Hello, and welcome to today's webcast, where Impact Coatings will present its financial results for the third quarter of 2026. Joining us today are CEO Jonas Nilsson and CFO Lena Åberg. At the end of the call, we will have a Q&A, so you're welcome to submit questions using the form located to the right of the webcast. If you're calling in and want to ask a question, please press star nine to raise your hand and star six to unmute your line when you've been handed the word. With that said, I will hand over to you, Jonas and Lena. Please go ahead.
Hi everyone, and welcome to this presentation of the third quarter report. Today, I am at the Hydrogen Technology World Expo in Hamburg. I'm here mainly to talk to our customers, the customers of the customers, and prospective customers that are here. So, let us hope that the Wi-Fi is with us today. Here is the agenda for today's webcast. We will start with highlights and business momentum for Q3. One of the highlights is, of course, that we have a positive net income for the quarter. Our CFO, Lena Åberg, will take us through the financials, then summary and outlook, and a Q&A session at the end. As I said, I'm in Germany now, and last week I was in Asia also to meet customers. I had lunch at the Port of Ningbo with the chairman of a company that supplies hydrogen fuel cell system for trucks.
Ningbo is in China. I was also given a tour of their test center and their exhibition center. Until now, they have been buying their fuel cell stacks from external suppliers, but they are now preparing to manufacture their own. The harbor in Ningbo is the world's largest port by total cargo tonnage, and it is said that the Chinese authorities use satellites to monitor CO2 emissions, and that is one of the reasons why hydrogen-powered trucks are used in the area. There are three hydrogen refueling station near the port and seven across the city. The hydrogen is a byproduct of the nearby industry. The company I visited, they have their own pipeline, which the chairman showed me, and buys the hydrogen for CNY 25 per kilogram, and that is actually cheaper than diesel in Sweden.
But what really struck me was how proud the chairman was when he told that the company had delivered 613 vehicles, many of which had been operating around the clock for several years. This was before we looked at the fuel cell stacks. When we got to them, we could point out that they came from a manufacturer that actually uses our coating. So without realizing it, he had been telling us about the performance of fuel cell systems that use our coating. Of course, that was very useful information for me. We were not discussing laboratory tests or theoretical performance. We were talking about real vehicles operating in real commercial applications year after year with our coatings. So back to highlights for Q3. Order intake was moderate with SEK 9.5 million .
We do have a steady inflow of new paying customers, more than 70 since we started monitoring this three years ago, 11 previous quarter and five this quarter. We had decent net sales of SEK 27.5 million, mainly from machine sales to HJWAVE, but also delivery of Coating Services, orders, and aftermarket. SEK +9 million net sales of recovered metals. This totals SEK 36.5 million in net sales. The net income for the quarter was positive, both with and without the sales of recovered metals. Here are some pictures. On the top left picture, you see the IC500 for antenna coatings installed in the production hall of HJWAVE. I think you have already seen it on LinkedIn. If not, start following Impact Coatings on LinkedIn and you will get some regular updates that are not at press release level.
Actually, I was in Korea last week, and I was talking to Mr. Yoo, the CEO of HJWAVE. He was happy, and he was proud of the company he had built, and of course, he also talked about his expansion plans. Another thing you have already seen on LinkedIn is the factory acceptance test of the machine that was shipped to Denmark, actually shipped yesterday. To the left, you see our Nils, who has played a central role in all our deliveries to LINDBERG. Then you see Niels Mikkelsen, Head of PVD at LINDBERG, and then we have Peter and Daniel, our COO. Order intake for the third quarter was moderate, but now in Q4, we got an order for an INLINECOATER IC2000 from a research institute in Romania. This is interesting from several aspects. Firstly, we won in competition with two of our main competitors.
Secondly, we talk a lot about using the same machine type all the way from prototyping to serious production. This is possible through our unique design of our machines. Others, they use batch coaters for prototyping and then transfer the process to huge linear inline coaters. We make the prototyping in the real machine. We start production in the real machine. We ramp up in the real machine and add more machines as the volumes grow. This is, of course, ideal for volatile markets. Looking at some of the big linear inline coaters on the market, they consume four times the floor space, they are four times as expensive, and also they have four times the throughput. Our concept is better for volatile markets because you can add machines when the demand increases.
I forgot to mention redundancy, but I think you get the point about this, so we can take next slide. Well, on this slide, my colleagues has gone a bit bananas with AI, but what we want to illustrate is that we have five regions now selected for the four-year-long hydrogen pilot program in China. As I told in the beginning, I was in Shanghai last week for customer meetings. It doesn't look like the picture, but the main message is that the Chinese market starts moving again. Right now, we are running one shift production in our Coating Service center in Shanghai. Actually, I tried to invite our whole team for dinner last Thursday, but they had to work overtime to get ready with that day's production. Unfortunately, we had to cancel.
At the last quarterly presentation, you got a guided tour in our Coating Services center in Linköping by Peter. The center in Shanghai, it's a little bit more advanced with more automation. We have a fully automated cleaning line with 12 stations for detergent cleaning, ultrasonic cleaning, drying of the plates. They are actually dried with heat and vacuum to get all of the moisture out of the inner channels of the bipolar plates. After cleaning, they go to coating and there is a robot loading our INLINECOATER IC2000, which we call Wilma, who do the coating. As some of you might know, all our machines, they have names.
Dependent on size of the plates and type of coating, Wilma is capable of 8,000 bipolar plates per day as long as someone gives her a bit of care and changes her so-called targets, which is the raw material between the shifts. After coating, we have a fully automated visual inspection system. The last station is laser marking and packing. There is a movie clip from our Shanghai Coating Services center on our homepage. So I recommend you to go to our homepage and have a look at that movie clip. Right now, we can handle the production in Shanghai with one shift and some overtime, as I mentioned. But I'm looking forward to go back to full two shift production. In Sweden, we don't have the same degree of automation as in China. But we have more machines, and we do a lot of customer samples.
This quarter, we welcomed five new paying customers. The start of the customer journey is typically to deliver paid samples. In Sweden, we also run serious production of coatings of earrings. We do coatings of components for the Swedish company [Exeger]. We do coatings for pulse measuring devices to make them sweat-resistant and also some other special applications. But in terms of money, coatings for PEM electrolyzers is the biggest business at our Coating Services center in Linköping, and it's mainly for the European and the North American market. It is our focused area, and especially SOFC. SOFC development and customer samples for solid oxide fuel cells are mainly done in Sweden, although the market is focused on Asia. That leads us to new customers. So in total, we added five new paying customers during the third quarter, which is along the target of approximately two per month.
In total, we have added 18 new paying customers this year. Looking at the picture, it might seem a little low with only one new SOFC customer. But to put it into perspective, the SOFC companies, they are quite big, and we have delivered samples to four of the top five in this market. Given their size, they are also thorough in testing, and what we see is longer evaluation and qualification cycles in the SOFC market compared to the PEM market. With that, I leave the word to Lena, who will guide us through all the figures in the report.
Yes. Thank you, Jonas. Maybe not all the figures, but the main parts anyway. We will start looking at net sales. As Jonas mentioned, group net sales for the third quarter increased, amounted to SEK 36.5 million compared to SEK 15.2 million last year, and it comprised of coating systems sales of SEK 16.6 million, Coating Services of SEK 17.8 million, and aftermarket sales of SEK 2.1 million. As Jonas mentioned, Coating Services net sales includes recycled metal sales of SEK 9.0 million compared to SEK 1.4 million last year. The subsidiary in China accounted for SEK 1.7 million of the group net sales. Gross margin for the quarter was 56%, equal to Q3 2025. If we look at group net sales from January to September, it amounted to SEK 58.9 million compared to SEK 31.5 million.
Coating Services net sales includes recycled metal sales of a total of SEK 13.8 million compared to SEK 1.8 million last year.
The subsidiary in China accounted for SEK 4.4 million of the group net sales. The gross margin was 58% so far this year, compared to 52% last year. If we look at the main costs for the quarter in the chart, personnel costs decreased SEK 3.3 million to SEK 9.4 million, compared to SEK 12.7 million in Q3 2025, and it shows the continued effect from the cost reductions. The full-time equivalents by the end of the quarter was 43 compared to 54 last year. The bottom chart shows the quarterly development of EBITDA and EBIT, where the group, as mentioned, reported a positive both EBITDA and EBIT and net income. The EBIT was SEK 3.8 million and net income SEK 3.6 million compared to SEK -12.1 million last year.
If we look at the year-to-date figures, January to September, personnel cost decreased to SEK 34.2 million compared to SEK 43.8 million, again, reflecting the implemented cost reductions. The average number of full-time equivalents for the year so far was 45 compared to 61. Operating loss January to September was SEK -20.3 million compared to SEK -41.9 million. If we look at the quarterly development of the main parts of the balance sheet, there are small changes in fixed assets compared to the year-end. Even though we have depreciations and they were larger than investments, there are, on the other hand, increase due to some currency effects from the subsidiary in China. Inventories have increased so far this year, mainly in work in progress, but where we have now in Q4 delivered another machine. Short-term receivables have increased mainly from prepaid costs and accrued revenue.
Total liabilities, which for Q3 2026 is only short-term liabilities, have increased mainly in accounts payables. Cash ending balance was SEK 14.1 million, compared to SEK 37.4 million at the year-end 2025, but with less changes from Q1 2026. We will move on to look at cash flow. If we look in the chart, we can see that cash flow from operations before change in working capital was SEK +6.0 million, and cash flow from operations amounted to SEK -4.0 million. Looking at the year-to-date figures, January to September, cash flow from operations before change in working capital was SEK -14.0 million, compared to SEK -34.8 million. The improvement of approximately SEK 20 million is a mixture from the increased sales, improved margin, and lower costs, especially personal costs. Cash flow from operations amounted to SEK -20.7 million compared to SEK -36.1 million.
And there is a low level of investments, SEK - 1.8 million. Looking at cash flow from financing activities, it amounted to SEK - 1.0 million. In Q1, the parent company repaid a short-term loan of SEK 5 million , and in Q3 a new short-term loan of SEK 4 million was raised. The corresponding period of the previous year included new borrowings in the subsidiary in China of SEK 23.2 million. So total cash flow for January to September amounted to SEK - 23.5 million, compared to SEK - 19.6 million last year. At the end of the period, the group's cash amounted to SEK 14.1 million, compared to SEK 12.9 million in September last year. With that, I leave the word back to you, Jonas, for the summary.
Yes. Thank you, Lena. So, if we look at the summary and outlook, we had good net sales and a positive net income during the quarter. Now in Q4, actually yesterday, we shipped the machine to Denmark. Also, now in Q4, we won the order to ICSI Romania. Going forward, we will continue to focus on sales and customer development. At the same time, cost control, cash flow, and improved margins remain essential as we work towards long-term profitability. With that, we open up for questions.
Thank you for that presentation. We will now, as stated, open up for a Q&A session. As stated before, you are welcome to submit questions using the form located to the right of the webcast. If you are calling in and want to ask a question, please press star and six to unmute your line when you have been handed the word. With that said, Lara from ABG, the word is yours.
Hello. Just a couple of questions from my end. Firstly, you said that net income was positive even without the recovered metals. Could you just maybe give us a feel for how much the metal sales contributed and how should we think about them going forward?
Lena, will you take that or shall I take it?
I can answer that, I think. I have an approximate figure at least. I would say that the margin for the metals, the aggregated in this quarter was a bit below 30%. That's the effect.
Okay, and how should we think about these metal sales going forward? Is it a recurring part of Coating Services?
It varies a bit because since we changed to a new supplier, that agreement allow us to decrease capital binding in the metal inventory, and it is used from time to time, and it's also a timing mix because sometimes we are not able to return material at the same time as we purchase. We have to make a gross. Have to make the purchase and then make the sales instead of making a combined net purchase, so to speak. So it varies depending on time and yeah. That's why we want to point it out separately.
Okay. Clear. Thank you. It also sounds like things are sort of picking up in Shanghai. What would it take to get back to two shifts, and when do you think that will happen?
Today we are right at the limit what we can handle with one shift. There is no sort of benefit in its own to go to two shifts. It is all about customer orders. Going to two shifts, of course, increases also the costs. So right now we are doing some overtime to avoid taking the cost for two shifts. But if we look at the forecast, overtime might not be enough to fulfill the customer demand in the forecast we have from the customers today for the rest of the year. So with those forecasts, we need to go to two shifts. But maybe we can sort of work with overtime or other means to make it work with one shift. But we are right at the limit.
Okay. Then on SOFC cells, when do you expect them to start generating meaningful revenue? Given the longer qualification cycles, would you think that will mainly come through Coating Services primarily, or should we also expect some system sales in the near term?
We expect system sales for SOFC. The reason why we expect system sales is that the volumes are much higher for SOFC than for PEM. So for PEM, it makes sense to start with prototypes in Coating Services, ramp up in Coating Services, and then when you see that the volumes are big enough, you invest in your own machine. We have seen that to some extent on the PEM fuel cell market. On SOFC, looking at the forecast from the customers, the forecasts are more like, okay, you qualify the coating, then you go for your own machine because the volumes already from start are so big, so it makes sense to invest in your own machine already from start. This, of course, is good for us because it brings the revenues earlier.
We can sell a machine very early already when the customer starts the production. Otherwise, we will have a ramp-up period through Coating Services and then we can sell a machine. I expect that we will see either a ramp-up during next year in Coating Services for SOFC, or we can have machine sales relatively soon.
Okay. Great. Thank you. Also, you mentioned that the HJWAVE CEO talked about expansion plans. Could that potentially turn into a second machine order, do you think?
According to his expansion plans, he need more than one machine. Then it's of course dependent that he has to be successful in his expansion. But according to his plans, yes.
Okay. Sounds promising. You mentioned that you're in Hamburg this week. What would you say is currently the mood in the European electrolysis market? How are the discussions going?
Yeah, I just arrived yesterday night, so I will go to the fair right after this webcast. I haven't seen the mood at the fair. To answer that question in a different way, I almost have a full schedule for today with already pre-booked meetings. That's of course good. I believe that the mood will be better this year than last year.
Okay. Also, if we look beyond HJWAVE, how do you see the demand for radar and electronic coatings developing? What would it take to get things moving in automotive?
What we see in automotive, so automotive when it comes to decorative radar transparent coatings, that market has been somewhat slow. We primarily have customers in Europe for that, machine customers in Europe. I think everyone is aware that the European automotive industry is not expanding that much right now. Quite the opposite. They try also to get into the Asian market and especially the Chinese market, which will lead to machine sales for us because then we can deliver machines to their Chinese factories. However, also the Chinese automotive industry has not been that healthy the last year. I would say that most of the companies in the automotive industry, they have tough times now.
Yesterday I talked to one CEO of an automotive supplier, and he said that his belief is that the total number of produced vehicles the coming years will actually go down because the younger generation, they don't buy cars that much. I don't know if this is true, but this was what he was telling me. However, if you look at antennas, we are not dependent on an expanding automotive business to sell antennas because this is new functions that will go into the cars. For the safety system of a car and for systems for autonomous driving or driver assistance, then you need radars, and you need one radar in each corner, and you need one radar in the front. So we're talking about five radars in total for a car.
I also talk to not only our customers, but our customers' customers, i.e., the companies that buys the antennas and makes the radars. In some of their volume forecasts, they will consume a lot of antennas. I have seen forecasts where we talk about 100,000 antennas per day.
Okay. Very clear. Just finally from my end, could you maybe just give us a short update on the process to bring in an industrial partner?
Yeah. We have contracted an advisor, and we are working with that advisor. As we have said before, we are a little bit picky when it comes to bringing in an investor. We want an investor that can bring also other synergies, not only bringing money to Impact Coatings, but also to bring other synergies into the company. We have had a couple of companies that has visited our office in Linköping and have had a look at the factory in Linköping. We have also had visitors in our factory in Shanghai. We are progressing, but we are a bit picky.
Okay. That was all from my end. Thank you very much.
Okay, we will end with some written in questions. We will start off with, in connection with your collaboration with LT Metal on catalyst-coated porous transport layers or PTLs, you mentioned commercialization and mass production. Could you outline the key technical and commercial milestones that remain before the product reaches the market and provide your current estimate of the timeline for the first commercial deliveries?
Yeah. LT Metal, they are already a supplier on the market, so they supply PTLs, and we supply coatings of PTLs, so mainly platinum and gold coatings. Now we have entered also iridium coatings. What we have done so far together with LT Metal is that we have put iridium oxide on their PTLs to make samples, and they have provided those samples to their existing customers, so electrolyzer-producing companies. Those companies are evaluating those samples right now. The collaboration is more focused on the commercial part. It is not a development collaboration. It is not that we should develop some new coating. We take our iridium oxide coating and apply that on the LT Metal PTLs. We do have an iridium oxide coating. They have PTLs. We do this together, so we offer a ready-to-go solution to the customer, a coated PTL to the customer.
Did I answer the question?
Yes. Thank you. We will move on. In the beginning of the year, you expected system sales in all four segments during 2026. What is the status of this?
Yeah. As I talked about, we have taken orders in three of the segments and also in one of those three in energy. We have had decent Coating Services volumes also. We have shipped machines in luxury goods and in electronics. The segment that is left is automotive. That is decorative radar transparent coatings for cars. As we talked about in Lara's questions, we mainly have customers in Europe for those machines. They try to get into Asia, which is an opportunity for us to sell more machines to existing customers. But in general, automotive has been slow this year, I have to say. It has been slow for those customers. As of today, they are not lacking capacity. They need to get into Asia. They need to get more customers to have a need for more machines.
Yes. Finally, we have a question about the Romanian public tender. Is it official who the contenders were in the Romanian public tender?
Yes, it is. We were three companies who placed a bid. It was us, and it was Hauzer, and it was Singulus. The other two, they are two of our main competitors, and we won.
All right. That was the final question for today. We will now conclude today's conference call. I would like to extend my sincere thanks to Jonas and Lena for the presentation, as well as to everyone who submitted questions and joined today's webcast. I wish you all a pleasant rest of the day. Thank you.
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