FINANCIAL RESULTS FIRST QUARTER 2025

• Net sales amounted to SEK 9.5 million (4.0)
• Net sales, excluding metals for electrolysis, amounted to SEK 9.5 million (4.0) [1]
• Total revenue amounted to SEK 19.7 million (7.5)
• Operating profit amounted to SEK -14.2 million (-15.9)
• Operating profit after financial items amounted to SEK -14.2 million (-15.9)
• Cash flow amounted to SEK -5.6 million (-22.5)
• Net cash, end of period, amounted to SEK 26.3 million (97.2)
• Liquidity ratio amounted to 70% (151)
• Adjusted liquidity ratio amounted to 132% (218) [2]
• Order backlog coating systems at period end amounted to SEK 0 million (4.8) [3]
• Order backlog Coating Services at period end amounted to SEK 2.6 million (2.0) [3]

BUSINESS HIGHLIGHTS DURING THE FIRST QUARTER 2025

• Selected as preferred supplier of coating technology by Feintool + SITEC (Switzerland, Germany), manufacturing partners for fuel cell and electrolyzer components

BUSINESS HIGHLIGHTS AFTER THE PERIOD

• Letter of Intent from FTXT (China) about continued fuel cell Coating Service volume supply from Coating Service Center China

[1] Metals for electrolysis are for certain customers invoiced in a cost-neutral manner not affecting operating profit.
[2] Includes the part of the inventory that has been financed by customer pre-payments.
[3] Future agreed leasing revenue of SEK 9.0 million over 48 months for a production line in Coating Service Center China is not included in the backlog figures.

CEO’s COMMENTARY

The first quarter of 2025 was characterized by a continued wait-and-see market situation in the hydrogen sector, with postponed investment decisions. At the same time, our underlying growth continued. Net sales for the rolling 12-month period increased to SEK 115 million in the quarter, which demonstrates continued strength in the business over time. Our strategy remains stable, and we have taken important operational steps to scale the business, strengthen customer relationships and broaden our technical relevance. We are well-positioned as the market turns and see growing demand for solutions that combine technical innovation with industrial scalability.
 
Advancing the business despite subdued invest-ment appetite

As expected, the start of the year saw lower business activity. The quarter was affected, among other things, by seasonal effects such as the Chinese New Year, but also by the cautious investment environment we expected for 2025. We continue to expect that the investment appetite in the hydrogen sector will be characterized by some caution during the year, while our long-term market outlook remains positive.

Net sales for the quarter amounted to SEK 9.5 million (4.0), which represents continued growth compared to the previous year. The fact that no system deliveries were completed during the quarter is disappointing, but similar to the comparable quarter last year. We have systems in stock prepared for customizations and have created the right conditions to meet customer needs for systems with short delivery times once customers finalize purchase decisions.

Coating Services continues to show good development despite lower activity during the beginning of the year. Increased volumes of customer samples indicate that more customers are approaching commercial decisions, confirming that our technical solution is gaining ground.

Steps toward stronger cash flow

As previously communicated, our top priority is increasing sales, which is the key to profitable growth. At the same time, our cash flow has improved significantly compared to the previous quarter, although we are not yet where we want to be. We maintain the tight cost control that was initiated in the second half of 2024 and are focusing on both margin improvements and capital efficiency.

One example is that we will reduce customer-specific inventory of precious metals and gradually move towards customer-independent inventory. This shift has been initiated and shows a temporary positive cash flow effect in the quarter. We expect to see improved operating flexibility and efficiency from the new approach, which will take a few quarters to become fully customer-independent.

Overall, we have measures in place and continue to work actively to improve cash flow, where sales remain the most significant tool. Cash flow from operating activities amounted to SEK -3.2 million (-12.1) for the quarter.

Technical development to expand our market

Impact Coatings has a strong position in coatings for PEM fuel cells and PEM electrolyzers. In particular in fuel cells, we have unique advanced multi-layer coatings that fully exploit the potential of our INLINECOATER™ systems. Our technology has the potential to address more steps in the hydrogen value chain and we have therefore initiated two new technical initiatives that have great strategic importance for our future business and our position as a technology leader.

During the quarter, we have taken important steps towards broadening our offering in electrolysis with a particular focus on iridium oxide, a costly catalytic material that is crucial in PEM electrolyzer systems. Our INLINECOATER™ systems are well-suited to apply iridium oxide with high precision, which minimizes material consumption without compromising performance. By expanding our offering to more performance-critical functions in electrolysis stacks, we broaden our addressable market and create value for both component manufacturers and system integrators, in the form of more comprehensive solutions and reduced system costs.

To accelerate development, after quarter-end we entered into two new partnerships with technology companies: Ionautics and Smoltek Hydrogen. The purpose is to evaluate how their technologies – HiPIMS (high power impulse magnetron sputtering) and carbon nanofibers (CNF), respectively – can be integrated into our systems to enable next-generation high-performance coatings. The collaboration with Ionautics focuses especially on applications with iridium oxide, where HiPIMS technology can create coatings with very high technical performance. By acting as an integration platform for technologies with a high level of innovation, our systems are evolving from conventional coating equipment to enablers of higher performance in customer applications.

Encouraging results in SOFC/SOEC

For some time, we have together with multiple potential customers also evaluated our coating technology for use in solid oxide technologies, both solid oxide fuel cells (SOFC) and solid oxide electrolyzer cells (SOEC). These technologies share many similarities and are driven by the need for high performance in demanding applications, such as stationary power generation plants.

Our technology shows very good results in tests and is designed to be integrated into existing SOFC/SOEC architectures, which enables faster technology adaptation and provides clear commercial value. By also addressing solid oxide technologies, we can expand our reach and strengthen our competitiveness in a segment with high growth potential. Adapting the INLINECOATER™ platform to volume capacity will entail further development efforts, but our ambition is to become a qualified supplier in this area and thereby further broaden our market presence.

Outlook

After several years of investments in technology, capacity and market presence, we have built a strong platform for continued growth. At the same time, we find ourselves in a market situation where business decisions tend to take longer, and where customers place higher demands on technically verified solutions and clear business value. We see this as a natural part of the maturation process and as an opportunity to further sharpen our offering. In parallel, we continue to have a clear focus on sales and work methodically with cost control and margin improvements.

With global unrest, we feel relatively secure in having built up a robust structure for a long time to meet changes in the global trade landscape. With facilities in Europe and China and preparations for establishment in the USA, we have built a strong global presence. This makes us well-positioned to handle regional regulations, tariffs, trade barriers and other market challenges in an increasingly complex trade landscape. At the same time, we maintain secure delivery capacity to our most important markets.

2025 will be a challenging year. Customer investments are delayed across industries. With a clear strategy, a competitive offering and a committed team, we are adapting and well-prepared to create long-term value for our customers, partners and shareholders.

Jonas Nilsson, CEO

The full report is attached, and can be retrieved on the company’s website at www.impactcoatings.com/investors/financial-reporting/.

Presentation

Impact Coatings invites investors, analysts and the media to a presentation of this Interim Report on Tuesday, April 29 at 10:00 am (CEST). CEO Jonas Nilsson and CFO Lena Åberg will comment on the Interim Report and take questions. The presentation will held via webcast in English.