Impact Coatings

FINANCIAL RESULTS SECOND QUARTER 2024

• Net sales amounted to SEK 31.7 million (25.1)
• Net sales, excluding metals for electrolysis, amounted to SEK 31.7 million (22.7) [1]
• Total revenue amounted to SEK 24.7 million (20.7)
• Operating profit amounted to SEK -4.6 million (-9.7) [2]
• Operating profit after financial items amounted to SEK -3.8 million (-9.7)
• Cash flow amounted to SEK -11.5 million (-39.3)
• Net cash, end of period, amounted to SEK 85.7 million (154.3)
• Liquidity ratio amounted to 136% (238)
• Order backlog coating systems at period end amounted to SEK 0 million (36.3)
• Order backlog Coating Services, excluding metals for electrolysis, amounted to SEK 2.3 million (3.2) [1]
• Order backlog Coating Services, including metals for electrolysis, amounted to SEK 2.3 million (5.9) [1]

FINANCIAL RESULTS JANUARY-JUNE 2024

• Net sales amounted to SEK 35.7 million (45.1)
• Net sales, excluding metals for electrolysis, amounted to SEK 35.7 million (39.9) [1]
• Total revenue amounted to SEK 32.2 million (40.7)
• Operating profit amounted to SEK -20.5 million (-18.9) [2]
• Operating profit after financial items amounted to SEK -19.7 million (-18.8)
• Cash flow amounted to SEK -34.0 million (92.9)

BUSINESS HIGHLIGHTS DURING THE SECOND QUARTER 2024

• Approval from Chinese fuel cell manufacturer regarding volume production in Coating Service Center China
• Follow-on order and delivery within the same quarter of INLINECOATER™ IC2000 for fuel cell coatings to SEKSUN (China) – a milestone in the company's strategy to shorten delivery times
• Letter of Intent signed with Boyuan (China) appointing Impact Coatings as strategic supplier of PVD equipment for fuel cell plates to its production facilities

BUSINESS HIGHLIGHTS AFTER THE PERIOD

• Order for an INLINECOATER™ IC2000 for fuel cell coatings from Boyuan (China) at an order value in the EUR 2 million range, the customer's second coating system from Impact Coatings
• Lena Åberg appointed CFO and member of the Group Management Team, effective November 20

[1] Metals for electrolysis are invoiced in a cost-neutral manner and do not affect operating profit.
[2] Includes severance pay for the former CEO of SEK 3.0 million.

CEO’s COMMENTARY
Strategic progress and net sales growth

The second quarter was a period of significant progress and strategic milestones for Impact Coatings. We continued to deliver on our promises, showing concrete results of our strategy. An increased focus on standardization, shorter delivery times, and sales efforts have begun to bear fruit. We have a lot of work ahead still, but are standing strong and ready to take advantage of new opportunities to drive Impact Coatings forward.

Financial development
Net sales for the second quarter amounted to SEK 31.7 million (25.1). No metals for electrolysis were invoiced separately during the period. The quarter was positively affected by a second INLINECOATER™ IC2000 being successfully delivered to SEKSUN in June. Net sales for systems amounted to SEK 25.7 million (0) during the quarter.

We saw positive signs within Coating Services, but are not satisfied with the outcome. The previously communicated volume production for fuel cells at the Coating Service Center China started up at the end of the second quarter, yielding full production capacity in the facility and a need to further expand capacity. We also received smaller orders within electrolysis during the quarter. Delayed larger volumes in electrolysis from a single major customer weighed on Coating Services during the quarter. Indications from the customer are that planned volumes are still expected, but the timing is uncertain. We are therefore evaluating the timing of the launch of the North American Coating Service Center. At the same time, focus on sales activities in important growth markets has generated a strong sales pipeline within Coating Services, which is crucial to strengthen our position and diversify the customer base.

The aftermarket business performed in line with the corresponding period last year.

Sales developing well – driven by China
The pace and energy within the sales organization remain high and sales are developing positively. A central part of the commercial work has been the continued implementation of a push-pull strategy. By not only promoting or “pushing” our products directly to our target customers, but also addressing the next step in the value chain – our customers’ customers who ultimately drive the demand for our coating technologies – we have created a strong “pull” in the market. This strategy has had a direct impact on several business deals, strengthened our relationships with key customers, and ensured that we are one step ahead in meeting future market needs.

A highlight of the quarter was both receiving the order and successfully delivering a second IC2000 system to SEKSUN. Shortly after the end of the second quarter, we also received an order from Boyuan for an IC2000 system. The order followed the signing of a Letter of Intent in June, in which Impact Coatings was appointed the strategic supplier of PVD equipment for fuel cell plates to Boyuan's production facilities. We are proud that both SEKSUN and Boyuan are repeat customers, underlining their trust in our solutions and in our ability to deliver high quality coating systems.

We have stepped up operations at our Coating Service Center in Shanghai, where during the second quarter we expanded to two shifts to meet demand. To secure our delivery commitments, an additional coating system, an IC2000, will be installed in the facility. The system will be crucial to fulfilling our commercial commitments and to driving continued growth in the Chinese market. The expansion not only marks an important milestone for Impact Coatings, but also demonstrates our ability to adapt and grow in step with market needs.

IC2000 – a successful strategic investment
The development and launch of the INLINECOATER™ IC2000 in 2022 was a bold strategic investment by the company. We are happy to report that it has been absolutely the right decision. The IC2000 system, with its significantly greater production capacity compared to the IC500, has been a key factor in the company's success in the hydrogen business area. The increased production capacity means that we can meet the growing demand from our customers, especially in markets such as China where volume production is crucial. In China, we have in less than a year gone from having no IC2000 systems installed to now having several in operation, both at customers and soon in our own Coating Service Center in Shanghai. This rapid development demonstrates our ability to adapt quickly to market needs and paves the way for future growth opportunities.

Order and delivery within the same quarter
One of our most important strategic goals is to shorten delivery times by standardizing and streamlining the production of coating systems. We reached an important strategic milestone during the quarter through the delivery of the IC2000 system to SEKSUN, which was completed in the same quarter in which the order was received. The achievement shows that our strategy is working and that we are well on our way to streamlining our processes and meeting our customers' needs for even faster deliveries.

Work to standardize the system manufacturing process is proceeding according to plan and has contributed to this success. By manufacturing standard products based on a modular approach rather than tailoring each piece of machinery, we achieve margin benefits and increased customer value. The new organization, where the units for development and production have been more clearly separated, has also begun to settle in, which further strengthens our internal processes.

Future prospects
The second quarter delivered commercial success and clear progress in line with our strategy. We look forward to further increasing our presence in important geographic markets, developing our offering and moving to new premises in Linköping later this autumn. We have continued to focus on shortening system delivery times, increasing production capacity and converting the robust sales pipeline into firm orders.

We remain dedicated to achieving profitable growth. The company's direction is clear: we will strengthen our position as the market leader in electrolysis coatings for green hydrogen and coatings for fuel cells, while continuing to leverage the wide range of applications our PVD coating technology addresses.

Our primary focus is to continue developing our business through organic growth and strengthening our commercial efforts. At the same time, we closely monitor market trends to identify opportunities for strategic partnerships and collaborations that can advance Impact Coatings' offerings. These collaborations could take various forms, from joint development initiatives to more integrated approaches, including strategic acquisitions. Our priority is to carefully evaluate how such initiatives could contribute to Impact Coatings' long-term financial performance and further strengthen our market position.

Thank you to our customers and shareholders for your continued trust, and I look forward to reporting our third quarter progress and accomplishments in October.

Jonas Nilsson, CEO

The full report is attached, and can be retrieved on the company’s website at www.impactcoatings.com/finansiella-rapporter-arkiv/.

Presentation

Impact Coatings invites investors, analysts and the media to a presentation of this Interim Report on Friday, August 23 at 10:00 am (CEST). CEO Jonas Nilsson and CFO Bengt Vernerson will comment on the Interim Report and take questions. The presentation will held via webcast in English.