Hello and welcome to today's presentation where we have I-Tech with CEO Markus Jönsson and CFO Magnus Henell presenting. After the presentation, there will be a Q&A, so if you have any questions, please feel free to use the form located to the right. With that said, please go ahead, Markus and Magnus, with your presentation. Thank you very much, Martin, and good morning and welcome to this Q3 call. Today we actually extended the presentation a little bit to talk more about the market as such, to also answer your questions towards the end. Let's get going then with the introduction part. We will be brief here. I mean, most of you who are joining the call know about us, right? I-Tech as such, a scalable business model, still low penetration. We calculate that we are on approximately 3,000 out of a global fleet of 100,000 ships, so plenty of growth. Production is outsourced. We are focusing on the sales and marketing and product development of our product setup. We are addressing key maritime challenges, which are to reduce the emissions of CO2 and fuel use, also to help protect sensitive ecosystems and marine environments from the transfer of invasive species, and also reduce the emission of chemicals to our oceans. This is what we are working with in I-Tech. The solution is a pharmaceutical antifouling agent with a non-lethal effect on barnacle larvae. They become temporarily hyperactive, and they cannot settle on a ship hull that has been treated with Selektope. The substance is highly efficient, so 0.1% is needed approximately for having a good barnacle protection. You can formulate very innovative coating products also using Selektope. Why are barnacles such a big challenge for global shipping? They are present essentially almost all around the globe. They thrive in most marine environments, and when they settle on the ship's hull, they super glue themselves to the surface, which makes them very, very difficult to remove, and you actually end up damaging the coating when you try to remove them. The most efficient strategy is to prevent them from settling on the hull. Today we included a few more slides from this study and survey that we did together with Safinah Group earlier this year, where we looked then at the in-docking conditions of around 700 ships. Safinah is a coating advisor. They help the ship operators and ship owners to select the right coating for their particular ship and the trade route, et cetera, that it's on. Safinah has a great database, you could say, of the conditions of ships when they come in after dry docking. One of the market perceptions here is that barnacle fouling is mainly an issue for very slow steaming vessels or vessels that have a very low activity level, meaning that they are idling in the water and giving the barnacle larvae ample opportunity to settle on the ship's hull. Actually, what we showed here together with Safinah is that all types of vessels have issues with barnacles. What you're seeing here on the y-axis are various ship types like product tankers, LNG ships, cruise ships, container ships, etc. The light green is showing how many of them actually have the presence of animal fouling. You see, really, it's a majority of all the ship types. Not only slow steaming, but traditionally fast steaming ships also, like a car carrier or a container ship that is running on high activity and quite high speed. Another market perception that we want to highlight is that barnacle fouling can be completely avoided with some coating technologies. Actually, we were looking into that in our survey as well. We are comparing two main technologies here, one being traditional self-polishing coating, that is the light green bar, and then more modern or silicone type FRC coatings, foul release coatings. Foul release coatings are available on the market both biocide-free and with biocides. Essentially, what we see on a macro level here is that, overall, both of these coating technologies have issues with barnacles, and it's not that one is better than the other. There are, of course, many types of SPC products, so you see a larger variation and also a lot of different tiers of products. That's also the secret in this industry, to formulate the right product for the ship and the trade. Overall, silicones also have issues with barnacles. With I-Tech's previous work, we have been able to prove in ship-to-ship case studies the value of Selektope. You can find that Calypso case on our website. Also, in the Safinah study, we had the luck of finding 12 ships in this data set that had been coated with Selektope. Here we are comparing the 12 ships to the general population. That is what the graphs are showing here. Essentially, one third of all the ships have really an unacceptable level of barnacle fouling, right? Something that would equate to 36% more fuel use, right, trying to maintain the same speed through water with Selektope. Of course, here it's a limited data set with 12 ships, but you know, most of them had none or very little barnacle fouling, right? It's clear also here again then proving the value in the market of Selektope, right? We are very happy to have it. Another key insight that was actually coming through now in September when we had our International Antifouling Conference, which I-Tech is hosting and arranging here in Gothenburg every second year. This year was the third edition, and there were about 200 participants, you know, from all around the globe and from all different types of places of the value chain, working with antifouling for ships and other marine installations. What Safinah Group showed here is also a little bit worrying, but it's also sort of answering the question. Why, you know, if your technology is so efficient, why isn't the penetration going quicker? Of course, there are many caveats and layers to choosing the right coating product. What Safinah Group is showing here with the statistics they have is that, you know, for these ships that come in and have severe macro fouling, actually the owner ends up choosing the same manufacturer and often the same product, right? Despite sort of obvious proof that this was not the right coating, right? It just signals, you could say, the challenge and the barriers we are up to in terms of inertia and of creating market awareness, you know, that there are better solutions there. Another example that comes from the autumn here is a work we've done together with Coach Solutions. Coach Solutions is a performance management company. They help ship owners then to monitor and track the performance of their hull. Essentially, they can see, you know, through measuring various analytical points of the ship performance, how severe, you could say, fouling has become on the ship. That is what the graph is showing to the right here. The gray color is indicating, you know, where the ship is inactive. In this case, we've taken the case of an oil tanker, you know, trading on a time charter. Essentially, an owner that owns the ship, but is putting it up for hire, you could say, to transport goods. The case here is really to prove that it always pays off for a premium antifouling coating, right? You compare in the table to the left here the price of a low-tier antifouling and the price of a high-tier antifouling, right? It is more than double as expensive to coat your ship with a premium antifouling solution, including, you could say, full blast and good preparation of the surface, et cetera, right? You spend less on cleaning, but the important part is the production or the productive time. You can actually build more hours if you have a ship that is coated with a high-tier product, right? The earnings potential in this example for this oil tanker then is, you could say, is a typical oil tanker that is trading Middle East, Africa, and Europe, et cetera, right? The earnings potential for them of using a high-tier antifouling instead of a low-tier is $1.2 million, right, over five years. Of course, if you have a fleet of 100 tankers, this starts to be massive, right? It really sort of reflects the challenge we're up to also to convince the market, right, to go for more premium antifouling solutions. We come to the market outlook. As I was writing in the comments, you could say in the report, actually, the macro conditions have improved after the summer. There was quite a bit of worry and turbulence and so on in the beginning of the year, especially in Q2, as a consequence, you could say, of global trade politics, et cetera. This has sort of stabilized, I would say, and charter rates have actually strengthened. Charter rates is how much a ship owner is being paid, you know, to rent out the ship for a specific service or a trade route, right? It has actually improved over the summer, which is good news. As we have said earlier in the year, also the number of new ships that are being produced this year is actually expected to rise by about 6%, 7%. That is, of course, ongoing, right? These projects have been started about two years ago. These ships will be delivered this year. There is a really high activity in the shipyards. What we have seen then and what our worrying signals is that the contracting activity, so essentially the fact that ship owners are placing orders for new ships, but these are like three, four, four years out sort of in the, you know, from now, right? The contracting activity now is for, you know, to start building before 2030, right? 2028, 2029, right? Here we have seen a drop of 50% this year compared to last year. The activity and the contract level is still close to the 10-year average. It's not a disaster. What has also picked up this year and what we want to highlight in this report is ship repair activity has also jumped, you could say, around 7% this year. This is, you have to do, you could say, with the average age of the total shipping fleet, right? There were a lot of ships built between 2010 and 2015 that are now coming in for major repair, but also upgrade work. We see a lot of owners doing energy saving technology updates, so-called ESTs, right? Here we want to highlight also that Europe still plays a very important role for repairs of ships. China has about 45% market share, but Europe also almost has 20% when it comes to ship repairs. A little bit, you could say, a different situation. The graph we show in the bottom right here is the standard service. That is when the ship goes in for inspection and also where you always typically then do a recoating on the antifouling, right? This varies year to year because of the age of the total fleet. It's an upgoing trend as well, right? You have a lot of bulkers and tankers needing service on a regular basis. This is, of course, what is creating stability, some cyclicality between the different ship types over the years. Overall, there is a steady stream of ships that needs both repair and maintenance and recoating, right? That is really the overall non-cyclical element of our business, right? Now we come into the interim results, and I hand over to you, Magnus. Thank you very much. We're coming into the main topic of this call today. We're actually starting up with the same picture as we started up last quarter where we actually showed a very large dip towards Q4 and Q1. Still, Q4 and Q1 was very high. We have a good uptake in Q3 now. In compared to them, of course, it's a little bit lower. We shouldn't forget that this is our third strongest quarter ever with a 10% organic sales growth towards a quite strong Q3 last year. What we had discussed before as well is that we see a lot of variations. It's hard to find the really seasonal pattern in these conditions. The trend is still upwards. The market conditions for the shipping are still positive. We're working onto it. Coming into the sort of fact results for this quarter, you can see in front of you that we have a very small increase on the net sales compared to last year, 0.5%. We shouldn't forget here as well that when we currency adjusted the revenues, we have a 10% growth and even further on the volumes. We still have a very good gross margin, which is a result of all the work that we have done on this side during the last periods. Hopefully, we can increase it a little bit more moving forward. I think Markus will talk a little bit about it in the far end. This is a good and stable level. Both EBITDA and EBIT are growing compared to last year, 14% respective to 18%. I think it's really nice to show that we have a 32% EBITDA margin. We're showing that the business model holds, even though we are forced to spend quite a lot of money on things that we don't want to spend money on, which Markus will come back to us later as well. The cash conversion, I think it's almost the best cash conversion quarter we have had. This is really depending on ingoing and outgoing payments. $23 million in operating cash flow for the quarter and a 121% increase from the previous year is quite good. It gives us a strong cash balance in order to further develop the company. To conclude the financial part, I think it's quite interesting to look on the geographical spread. If we start on the little bit more negative side, for those who were with us in the Q4 call, you can see that Korea has lost almost 14%. It was roughly 50% of the sales in Asia during last year. One of the reasons is what we have reported that one of the customers has slowed down a little bit. On the positive side, on the other end, both Japan and China, which are really strong maintenance and new building for Japan, but China is really strong on the maintenance side, have grown both in proportion of our sales and also in the total revenues. The major take we should take with us from this picture is actually that we are increasing in China, which is a very important market moving forward. To sum up, market conditions overall are still favorable and good, I would say, both in terms of new build and the service and maintenance activity, right? There is no worry here. As we report, one of our customers has had a lower offtake or reported to us that they would have a lower offtake this year than last year. We are highly dependent still on individual customers, right? Our total addressable market is around 10 customers and so on. Of course, as we grow the business, it's not going to be a straight line upwards for sure. I think that's to say the ground of this section, right? It's not market related. It's more for individual customers that we can sort of ascribe to a little bit weaker than we have hoped as well growth here, right? OK, now we come to the outlook. We start with the regulatory or this ongoing saga that we have around the re-registration of Selektope to be used in Europe. As you saw in Magnus' previous slide, Europe has actually grown a little bit this year. 2% of our sales is to Europe. It is, of course, a strong symbolism, right, to have a product that is registered in all markets, right? From that perspective, it's important. Right now, you could say we are in between two of these interactions with the Standing Committee on Biocidal Products. We are still, you could say, awaiting the outcome and the meeting minutes from the meeting that took place now in the end of September to see what is the latest from the commission in terms of our application then. We note now also that we have got some attention, you could say, also in media for our case, right? The Financial Times published a piece over the last weekend, which is a very nice piece that we would recommend you to read, of course, where they talk about how EU's strategic goals of battling the climate and taking on the challenge of invasive species, et cetera, and then coming with a regulation that really goes against this, right, and at odds, right? We sort of illustrate a little bit the failure for European regulations, right? We are monitoring this closely, and we are not changing, you could say, the communication. We believe that there will be some more clarity this year around where the case is going in Europe. We will definitely come back to that, you could say, during the last months of this year to you. We also thought that we would speak a little bit more about the business development pipeline. As I stated also in the comments, you know, we have several new partnerships, dialogues ongoing in parallel here, and we are really pushing forward to be able to announce something during Q4. We are working very actively, both with complementing technologies like other active ingredients and other additives for coatings, and also other sort of major components, which is more than the binder systems, you could say, which is another interesting area. These are two sort of technology areas that we are looking into for future partnerships. The other marine markets is, of course, you could say, offshore energy, but that is very much in the startup phase. More mature are aquaculture and the yacht markets, right, that we've also been talking about in the past. There are also projects, you could say, which are more forward-leaning and looking more into the future that also circulate in the business opportunity pipeline. Here, we hope to come back more towards the later part of the year. We come to the outlook. If we start with the market, we see continued currency headwind. Of course, there is market turbulence relating to trade. As we are stating, the market has definitely turned out to be better after the summer than before, right? It's actually less turbulence, I would say, right now, right? This can, of course, change quite quickly. If we're looking at in terms of the customer development, we would love to see some new product launches. That would be required for the growth journey to really accelerate again, to come into more of our customers' products. That is also what we're looking forward to, both with existing, but also new customers in the near term. It's difficult to say exactly when that comes because that transparency we do not have, right? As we mentioned, we're also looking at closing some of the new strategic partnerships in the coming period. As Magnus was alluding to, the gross margin has improved quite nicely over this year. We are looking at implementing these actions that have been initiated last year fully, right, for the remainder of this year, which, as Magnus is stating then, would enable us to continue to strengthen the gross margin more going forward. Of course, the ongoing expenditure on advocacy linked to regulation, we can see, I mean, it will continue at least this quarter, right, and then into next year, for sure. I think that is the outlook. We are happily awaiting and looking forward to your questions. Thank you very much, Markus and Magnus, for that presentation. Yes, let's dive into the Q&A section here. Start with the first question. What is the average sales value of your Selektope sales for an average size vessel? It's a good question. Of course, we need to start by saying it really depends, you know, on the size of the vessels, but also on the strategy that you take for coating this, right? Is it a Selektope-containing coating that you apply both on the sides of the ships and on the underwater, on the bottom side? Or in how many layers are you applying? You know, is this a ship that is going to traffic very hot, warm water? You need a thick layer of coating or a sort of a little thinner is acceptable. It can range and vary, you know, from the value of the Selektope sales to one ship between $15,000 and maybe $100,000 per ship, depending on the size and sort of the thickness and layers, etc., of the coating. Typically, then we could say around maybe $25,000 if we are sort of to give an average value. Thank you for that answer. When a paint OEM will produce a batch containing Selektope, do they produce paint for one, three, five, or 20 boats at the same time? That's a good question. Again, it depends. You could say, major projects taking place in the shipyard, right, you can only fit a certain number of ships in the dry dock at the same time, right? Of course, they try to minimize their stock levels as well. Let's say there are maybe three ships being able to be coated at the same time, right? You have a sort of an indication, right, how much paint has to be ready on the ship, right? Thank you for clarifying that. Could you quantify the impact of the reduced offtake from the sizable customer that reported financial constraints earlier this year? How high would your growth figures have been if you excluded the revenues? If you excluded the revenues from If you excluded the revenues from this customer? Sorry, we cannot go into that level of detail here, right? I think we also cannot discuss, you could say, customer relationship in detail on the call here. We would refrain from answering that question, unfortunately. Thank you. Over the past few quarters, we've seen revenue move from about $59 million- $57 million and down to $31 million last quarter. Now we're about roughly $42 million. We're trying to get a clearer sense of what the baseline revenue run rate should be. Would you say that there's some cyclicality or seasonal factors that we could understand better? I was hoping that we could understand the seasonal factors better. We should understand that all our deliveries are quite big deliveries, so it depends on in which quarter. You can have one quarter with a couple of deliveries coming in late in the quarter and then coming in early in the quarter past the next one. What we can see is that we have an upgoing trend on the volumes and on the organic, currency-adjusted sales. We have 10% up year to date this year, and we have 14% in the volumes. It's not really easy to find the seasonality. Of course, you would believe that you should have large sales in maybe Q4 and Q1, depending on the sort of spring season of a lot of maintenance in the areas where you actually have quite cool winters. On the other hand, many of the shipyards are in areas where the weather doesn't really matter. I was hoping we could answer that question more thoroughly. We tried over the years, but it's hard to find the patterns. Yeah. There are no clear patterns that you can say. There are many patterns, sort of, you know, crossing each other, right? It's difficult to get. I think, I mean, you can look at the year-to-date numbers as well, right? We are stating in the comments to Q3 that CMP, Chugoku Marine Paints, they have grown their sales by 18% so far this year, right? Thank you for clarifying that. You mentioned that you expect to announce new partnerships in Q4. Does that relate to Selektope or new ingredients or technologies? Yeah. The cryptic answer will be, yeah, both, right? Some of these projects are very associated with Selektope, and some are sort of adjacent, right? Other products and projects are also sort of looking into new technology areas, right? We have really a range of different ideas that we're pursuing in parallel here. We have been able to mature several of them quite substantially during this year, which is great. We would love to come out and talk more about them soon. It's encouraging to see significant growth from Jotun. Do you know what has been the driver for that growth? The driver is, of course, that the customers are asking for the product, right? They want more of this type of product. I would say that is behind the growth, right? I hope it's because it's performing well in the market. Thank you. What would you say are your key takeaways following the antifouling conference? Yeah, I think we touched upon it a little bit in the introduction, right? There were some good new insights into behaviors, definitely. The value of antifouling, I think it was highlighted over and over again. I think that the conference as such is really proving in itself its value because we are bringing, you could say, together the value chain, also including academic research, right? We need to create, I think, longer term, more of a common language, right? When we try to compare technologies, sort of me coming in from other industries, what I see is not very common here is actually using, you know, the socioeconomic impacts, the life cycle analysis of different technologies, right? Biocides, you could say, are under pressure, you could say, from an environmental point of view. They should rightfully be, right? Because, of course, you should minimize sort of the release of chemicals in general to the ocean, right? You also have to be sure then what you're comparing this against, right? Is the cleaning really better? What is the implication on the fleet size and sort of on the operations of cleaning, et cetera, right? We would love to see more science-based, more socioeconomic studies. I think this conference creates really a foundation to collaborate across the value chain, but also with academia to increase the level of, you know, scientific drive, I would say, when comparing different technologies and different approaches to biofouling management. The conference in itself is hugely valuable. Thank you for that answer. You reported a lower Q2 due to national variations between quarters. What would you say was the main reason for the weaker organic growth this quarter compared to last year? Yeah, it is the mixed effect, right? We are talking about that, you know, one customer having challenges this year, right, and actually taking lower volume than last year. I would say that one is one of the main reasons. Thank you. The next question is, if your product is so good, why isn't the market penetration better than it is today? Yeah. It's market inertia and risk avoidance, you could say. As the slide we show in the introduction, right, even if the ship owner is faced with the fact that the coating system that they chose last time failed them, they have severe macrofouling, over half of them continue to choose the same manufacturer and the same product, right? That is the type of behavior we need to change in the industry. Here, awareness, of course, is important and marketing, right, to educate and show the potential of doing a better job in terms of biofouling management, right, and the value of it, right, because, of course, it's not only good for the environment. It also saves you money as a ship operator. Thank you, Markus, for that answer. I believe you touched upon this in the presentation, but maybe you can add some more color to this. Is there any news on the EU reapproval? No. As I said there on this slide, we are waiting, you could say, for the outcome of the last meeting, right? No, and I just reiterate, right, we expect to have some more clarity still before the end of this year, right? Although it's not sure that the process will end. I mean, the extension that we got this year, right, was for one year. The current approval for Selektope runs to the end of June 2026, right? In theory, you know, it could take up until June, but we hope for more clarity than still this year. Thank you. You said volume growth was ahead of FX-adjusted sales growth. Can you share some more color here? What pricing pressure are you seeing? Yeah. The only color we can say is that the mix of customers during this year compared to last year is a little bit more skewed towards the really high consumers such as CMP, of course, which have a little bit lower price. That is sort of the main reason for that. Price pressure, we are always under price pressure with our customers. They want to have the most efficient and most cost-reduced way of handling the barnacles. I don't think we have more cost pressure than any other actor within this business. There is still a good business case with the Selektope included in the paints. Of course, we have discussed this many times before. It somewhat also depends on if the end customer then or our paint manufacturer have developed a new paint based on Selektope or if they have just introduced Selektope into an existing formulation, which is very good. What we can see is that the price pressure is higher on that side where they actually introduced it into the existing formulations. In general, I think we are under the same price pressure as everyone else in the business. Yeah, I'm just saying, I mean, the foundation of the value proposition is very strong, right? If the coating manufacturers reformulate around the effectiveness of Selektope, they could achieve better performance at a reduced cost, right? It creates more value for the ship owner. It is a win-win-win business case, right? Fundamentally, the value proposition is very strong, which helps us, right? Thank you for that answer. Is it fair to assume that it will not be possible to match the very strong Q4 2024 and Q1 2025 levels in the coming two quarters? As we have touched upon here, these were really great quarters, right? Q4 and Q1 were really high. Of course, it's a challenge, right? Especially then sort of with one customer buying less this year. You know, we do not give the exact forward-looking statements here, but it's a challenge, yes. If orders from CMP and PPG both have growth, who is lowering the growth? Yeah, there is one customer, you know, as we have stated, with a little bit of troubles this year. They have sort of confirmed now that they will be using less product this year than they did last year. How many new products are currently in development phase with customers? How many are you expecting to introduce to the market over the next two years? Yeah, it's a little bit challenging question because we are working, you could say, on the R&D side and the product development side. We are working basically with all of the major customers in parallel at the same time, right? There is not complete transparency, you could say, in our customers' plans to launch new products, right? That is a challenge for us, right? We know, of course, when we have technical breakthroughs, we have helped them to solve various challenges related to their technology. That does not translate to that we actually know, you know, when and where and exactly in what form they will launch these products, right? I mean, I would say there are four or five projects, right, that can turn into new products on fairly short notice, right? That's, of course, what we are closely monitoring to see that, you know, that this is happening going forward. How is the current discussion going ahead of 2026 with a Korean player that has reduced volumes in 2025? Once again, we're coming into the forward-looking statements. Of course, we are in discussion, but there is nothing we can sort of elaborate around in this call. Understood. Thank you. Could you give us an indication of this quarter's cost for the EU regulatory re-registration process? Yeah, I actually assumed that question would come up. Actually, it's been a quarter with significant cost. I would say it's roughly between $2 million and $2.5 million in external costs, depending on some overlapping activities. It's really not easy to say, is it truly the EU cost or is it another purpose? Maybe it's significant. For those who have been with us, I think we have reported quite consistently that we are on around $1.5 million run level on these types of costs. This quarter has been a little bit more. How is the pricing point compared to silicon-based coatings? Yeah, it's a little bit difficult to answer this question. If you take a high-tier self-polishing coating, then you could say copper-free based on Selektope, that would be a rather high price point as well. We have heard that silicons are quite costly, right? The value proposition is, of course, that it would improve the performance even further. It's difficult for us to comment specifically on that, right? Now, you know, if you compare high-tier to high-tier, I would say silicons tend to be maybe even a little bit more pricey. Thank you for that answer. Can you make any comment on how the Q4 has started so far? No. OK, thank you. Magnus, you mentioned 40% growth in volumes, but 10% organic. Does this mean a major price reduction? No, as I explained before, it's an effect of the customer mix in the quarter. It's no price reductions in. OK, did you say? Sorry, yeah, 14, right? It's not 40, Mark. OK, thank you for clarifying that. Yeah, OK. Yeah. Has your major customer, CMP, showed improved revenue growth in Q3 versus Q2? Excuse me, can you rephrase the question again? Yes, absolutely. Has your major customer, CMP, shown improved revenue growth in Q3 versus Q2? No, they were slightly lower. OK, thank you. Q3 compared to Q2, you said? Yes, correct. Yes, they have improved. Yeah, they have improved. Yes, substantially. Q2 was, as we said, you know, it was low because of quarterly variations. Thank you for that answer. How do you market Selektope when you sell through distributors? The marketing of Selektope is, you could say, mainly targeting ship operators, shipyards, and sort of a broader value chain, right? We, of course, work together with the partners, agents, and distributors and try to make sort of material available in local languages, right? That also supports their efforts, right? Thank you for that answer. Have you thought about Selektope in silicons? Absolutely. It was actually the reason that we included silicons to show, you know, there is a barnacle problem as far as Safinah, and we have sort of concluded, right, also for silicons. We view silicons as a very nice growth opportunity because to our knowledge today, there are no silicon-based coatings that contain Selektope or any sort of specific barnacle protection technology. That is, I would say, a potentially major innovation breakthrough that we are, of course, actively working on. Thank you. We'll take one final question here before wrapping up this Q&A section. Your Head of Sales guy is leaving I-Tech soon. Have you found a replacement? He's not leaving soon. He's approaching, you could say, a golden age. We are looking at strengthening the sales team in general, I would say, as well. The plan is really to recruit a new sales resource, right? Correct. OK, thank you very much, Markus and Magnus, for your presentation here today and also answering all of our questions. Thank everyone who tuned into this presentation with I-Tech. I wish you all a great rest of the day. Thank you. Thank you.