Impact Coatings

FINANCIAL RESULTS THIRD QUARTER 2024

• Net sales amounted to SEK 31.7 million (14.8)
• Net sales, excluding metals for electrolysis, amounted to SEK 31.7 million (10.8) [1]
• Total revenue amounted to SEK 23.0 million (17.6)
• Operating profit amounted to SEK -6.7 million (-13.8) [2]
• Operating profit after financial items amounted to SEK -6.5 million (-13.8)
• Cash flow amounted to SEK -20.5 million (-15.3)
• Net cash, end of period, amounted to SEK 65.1 million (139.1)
• Liquidity ratio amounted to 131% (169)
• Order backlog coating systems at period end amounted to SEK 2.0 million (36.5) [3]
• Order backlog Coating Services, excluding metals for electrolysis, amounted to SEK 3.9 million (0.8) [1] [3]
• Order backlog Coating Services, including metals for electrolysis, amounted to SEK 3.9 million (0.8) [1] [3]

FINANCIAL RESULTS JANUARY-SEPTEMBER 2024

• Net sales amounted to SEK 67.5 million (60.0)
• Net sales, excluding metals for electrolysis, amounted to SEK 67.5 million (50.8) [1]
• Total revenue amounted to SEK 55.2 million (58.0)
• Operating profit amounted to SEK -27.2 million (-32.6) [2]
• Operating profit after financial items amounted to SEK -26.2 million (-32.6)
• Cash flow amounted to SEK -54.6 million (77.6)

BUSINESS HIGHLIGHTS DURING THE THIRD QUARTER 2024

• Follow-on order for an INLINECOATER™ IC2000 for fuel cell coatings from Boyuan (China)
• Delivery within the same quarter as the order of INLINECOATER™ IC2000 to Boyuan (China)
• Lena Åberg appointed CFO and member of the Group Management Team, effective November 20

BUSINESS HIGHLIGHTS AFTER THE PERIOD

• Internal delivery of an INLINECOATER™ IC2000 for fuel cell coatings for Coating Service Center China

[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.
[3] Future agreed leasing revenue of SEK 10.7 million over 54 months for a production line in Coating Service Center China is not included in the backlog figures.

CEO’s COMMENTARY

During the third quarter, Impact Coatings continued to show growth across the business, primarily driven by consistency in system sales. Our efforts to improve production efficiency and refine our delivery strategy have contributed to shorter lead times and increased volumes, particularly to China. With continued strong demand and positive momentum in both system sales and Coating Services, we look forward to building on this success in the coming quarters.
 
Growth across business areas
Net sales for the third quarter amounted to SEK 31.7 million (14.8). No metals for electrolysis were invoiced separately during the quarter. Net sales on a rolling twelve-month basis reached SEK 100 million for the first time, indicating the endurance of our focused sales efforts and continuity in system sales.

The quarter’s growth is attributed to the successful delivery of another INLINECOATER™ IC2000 to Boyuan in September. This system delivery significantly contributed to system sales, which amounted to SEK 21.5 million (0) during the quarter.

Coating Services continued its positive trend over the year, although revenues remain at lower levels compared to 12 months ago due to delayed orders in electrolysis, as previously communicated. Net sales from Coating Services amounted to SEK 6.6 million (8.4) for the quarter, excluding metals for electrolysis, primarily driven by Coating Service Center China, which remains in full operation.

Aftermarket sales were higher than in the corresponding period last year.

Successful delivery strategy
During the third quarter, we again demonstrated the results of our new delivery strategy with the successful delivery of another IC2000 system within the same quarter as the order was received. The delivery to Boyuan in China confirms that our focus on standardization and forecast-based system production increases efficiency.

The IC2000 has quickly become a flagship in our product line and is, due to its capacity, particularly attractive to customers with large-scale production needs. Repeat orders from customers show that the IC2000 not only meets today’s demands but also delivers long-term value through its reliability in rapidly growing markets.

Moving forward, we will work on refining software, coating processes, and other system functionalities. The modular design of the IC2000 allows us to update existing systems with new software and technical upgrades to certain hardware components. The combination of quick adaptability and a more streamlined production process gives our customers and us a strong position in the market. We are confident that faster deliveries will enhance our competitiveness and drive long-term sales growth.

Increased capacity at Coating Service Center China
Our Coating Service Center China has been operating at full production capacity in two-shifts since the second quarter 2024. With machine setup time and preparations for the next shift, this in practice means round-the-clock production at the factory. The planned IC2000 system for the Shanghai plant, which was communicated in the Q2 2024 report, has shipped during October. The addition of another system will more than double the facility’s capacity, giving us a strong position to meet the high demand for fuel cell coatings in the Chinese market.

During my visit to China in early September, it became clear that the market is moving. Players in the fuel cell segment are gearing up for increasing demand. Our position as a strategic partner, to grow alongside them, is crucial to our establishment in this emerging landscape. It is still a market in development, but we see significant opportunities and look forward to being part of this growth.

Strengthened collaboration
In September, we signed a Letter of Intent with FTXT in China, a subsidiary of Great Wall Motors and a leading player in fuel cell technology. The intention is to collaborate regarding coating development and allow them to test our coatings in their development cycle, opening up future growth opportunities and technological innovation in fuel cell applications for vehicles.

The Letter of Intent is a direct result of a collaboration described in a press release on April 18, 2024, when we received official approval as a volume supplier of our Premium FC coatings. At that time, initial orders to us from the plate supplier of FTXT were estimated at a value of SEK 13 million.

Relocation of our headquarters
During the quarter we began the relocation of our Linköping headquarters including R&D, system manufacturing, and our European Coating Service Center to our new premises in the area called Mjärdevi. Mjärdevi is the home of Linköping Science Park, offering us a dynamic and innovative environment. With the new facility we get access to modern and larger production facilities, including a clean room that is particularly important for our coating processes within hydrogen applications. The new facility will allow us to scale production capacity, further streamline production, and continue ensuring our high-quality standards. The move is being carried out in stages, and we expect to be fully settled in the headquarters by the end of the year.

Towards profitability and continued growth
Net income has improved thanks in part to sales of IC2000 systems during the last few quarters – a trend we aim to continue and improve upon. With a strong sales pipeline, proven delivery capacity, and increased production capacity in our new premises, we see a path to reach profitability. We are focusing on optimizing our processes and strengthening our production capacity in order to increase volumes in our existing segments. We are also exploring new partnerships, development collaborations, and potential acquisitions that can complement our business.

We will continue to work closely with our customers to ensure that our solutions evolve in line with market needs and that we keep pace with the rapid developments in hydrogen applications such as fuel cells and electrolysis.

A sincere “Thank You” to our employees, customers, suppliers, partners, and shareholders for your continued trust and commitment.

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, October 18 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.