“Impact Coatings is accelerating its efforts to become a service company in coating technology based on PVD. Through this initiative, we will establish Impact Coatings' market-leading expertise in fast-growing key markets globally and thereby strengthen the conditions for achieving sustainable and profitable growth. I confidently look forward to creating clear customer value and in turn also long-term shareholder value through these initiatives," said Torbjörn Sandberg, CEO of Impact Coatings.

Background to the redefined business model

Impact Coatings has historically focused on machine sales, which occur irregularly, have long sales cycles, and require staffing levels that fluctuate widely over time. This has led to the company’s dependence on winning several machine delivery contracts each year.

Impact Coatings has in parallel responded to a strong increase in demand for Coating Services, a business that achieved an increase in sales of over 60 percent during 2021. The strong demand is driven by, among other dynamics, the global green energy transition and increasingly stringent regulatory requirements in the automotive industry. Impact Coatings has observed that many of its current and potential customers are hesitant to make investment decisions regarding coating equipment and instead prefer buying coating services, including the company’s unique in-house expertise, in order to try different technologies and gain a competitive advantage.

The scope of the new service offering and its effect on Impact Coatings’ financial profile

Impact Coatings’ service offering will initially focus on rapidly scaling up Coating Services and developing a broader aftermarket business. In the long term, the service offering will be further developed as customers' needs evolve.

By broadening the service offering, the company aims to build closer customer relationships, achieve more efficient resource utilization, and better serve fast-growing markets. The model also improves the conditions for generating recurring revenue. In parallel, scalability will improve, enabling Impact Coatings to add capacity at attractive marginal cost of investment. The increased recurring revenues, more efficient resource utilization, and increased scalability are expected to compensate for the initial increase in CAPEX arising from the scale-up in the service offering.

Roll-out and ambition

Service revenues amounted to approximately 27 percent of total revenue in 2021 and are expected to reach 50 percent over the long term, based on the updated strategy. Coating Services will be established in China in 2022 and is planned to be established in South Korea, the United States and Germany in 2023-24. This will take place in parallel with the broadening of the service offering.

Presentation of the updated strategy

Impact Coatings' CEO Torbjörn Sandberg will hold a presentation of the updated strategy today at 10:00 a.m. CEST. The presentation will be held in English and will conclude with a Q&A session.

Link to webcast: https://fronto.vancastvideo.com/event/G8LdOPH5/2772/?lang=2297

To ask questions participants must participate via the conference call, where they can also listen to the presentation.

Telephone number for calling participants:

Sweden: +46850558357
United Kingdom: +443333009272
Conference ID: EV00135154