QleanAir AB (publ)

Warm welcome to the Clean Air Investor presentation for Q2 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. Thank you. So starting off with the numbers for Q2, we closed a good stable quarter but a quarter with continued significant headwind when it comes to FX, mostly related to the Japanese Yen. We delivered 118 million in sales in the quarter, which is just about even versus last year in reported numbers. In constant currency, we grew 6.1% versus last year. We have seen a strong performance in air cleaners and clean rooms and a stable cabin business. Our new products focused on solutions for critical problem areas of the industry are continuing to drive growth and mitigate the uncertainty out there in the market. Our launch of the FS60 has really gained ground and in the first half now ranks among our best-selling products. Our recurring revenues were 65 million Below the 68 million we had last year, but again, if we take the currency effects into account, we actually grew our recurring revenues by 2%, and our turn is back to a healthy 7-8%. Our gross margin remains stable and healthy in the high 60s, but slightly behind last year. Our EBTA margin of 12.9% was behind last year's 15.9%, But FX adjusted the EBITDA margin was 13.7. Our lower margins are due to two things. The FXFX and a change in relation between different revenue types. The FXFX comes from the weakening of the Japanese Yen and the changes in revenue types comes from three things. One. that we in Europe no longer sell contracts to finance companies. In the short term, this transition in Europe has a negative impact on results. In the long term, however, increased product sales and rental contracts held on our own books contribute to a more profitable business. Two, that we in Japan recorded a higher proportion of new sales relative to contract renewals to finance companies. This has had a negative impact on the earnings in the short term. However, this effect will be recouped when these contracts are renewed in the future. And three, our sales of products to customers were higher relative to rental contracts, driven by a small number of industrial customers undertaking larger investment projects where the rental model was not feasible. This has had a negative impact on margin as rental contracts which can subsequently be renewed are more profitable. Our cash flow was 18.1 million, a little below last year, but our cash conversion was in the higher range of our targets at 101%. Our EPS or earnings per share were 0.23 kronor versus 0.44 kronor last year. So, summing 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 last two years. Our systematic approach to product development is really paying off on the air cleaner side. The underlying currency adjusted growth on air cleaners was 18% in the quarter and 16% for the first half. We have over the past year driven up our commercial presence in the US with CE programs averaging about 100 attendees per month. of architects, engineers, general constructors, and so forth. In Q2, we as well launched a dedicated cleanroom website for the US and started our SEO and SEM work. All things combined, we've been able to attract more key clients and have the strongest 12-month signed contracted backlog that we've ever had in the US. And in the background of all these commercial activities, we hammer on with our transformation programs in supply chain and service. So let's see. We are having trouble changing. So sorry, we have trouble changing the slide. There we go. So, in our focus and plan, we have a clear target to grow both our cleaner business significantly and the cleanroom business in the US whilst protecting our strong position within Cabin Solutions. We've been at this for the past four years, and step by step, as you can see on this slide, air cleaners and clean rooms are developing in share. For a particular quarter, it may not be visible, but year on year, they will continue to grow in importance. We need some help changing slide. There we go. So, why is it that we grow so well in our air cleaner business? Well, our strong growth in air cleaners is the direct result of the focus we applied back in 2024, where we doubled down on industrial air cleaner segment and started a series of explorations to solve critical application areas of the industry, like oil mist and welding that I've spoken about before. We now have a comprehensive offering that can be deployed in many aspects of the air quality challenges of the industry, shown in the four pictures in the top of this slide. From the challenges with mold spore, bacteria and powder ingredients of the food and beverage sector, challenging the safeguard of their product quality, to the dust and particle causing health issues and negatively affecting process quality in warehousing and logistics. And the particles, gases, oil mist and welding fumes of the production and fabrication segment causing health issues and negatively affecting both process and product quality. Our unique range of both mobile floor standing units and ceiling wall or rack mounted units allow us to deploy in a variety of environments of our customers to create a healthier workplace environment and improve process and product quality. From the left to the right of the bottom of this page, we can lower Particle concentration in general through air recirculation with both floor standing and ceiling wall or rack mounted units. With our mobile units, we can deploy directly at the source next to the machine or process. We can also establish clean zones to protect an operator handling a hazardous process or to protect a sensitive product or component being worked on from the environment around. We can, through the versatility of our products, create positive or negative pressure workspaces to either protect what is done in the room from the outside of the room or protect the outside from the process inside the room. This versatility of our products and the knowledge of our teams is what makes CleanAir truly unique and is something that we will secure going forward when expanding our portfolio of products and technologies. The market environment is still uncertain out there, but we maintain a very high activity level. As seen on 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. The high activity level really cuts across all regions from Japan in the east to the US in the west. We are now in our fourth year of the transformation plan and the results from customer focus and sales efficiency activities starts to show up as increased sales of air cleaners and clean rooms. When it comes to our focus, our systematic transformation program is on track with three prioritized objectives, cost control, sales efficiency, and customer focus. And summing up the quarter, the key steps taken were, and if we start off with cost control, our transition from external service partners to own service personnel in France, Benelux, and selected parts of Germany is developing according to plan. We've managed to balance the increase in personnel costs with lower external services costs, even though we've had to run both setups in parallel in the transition. Our experience thus far is that we can improve our service delivery to the customer at the same or lower cost. We continue our value engineering focus within Cabin Solutions to improve our competitiveness in the Cabin Solutions market. First deliveries through this new supply chain were done in Q2 and product quality looks great. The full transition will take another six months and the transition has given us some delays in installations for the past quarter on the cabin side, but we foresee it to be back on track before year end. Moving over to sales efficiency. Our launch of FS60 has given us access to a part of the market where we can place more units per installation. This drives up the number of units per customer and thereby our sales efficiency. And we are unique in the fact that we can combine this ceiling wall or rack mounted solutions with floor standing mobile units directly at the source. Also on the efficiency side, our SEO work done over the past 12 months has really paid off as leads has tripled from these source versus last year. The result is more qualified leads than from other sources, and we've only started this journey. Bringinging in new customers is a priority, especially given our strong subscription model with rental contracts. Moving over to customer focus. We shifted more mandate and accountability in the past two years from the central organization Now, I think the slide is a bit different than what I'm talking about. It's lagging. Okay. So anyway, I continue to talk about our three prioritized areas within our transformation program, and I moved over to customer focus. So as I said, we shifted the mandate and accountability in the past two years from the central organization to the regions, including marketing and service management, ensuring a clear customer focus in everything we do. Our messaging, our campaigns have as a result become more direct and better tailored to the specifics of each market. I'm convinced that it is this, next to of course the successful product expansions on the air cleaner side, that is the key driver for our strong double digit growth in air cleaners and clean rooms. During Q2 we have built and launched a dedicated website for our cleanroom business in the US. It was necessary as our global website needed to become more and more industrial to support air cleaner and cabin sales in Europe and Japan. The new website allows our US cleanroom business to speak directly to the needs, regulations, and buying behaviors of American healthcare customers. rather than operating primarily as a regional section of the global Clean Air site. The key business values are stronger brand identity in the US, more relevant customer messaging, creating greater credibility and a better control over the US customer journey. We have made investments during 2025 on our website towards SEO and tailoring to the needs of AI. And we clearly see an uptick in lead generation for Europe and Japan, where we initiated the program. We're now bringing this to the US as well. And the response has been phenomenal in the US. Our search appearance is up. We see a clear increase in page visitors, followers, and post impressions. We have also in the past quarter summoned up the work from our regional workshops in Q1 and together with regional and product management outlined our product roadmap expansion plans to fuel our continued growth for the future. We have a number of very interesting new initiatives we'll be working on for the future. And in the next couple of days, we have our regions here in Solna to agree on that plan. 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. The currency adjusted growth of 16% in air cleaners is proof of this, and we do this with a stable 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 to support this plan. And with that said, I hand over to Fredrik and the financial section.

Thank you, Sebastian. Let's now have a look at the numbers. As mentioned by Sebastian, in our plan, we have a clear target to grow both the air cleaning business significantly and the clean room business in the US at the same time as protecting our strong position within Cabin Solutions. For Cabin Solutions this quarter, we see that sales and gross profit are lower than last year, but we managed to keep the profit margin unchanged. Air cleaners increase sales and gross profit in line with the plan, while gross margin is negatively affected by changing the revenue mix. For clean rooms, we increase all three, sales, gross profit, and gross margin. Our strategy is to increase our recurring revenue, and as you can see on this chart, they are relatively stable over time. Here, we have the quarterly sales since beginning of 2023. Last quarter, revenue was 118 million SEK ahead of last quarter and on the same level as the corresponding quarter one year ago. Adjusted for the negative currency effect we had in this quarter, revenue was 125 million SEK, a currency-adjusted increase of 6%. The total negative currency effect in the quarter was 7 million. That was primarily an effect of the weaker Japanese yen in relation to the Swedish krona. The Japanese yen is almost down with 25% against the Swedish krona since the start of 2023. For the first half year, the total negative currency effect was 22 million Swedish krona. Here we see the quarterly split between recurring revenue, revenue from sales of agreements to finance companies and revenue from product sales. We have stable rental revenues with high margins from units we hold on our balance sheet. The revenue split is primarily affected by the decline for recurring revenue because of the cancellations from the German schools that started in 2024. Now there are very few of these contracts left on our books. And total churn is now back to the levels we saw before these cancellations started. The decline for recurring revenue over time is of course also affected by the negative currency effect for mainly the Japanese yen. I would like to highlight that our base 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 president, you must go back three years and look at the sales to finance company at that time. We continue with our quarterly numbers. Here we see that our model with recurring revenue supports a strong gross margin. Gross profit Gross profit and gross margin are stable over time at a high level. Gross margin is higher than 65% for most of the quarters since the start. Last quarter, we introduced a new financial target. EBITDA margin replaced the EBIT margin. Our EBITDA and EBIT margins move in parallel and therefore follow the same underlying performance trend. The stable gross margins are also supporting our EBITDA performance. EBITDA in this quarter is negatively affected by the currency effect, lower renewals of contracts owed to finance companies in Japan, and that we do not use sales to finance companies in Europe from the start of this year. Over time, though, this change in the revenue mix will have a positive effect on our profitability. On this slide, we now see the rolling 12-month numbers. Also here, we see that recurring revenue are driving gross margin. You can see that revenue, relative share of recurring revenue and gross profit are relatively stable. With the exception of one quarter since the start of 2023 on this slide, gross margin has been in the range of 66 to 76%. And also on a rolling 12 month basis, you see that the stable gross margin support EBITDA margin. We are now back on the level of 15% after a couple of years with lower margins. As mentioned before, 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 18 million Swedish kronor compared to 23 million in the corresponding quarter last year. The operating cash flow for the first half year is 13 million compared to close to 26 million SEK the same quarter last year. The difference consists primarily of adjustments of non-cash items relating to the Corexa settlement where we recognize revenue that was released from a previous provision and where the cash was paid during 2024. and a weaker underlying result in the U.S. operations as two planned cleanroom installations have been postponed until next year. Taxes paid are also higher this year. Both inventory and accounts receivable have been reduced compared to the same quarter last year. We have a stable financial situation. Net interest-bearing debt continues to be on a lower level. We amortize around 40 million Swedish kronor per year on our term loan. equity to total assets ratio continue to improve. Now we are at 38%. And with that, I hand it back over to you, Sebastian.

Thank you, Fredrik. So what we do at Clean Air is really 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 all 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 clean air solutions out there cleaned over 23.8 billion cubic meters of indoor air in Q2. And it matters, as 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. And to close off the session before, in front of the Q&A, I want to highlight the key takeaways from Q2. Our new industrial air cleaners are are already our best-selling products for 2026. We have our strongest 12-month signed contracted backlog in the US ever. And in the background, our transformation program is progressing well. So with that, I hand over to the Q&A.