the range from 66 to 76%. And also on a rolling 12-month basis, you can see that the stable gross margins support the EBITDA margin. We are now back on a level of more than 15% after a couple of years with lower margins. Our strategy is to increase recurring revenue and increase the number of units that we have on our own books. On this slide, you can see that since second half of 2024, we steadily increase EBITDA, operating cash flow and our cash conversion rate. Now we have an EBITDA that is generating cash. The operating cash flow for the quarter is minus 5 million Swedish kroner compared to a positive 2.3 million in the corresponding quarter last year. The difference mainly consists of the adjustment of non-cash items related to the Corexa settlement where we recognize revenue that was released from a previous provision where the cash was paid during 2024. Another factor is the underlying result in the American operations, as two planned installations of clean roads have been postponed to the first part of next year. Both inventory and accounts receivable have been reduced compared to the same course to last year. We have a stable financial situation. Net interest-bearing debt continues to be on a lower level, and we amortize around 40 million Swedish kroner per year on our term loan. Equity to total assets ratio continue to improve. Now we are at 38.5%. 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. Looking at the amount of clean air that is delivered through our solutions, we estimate that clean air solutions out there cleaned over 23.2 billion cubic meters of indoor air in Q1. And it matters, as air pollution is a key challenge for human health. people die prematurely from exposure to polluted air and 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 over to the Q&A.