Welcome to the Permascand Top Holding Q3 report 2021. For the first part of this call, all participants will be in a listen-only mode, and afterwards, there will be a question-and-answer session. Today, I'm pleased to present the CEO, Peter Lundström. Speaker, please begin. Okay, thank you very much. I think we can go to slide number two and start. Welcome, everyone. This is the first time Permascand does this as a public company, and we will present our Q3 results, the financials. We will also take the opportunity to introduce the company, have a little bit of an educational session around the Permascand, who we are, how we are operating, what is the important key drivers for us and what is going on in the business. Then, of course, we will touch and talk about our Q3 results, and we will make some concluding remarks and open up for a Q&A session. I think we go to slide number three. Yeah, to start, remind everyone that we are not newcomers. We are actually turning 50 years old this year. We were founded in 1971, and we were one of the pioneers that brought electrochemistry and revolutionized it through dimensionally stable anodes in titanium. We could replace lead and mercury anodes in the industry, and we're also able to lower the energy consumption for our customers. I mean, we are for sure a technology-driven company. I mean, for us, it's R&D, it's research and development. We do designing, we do drawings, we do production methods, we do product development, and we produce electrochemical solutions. When it's time for aftermarket and service and refurbishment, we of course do that. We're not belonging to anyone. We feel really free on the market. I mean, we are an OEM-agnostic supplier. We don't have any interlinks to our customers or to our suppliers. We can freely operate and support, customers and clients that need, electrochemical solutions and also need, components to be produced. Everything we do is tailor-made, in accordance to customer-specific needs. We don't produce components or electrochemical cells, that are put on the shelves, that customer or client can buy. Everything is tailor-made. That also is why it sometimes takes some time from that you get the first contact with the customers to actually start to deliver something. The time is normally around five years. It can go faster, but it can also take a longer time. We are located in Ljungaverk, in the middle part of Sweden. If you drive from Stockholm to Örnsköldsvik, you can drive through Sundsvall and then up to us to Sjundeån. In between, you find Ljungaverk. We're really in the middle. That's where we have the main part of our operation. Then we have sales offices in Vancouver and in Gothenburg, and we are serving all around the world through these sales offices. We serve our customers through our network and partners, the workshop partners that we have placed strategically where we see that we have a need for it, of course, but that's where we also have our biggest opportunity for growth and for finding new customers, but also to serving them there in existing customer base. If we move to number four, we are organized in a way that we see three markets. It all started with Industrial Solutions. That is the chlorate and chlor-alkali plants business. That's where we have been since 1971. It is the industry part. It is an aftermarket and service mainly. It hasn't been so much new capacity brought to the market. Last time Permascand did it was basically almost 10 years ago. The interesting thing with Industrial Solutions is that it is a growing market, and there seems to be a need for more capacity going forward. We do this out from the core technology platform that we have built from Industrial Solutions, and we use that for building new aftermarket, like new markets. The one that has come recently was 2017 when a legislation came into place for ballast water purification. All the vessels that are crossing the oceans needs to have a purification system or disinfection system for their ballast water treatment. It started to kick off in 2018, and we've had a very good journey and a very good growth in the company from that. We have helped and served customers in the qualification process. You need a certification and approval for your system to be allowed to install it into the vessels. We have done a couple of these processes together with our customers. We are today one of the major suppliers into this business through our customer base. Electrification of renewables, that's a mixture of new business and I would say a little bit of traditional industrial business. The mining side, the metal purification side, it's something that has been served within Permascand for decades, and it also has a lot of similarities to Industrial Solutions. It is very much an aftermarket and service business, but we also see through this green transition that there is a need for capacity increase for extracting metals and to have purified metals to produce batteries, et cetera, et cetera. We also have power transmission in this area, which is also something Permascand has served for many years. That is also, of course, a growing area with windmills and others. We have the future business which we see has the biggest potential for large growth in Permascand, which is the green hydrogen. Despite the fact that it's not really something new, I mean, it hasn't really taken off. We have served this market for almost two decades with the good electrodes and catalytic coatings, but it's still on almost small levels. This is where there's a lot of activities for new products, for new production methods and of course for larger scale systems in the future. What I should also say that water treatment is today a new installed market. It's not so much aftermarket and service business as it is now. It is to install new systems on existing vessels, and during the time it will be needed for a service and aftermarket business. What is common for all these three segments is that it is about creating a stable environment to create and lower the cost for the producers to produce the products that they would like to achieve. It normally is the purification or it is some type of disinfection. It's lower the energy consumption, create a stable environment, lower downtime, maintenance costs, and have a reliable production facility because electrochemical process, it is at its best when it's stabilized, when it is stable, when it's running 24/7, and when it's not stopping. Stopping and starting is where things are happening in the systems and where you can get some issues later. If you stop and start a lot, that's normally not good for an electrochemical process. I take number five. Just to pinpoint when I'm talking about electrochemical processes. If we take it from the simple side, it's all about an anode, a cathode. You add electricity. You could normally connect it through what we call a back plate, and you dip it down into some type of liquid. The liquid is depending on what you like to extract or what you like to purify. Normally it's purification or distillation. We can use our core technology, tweak it for customer specific needs, and solve and improve customers' processes. If you look into the middle, it's all about the catalytic coatings. What I mean with the catalytic coating is that it is normally the anode, which we use titanium in the most cases. You add precious metals, and you do it to create lower energy consumption, so you can lead the electricity easier and faster through the process, and also then lower the cost for it. Titanium is very good because it is reusable. It's not eaten up in the process. When we do a new installation, when it's time for aftermarket and service, which is normally eight-10 years after a new installation, we can reuse the same anode blades. Therefore, we don't need to add much more materials during the process. The oldest anodes that we still are reusing is actually from the beginning of 1970. That's been back to us 4x or 5x, and they are still usable and that's also of course good for the environment. What we also do with this coating, this layer that we add on the anode is that we create kind of a stable environment. We protect the anode, which also gives the customers a more reliable and easy process to run, which also reduces the number of maintenance stops. Because what's important for the customers is that they have a reliable process. We normally say when people are asking, "So what are you doing? You don't deliver a system." No, we don't deliver a system. We deliver the heart in an electrochemical system. I will talk a little bit more about that. To simplify it is like the heart in our body. That is our focus area. It is to create a heart that always will pump. It will never, ever stop, no matter depending on what happens to the rest of the body. That is exactly the same philosophy we have within the electrochemical process. We're serving this into a very few market. It is mainly within the industry where we came from. We have deployed and we have been successful in the water treatment business. Now we're using Industrial Solutions and our water treatment business to develop the third leg, where green hydrogen is one of the main focus areas. That's how we look upon it, and that is our strategy to use our commercialized legs where we have good cash flow and we have a good results and by that growing the company long term. Let's go to slide number six. Let's do another deep dive into when I'm talking about the core product platform, the core technology. I mean, no matter what customers we are serving, no matter what markets we are serving, it all starts with the raw materials. We basically use the same raw materials no matter what type of electrochemical cell or electrode that we're going to deliver. Everything is custom-made for the customer specifically. The catalytic coatings are very essential in this process. I mean, that's where you basically create the stability. You create the lifetime. That's where you kind of create also the energy efficiency, the cost for running the process, and so on and so forth. From the catalytic coatings, you have the electrodes. We can sell only the electrodes to the customers, and then they sell it themselves. As we wish, because if we would like to take the full guarantee from the components and from the product that we are selling, I mean, we also like to produce the electrochemistry ourselves. In thousands of them every year. We base it on the same processes. We base it on the same production way of doing it. We develop them in the same way. We have a quite robust and reliable process how to get to, in the end, high quality product that delivers good results for our customers. When we open up a new market, as we have done, I mean, we can trust that we understand what is important in this business and how we can create a good relationship and a good partnership with the customer because it is all about partnerships. If you buy products from Permascand, it is normally a lifelong relationship that you start and that you would like to maintain. Because if you have developed something together, you produced it for them for the first time, they expect you to be there eight-10 years later when it's time to call for service. Then it needs to be repaired and serviced in the same way as it was new built because otherwise you're changing something for the customer's specification, and it will be more difficult for the customer to run the processes. If you look into the middle part because there is like a black box or a secret source in Permascand that is, it's written in patent or any external instructions. That is the combinations of the experience of decades of development and trial and deliveries of these anodes coated that are specifically made for customer unique situations. It's also the how you design and how you understand the customer's well issues or problems or how they want to run their operations. You need to have a good knowledge in the customer's understanding. If you have the cell design and you have a good coating, that's it's not enough because you also need to be able to produce this. It's all about how you are stamping them, how you are constructing them, and how you can run this in an efficient way. Permascand has invested a lot over the last years in automation and in robotization to make sure that no matter if we have large volumes or lower volumes, we are supposed to be very efficient, and we're supposed to be having good margins in our production side. If you produce a lot, yes, we have a very high throughput in our operations, but we should also make sure that we're making money already from the first product that we are producing. This has been the focus areas for many years now. We have invested heavily into our facility in the way that we are producing, but also all the support and functions around to be an efficient machinery without too many obstacles. It's always things happening, but we should try to simplify and try to straighten out things that normally leads that you are not able to squeeze margins out of it. We do it through our own competence, but we also do it through from the partnerships that is important with our customers. We have many different universities that we are having collaborations and that we are involved in. We also have external interest organizations and stakeholders that are important for us to kind of bring us up to be a top-tier supplier into this market, also making sure that we understand what's going on into the business. If we take green hydrogen, I mean, there is well-known, well-tested technology available today. Do we believe that this is going to bring 10-15 years ahead of us? Will that be enough? Probably not. There's a lot of research, there's a lot of development around alternative technologies, alternative materials, and so on and so forth to make sure that we can meet customer expectations. We do it through these collaborations and for all the customer projects that we are running. We are using applications for the way that we are operating to the customers, and I mean, we have PermaChlor that are more for the water treatment. We have the water electrolysis that are more for the hydrogen customers. We have what we call the NORSCAND, which is a electrolysis for metal purification, lithium, and so on and so forth. For us, it is a mixture of ground basic research that we do at university level, but that is the basis for how we can support the customers and making sure that we deliver in accordance to expectations. You can go to number seven. If we look a bit around the strategy, I mean, I've talked a little bit how we're operating and what is important for us. I mean, we have a clear strategy in Permascand. We are not the fast-moving business. It is long lead times and it is a lot of things that need to happen which takes time. We're looking upon a strategy that goes five years from now. We have a clear view on how we want to attract customers and how we would like to focus on the different segments. If we start with Industrial Solutions, which is the base business, it is really where it all started and that is where we're gaining the platform for the rest. I mean, North America, there is no secret that that is our focus area. We see that it is important for us to increase our physical presence to really gain large supplier agreement and to get the big volumes if that is what we want. We are gaining market share, we're gaining volumes, but if we really want to have a big pie or big chunk of the pie that's out there, we need to increase our presence and make ourselves hang out the Permascand sign there. It's all about the performance of our products, and it's all about the customer support. That is our main primary focus on Industrial Solutions. Everything we do is that when we get the physical presence in North America, it's not that it's only going to be for Industrial Solutions. It will be, of course, the Permascand product and the Permascand customers. The driver right now where we have the volumes and where we see that we could gain market shares and increase volumes is within the Industrial Solutions. We take water treatment, which is the other really commercialized segment that we're running. I mean, there's new installations to be made. There is the regulation that is stating around 2025, 2026, every vessel needs to have some type of cleaning system, disinfection system. There is not much new invention or new development. We have done the certification process for several customers, and now it is to win business and to install new systems because that is a secure and good installation base, which also means an aftermarket and service business. They have a little bit shorter lifetime in the ballast water treatment system. We're normally talking about five-10 years recycling time or refurbishment aftermarket timeline. That is really the driver now to get as much installations as possible until it's finished, and then we will serve an aftermarket. It has already started. I mean, we were early into this market. I mean, our first client was number six in the world to be approved. They were also one of the first in the world to be approved for installing into vessels, oil vessels and things like that where you need a specific certification and approval. Electrification and renewables, I mean, there is no doubt hydrogen. We believe strongly in hydrogen, and we believe that market is huge. It's absolutely going to be a game changer for electrochemistry and for us as a supplier into the market. It's large volumes that are expected to be produced, both from a coating size perspective. There are millions of sq m in the world that need to be produced, and there are hundreds of thousands of electrochemical cells that need to be produced. We have done this for 50 years. We know and understand this is not easy, but we have done it, and we have the strategy on making sure that we will have the capacity and that we have the development projects going on as we speak. Then you have metal purification, of course. Lithium is one of the interesting things that the demand is increasing. The good thing with compared to a traditional method for lithium is that when you're using electrochemistry process, the purification is higher versus a more traditional one. We believe that in the long run, that will be necessary to achieve a very high quality product when we're producing batteries. What goes for all these segments is that it is the installation base. It is the market share to secure our aftermarket service business. Through that, we never do specific operational investment into our company just specifically for one, because as I tried to explain before, I mean, it is coatings, and we use the same facility to produce different types of coatings. When we produce electrodes, it is of course the same production facility that is producing those electrodes no matter where it goes to customers. When we are assembling, I mean, we have an automated roboticized part of the company where we produce as much as possible where we can automate them at a robotize. We also have ability to do manual work. Some of these products that we produce, they are really large. They're heavyweight, so it's difficult to automate, but we also have that possibility to do it. We have many different ways of serving and making sure that the client gets the best product available on the market. Number eight, that was a little bit around Permascand and the educational part of how we see the company and what's important for us, and what drives us, our everyday life. If we look upon the Q3 report and the Q3 results, I mean, you can if you make a simple analysis say, "Oh, this is not good. All the numbers are going in the wrong direction. Internally, we are delivering in accordance to our internal expectations because there is no doubt that we are coming from a world that are still impacted by the pandemic. Even though it has been, of course, a little bit of a relief, and things like that. We are a slow-moving business. I mean, we are operating on these long lead times. For us, it takes some time to get our internal engine up and running. I mean, we have a strong order book. This is one of the highest ever in the company history. That needs to be taken into consideration. Yes, we have. You could say we have low revenue in Q3. That is a little bit the result of that, the orders hasn't been super great during the pandemic. For us, it takes some time to kind of expedite them and deliver them. On top of that, which basically every company that produce something is impacted by, is of course material sourcing, material pricing, and transportation. All these things together, it means that yes, we have a little bit lower delivery and a little lower revenue, maybe that was expected from the market, but on one hand, on the other hand, we had a very strong order book. It's a little bit of a timing issue. This is the challenge in Permascand and has always been the challenge. It is when the time we are relying on customers' decision process. These are normally quite large investment for customers. We are operating with large global corporations and decisions are normally taking some time. When you have high prices and long lead time, it is of course expensive for the customers to order. Then they order what they need and not necessarily the large investment. They're waiting a little bit. The good thing right now is that it looks like the pricing and the delivery times have stabilized and not at least increasing as much as it was in the past. We are expecting that this is going to normalize along the goal. It might take one or two quarters, but we are definitely positive that we can see some light in the tunnel. What's also good to highlight is that the market demand in all segments, I mean, it is a really strong market demand. It's not only that there are requests for new capacity, what we call the greenfields, but it's also, I would say, all-time high for Permascand when it comes to the customer development projects. We measure the activity level before we get to commercial quotations and order intake. That is very important for us, that we have a high activity level through this pipeline, through this prospect list. It's really hot at the moment. That is important for us because historically, we know that when we have a really busy in these early stages, it normally means that we will get into a commercial quotation phase, which normally means that we also get into order intake. If we get into the commercial quotation phase, there is a very high rate of receiving an order. It could be a little bit bigger, it could be a little bit smaller, it could take some time, but normally it ends up in our order book sooner or later. It takes electrification, renewables, and Industrial Solutions. I mean, we have slightly lower intake during this quarter than we had in the previous quarters, but it's still a strong order intake from gaining market share. We also saw that the water treatment business seems to be having some positive signals that stabilizes, and we can expect installations to kind of be more reliable going forward through the large order intake we had in September. We are really satisfied that the investments we have done during a couple of years, we ended an automation and the robotization phase in the end of last year, which we started up in the beginning of this year. Of course, as always, when you have new equipment and new tools, there is a timeline when you need to improve and learn how to operate this. We have had a good time during this year and gradually been able to improve and secure that we can have, to be honest, all-time high gross profit in the company history. That comes through the internal projects, through the internal improvement projects that we have and also a result of all the investments that we have finalized. I think we have a strong operating margin in the end. We have low sales, but we have also turned that into some quite good cash and results into the company. We don't see a major mix change. I mean, it is the water treatment business that is driving the revenue, and then we see an increase in electrification of group also. Industrial Solutions is pretty normal within the variation. If we go for number nine, just to touch base a little bit, and also a little bit how we work, what is important for us, and that we press release September the collaboration with Verdagy. Verdagy is a spin-off from Chemetry. Chemetry is an American-based company that is... I mean, their whole idea is to find a new way of reducing electrochemical cell for the chlor-alkali industry and lower the energy of course, but also lower the total cost of ownership and so on. This is a spin-off for the green hydrogen, and we help them in the chlor-alkali business. We are all very satisfied with the work we do with them. They are already in the test phase, testing the products that we have delivered. Verdagy is a little bit earlier stage. We are in the prototype stage for the first testing of the cells. This just strengthens our relationship together. I mean, we had a letter of intent in the summer, and now we have a collaboration agreement, with the aim of this to be a commercial agreement, when we are ready to launch a finished product to them. We're also very satisfied and as I said before, I mean this order from the water treatment sector is kind of giving an indication that things start to stabilize and there is a belief that installations will start to pick up, and continue maybe going back slowly to what was expected before. I mean, there is a timeline when this needs to be finished. Of course, it is a couple of years ahead of us, but still this is giving us a good start for next year. I mean, it is a sizable order in the company's history. I think it's number three from this client and from this side. There's good hope that things start to go back after the pandemic to a more normal timeline that we're expecting things to happen, and we will have a more speedy growth going forward. The last thing that happened just after we closed Q3. I'm at slide number 10. That is the press release where we press released that we have a new master supply agreement with one of the big boys or girls in U.S. for chlorine and caustic soda market. We have done some single projects, some single deliveries for them to kind of qualify for this, and we have managed to convince them that we are a reliable partner and that we have good quality and that we are able to, of course, lower their cost of ownership for their production. We have now signed an agreement for over three years. Each year is worth somewhere between SEK 30 million and SEK 40 million. Permascand is a good partner for them. I can only say that we have worked long for this, and it's fantastic that we managed to close this deal. That means also that we have a reference, and it will be easier, and hopefully it will go a little bit faster, when we go for the next client and try to sign up the next supply agreements. If we go into more details when it comes to the Q3 results, I'm now on slide number 11. I will hand over to Permascand CFO, Linda Ekman. I will come back with some conclusions. Thank you, Peter. If we look into the details of the finance, I think that what Peter has been telling, the story he's been telling you is also supported by the numbers. Permascand has an organic growth and high visibility. The Permascand revenue has grown from around SEK 200 million per year up to SEK 444 million in 2019, which was a record in the company's history. That was, of course, driven by the ballast water treatment and the water treatment segment. Going into 2020, all indications was continued growth before the pandemic spread over the world. For Permascand, the consequence of COVID-19 was that the kind of fast growth, the planned sales growth was postponed and spread over more years. During 2020 and going into 2021, we deliver revenue above SEK 400 million. Year to date, nine months in 2021, we have revenue of SEK 274 million. Also the growth is supported by the order backlog development that gives comfort for future delivery. The order backlog is, for us, confirmed customer orders. As per the end of September, the Q3 report, it was SEK 501 million. The SEK 501 million is, 61% is for the water treatment segment. The industrial is 17%, and the electrification and renewable, 21%. Which means that in all three segments, we have supporting orders to cover for coming months and coming years. If you look at the gross margin development, Permascand has, as Peter has told you, invested in in automated production facilities and also a strategic planning for better yield and the cost-efficient production. As a result, we can see that the gross margin is increasing. Year to date, 2021, we have a gross margin of 28%, and in Q3, it was as high as 36%. All as a result of the strategic plan that we have and the work that we have done in improving the cost efficiency. The adjusted EBIT development, we have 10% EBIT margin and SEK 28 million. We believe that we have a good setup and a possible increase in EBIT margin that will come with higher volume. Reasons for holding the EBITDA down in Q3, that's due to investment in resources, competencies, and for the future. We have in 2021 also a year for Permascand with costs for adapting to new conditions and also the IPO costs. We adjust for the non-recurring costs, but anyway, we have also recurring costs that we have invested for the future. We believe that we now have a setup that will cover for future. Now I will move on to the next page 12. We will focus a little bit more on the segments. We begin with the electrification and renewables, and as Peter has told you, that is still a project-driven segment. It can vary over time, and the quarters can vary a lot depending on project type, also if the customer plan. It can be a test cell or it can be commercial production, so that's why there are bigger differences in this segment. In the Q3, we had a small order intake of SEK 3 million. We have had sales that increased compared to the same period last year. We had revenue of SEK 13 million, and we also had a big improvement in gross margin up to 27%. Electrification renewables stands for 18% of total revenue in the quarter. If we look at Industrial Solutions, which is kind of a Permascand base business, in Q3, we had order intake of SEK 20 million, and we had sales of 28. Also in this segment, we have had an increase in gross margin. It was 34%. The Industrial Solutions segment stands for 36% of the total group revenue. The third and the biggest segment, Water Treatment, as I told you about the big order intake in the Q3, we had a total of SEK 179 million order intake. We have sales of SEK 35 million compared to SEK 77 million last year. What needs to be remembered here is that the COVID-19 has affected the allocation of the distribution of deliveries and revenue between quarters. That's why it can vary so much, but still it's not a drop that we have lost any business. It's just that it has to be spread out over a different period of time. In water treatment, the gross margin is 39% in the quarter. Water treatment sales of 46% revenue. Move on to slide 13. Look a little bit on the balance sheet of the financial position. Permascand had a repositioning relating to the IPO in June. We had new equity through the share issue, and we also did a refund of the bank loan, and we paid SEK 250 million. We had kind of a new financial position in the Q3 compared to last year and compared to the beginning of the year. It's not a complicated balance sheet. The total assets, SEK 438 million, primarily tangible assets, the automation and the robot cells, as well as inventory stock and also, customer receivables. If you look at the equity side, we have SEK 262 million equity. That represents an equity to asset ratio of 60%. On the liability side, we have primarily, bank loans, and also supply payables, prepayment from customers. The net debt is SEK 30 million, and the net working capital is 21% of revenue approximately. We move on to slide 14. Have a little look at the cash flow. We should remember that Permascand is a cash generating company. We have a solid result, and we have a good cash flow. In the Q3, the operating activities gave a surplus of SEK 32 million. We also had some investment activities, of course, not that much, about SEK 6 million for the investment, but it's attributable to green hydrogen, but also the other segments investments and continue to improve the production. Financing activities is that we are using less of the credit line in the bank for repayment of loans for that. Going out to the Q3, we have cash for SEK 24 million of available liquidity, a solid and stable level. We can handle planned activities going forward. Moving on to next slide 16. I hand over back to Peter. Yeah. Thank you. If you look upon, try to summarize the quarter and actually where we are, I mean, there is no doubt we have a good and solid order book for us going forward. I mean, there is a strong foundation. There's a strong base for us to kind of grow forward our business. I mean, we have our midterm guidance and there is no doubt that we have a clarity, we have our clarity and that is how we guide and that we want to achieve. Highlight the gross margins. I mean, when we went to Nasdaq, I mean, we were talking a lot about the investment we do and how we try to operate in an efficient way and use and utilize our machinery and our resources across the segment and across the product. There's no doubt that we are doing a good job internally with our processes and how we are operating our model. We also see the impact and the positive effect for the automation and the robotization. I mean, we are creating value, and we're creating results already from the first products that we have built. We also said when we went into Nasdaq that we have built the machinery for the future. I mean, we are where we are today. I mean, we have a good solid base for growth, but the machinery is able to produce two times where we are now, maybe even two and a half times where we are today, because we're not stopping improving our processes or the way that we're operating. I mean, there are some short term challenges that I think not only Permascand is facing. It is expensive for the customers right now to place big orders to us, and then there is a long decision process. The investment budgets are maybe not sufficient for the cost of all investing. I do believe that the pandemic is maybe not fully behind us, but that I think that we are having a more positive view on the future. I think a statement is that the order for, from the water treatment side that they are looking on a more stable situation that they need to place the order to be able to deliver, I mean, according to expectation they have. It is the ground the pricing and the delivery terms and transportation. Since we are adding a market an aftermarket service where customers are bringing their components and their electrochemical back to us for service and aftermarket, we are kind of... We are challenged by not only the supplier's transportation, but also challenged by the customer's transportation. There is a lot of work going on to try to improve the situation, shortening the delivery time through that. We are maybe changing a little bit the way that we operate and do that, but also around transportation and maybe we don't need to transport everything back to Sweden. Maybe we can do some other things to shorten it and to drive this a little bit further. We expect this to normalize during the upcoming quarters. We can see that the prices are dropping on a high level, but they are dropping. They're not increasing. We also see that delivery terms starts to shorten up. They are at least not longer now than they were last week. On that transportation, we also try to work with other ways of getting the materials out faster if need. What's important for us that we are thinking of trying to inform the market is the pipeline, what we call the pre-stage before we get into commercial quotation, or even an order. I mean, there is really strong underlying demand from particularly Industrial Solutions segment for greenfield and increased capacity, but also of course from the market share activities that we're trying to gain. Within electrification and renewables, it's both capacity increases, but it is in particular new products. I mean, there's no doubt it's all-time high in the company's history. Normally we are quite good at picking the right activities and pick the right customers and the right product development. By that getting into the mode of commercializing and chasing them, and that normally means an order and a delivery. As I said before, I mean, we have a 50-year history of this. There is a quite reliable machinery that we are running. There is no doubt, nothing has changed to these mega trends that are coming ahead of us. I mean, we need to find a way of being more green in the world. We need to find a way of producing hydrogen in a reliable way. We need to make sure that we have less of a supporting thing for us to be able to do this. Of course, the electrochemical part in this is of course other things that need to be supported. Permascand is a company that we are good at supporting, and we are good at kind of the whole value chain in producing these components, designing them, and fulfill customers' requests and requirements. They have a very good and efficient process, and that's what we would like to kind of discuss that yes, maybe if you look at the numbers, it could be a bump in the road, but it's no more than a bump in the road. We have a positive view on our future, so for... It's all about pipeline activities for us that play around. That was what we were going to present. I think we open up for a Q&A session. If someone have some comments or questions, we're more than glad to take them and try to answer them if that's possible. Thank you. Ladies and gentlemen, if you do have a question for the speakers, please press zero, one on your telephone keypad to register. Our first question comes from the line of Gustav Österberg from Carnegie. Please go ahead. Your line is open. Hi, and good morning Peter, and Linda. Thank you for taking my questions. I'll start with two, if I may. Could you please elaborate further on the gross margin improvement here? I mean, it's a significant improvement on a smaller sales base. You know, you're talking about manufacturing efficiency, but could you please elaborate a bit more on the background and context here? Is there any large one-offs? You're talking a little bit about mix, but no big change there or is it this sort of a more permanent level in your view? I mean, we have said that for a long time now, during the process of the IPO, and also that we have built and we have invested into Permascand with new equipment, with more efficient processes all around, supporting production, supporting development and things like that. This is of course not something that you start and stop. It is a continuous improvement process. What we saw in the first half year was that the activities were ongoing and so on and so forth, but we maybe didn't see the results from it. We start now to see the results from the activities and from the investments that we have done. There is like a... If you compare it to historic history, that's where we have done a lot of these initial works and building up these improvements and now we start to see the benefit from it. I said that there is not any major shifts in the type of products we have produced or anything like that. We see the results of what we told before that we have built something that will generate results and cash when we get the volume. Maybe we're all a little bit surprised that it's also generating a good margin contribution already from the first product. We have done a lot of improvements during this process, and it looks like it is even more promising maybe than before from the beginning. Is it a one-off? Well, things can change. I mean, we are operating and we had a pretty smooth operation during this period where that is, of course, gaining us better than if we had disturbances and things like that. This is a difficult or a complicated process to run. Things can happen during the process, which of course then could bring margins down. When things are going through the production, when things are smooth, we are generating and we're supposed to generate good margins. All right. Thank you very much. Then also my second question is a bit around you have an order book here of just over SEK 500 million at the end of the quarter, and obviously three large and important press releases on collaborations or firm orders here. Am I reading you correctly that sort of the short-term impact is from supply chains and rising prices are driving some hesitancy among customers, but overall, if you look at sort of 2022 or second half of 2022, you are starting to see more of a positive environment for these larger orders? Yes. That's how we are looking upon it. I mean, we know what's going on right now with our client base and with our product. We are expecting large orders to come because if they haven't come yet, and it needs to be an increase of capacity or it needs to be kind of a service in July to be made. I mean, you can wait as long as you don't need it, but there starts to be kind of a need to place the orders. The longer it take, the more difficult it will be for our customers to increase and supply their customers in a way. We are looking upon this as right now the pandemic period has been really expensive for the customers and so on and so forth. All the activities, underlying activities that we're talking about, they are indicating that we're getting soon to a point where they need to make a decision and go for it. I can't tell you more than that, but it's always really difficult for us to say, will it happen in December? Will it happen in January? That's always very difficult for us, the time when it comes. We are certain that it will come, but when it's always a question mark, and it's literally out of our hand because it is big decisions from the companies. There is normally we are operating with these global, big, conglomerates, and it takes some time for them to make a decision. Once they are in it, they go for it. All right. Thank you very much. That's very understandable. I'll jump back in the queue if there are any more questions. Thank you very much. Thank you, Gustav. Thank you. Our next question comes from the line of Karl Bokvist from ABG Sundal Collier. Please go ahead. Your line is open. Yeah. Thank you. Hi, Peter. Hi, Linda. My first question is also a bit of follow-up on just your comment earlier in your presentation where you said, you know, it developed in line with your own expectations. Just a bit curious to maybe if we could get a bit of color on your own expectations now in the near term. I mean, it seems like 2022 is quite well communicated to be a growth year. Just, you know, your own expectations for these, let's call them headwind due to external factors in the Q4, maybe possibly the beginning of next year. I mean, I'm just looking at your backlog from Q2. That was around SEK 400, then you had sales of SEK 80 million, roughly. Should we have a sort of similar backlog conversion in the Q4 related to your SEK 500 backlog? Or how do you think one should look at it, you know, to align ourselves with how you view the situation? I think it's a little bit as I said, this is a slow-moving business. It is long lead times. It takes some time to convert orders into sales. What I mean by that, it is exactly what I say. I mean, it's not going to turn around and go from zero- 100 over a week or a month. It takes a little bit longer than that. With that said, I mean, we are expecting things to open up, and we expect things to go back to more to the normal situation we had pre-pandemic. There's no doubt about that. I mean, we believe strongly in our strategy. We believe strongly in the activities and how we operate and the focus area we have. We can also see that in the traction of all these activities. The difficulties for us is a little bit timeline and also I wouldn't say we were taken by surprise because that's not the case. I mean, everyone that has been through this pandemic understands there is things happening, and there is a little bit difficult for suppliers and for transportation to move on. Maybe the price increases has been an overreaction because now we see them, they are dropping back down. I think that is a good signal for us to maybe speed up some of the expectations we have in gaining orders. If we're gaining orders, I mean, of course we are, speeding up also our ability to deliver in accordance to expectations. We have good communication with our customers and with our clients, and we know pretty well when they kind of really need to order it because they really need the product. Then of course, if you don't place it tomorrow, then we get closer to when they have to place the order. Understood. Just to follow up on that. I mean, just normally in terms of seasonality, the Q4 is quite a good quarter for you. Let's say that the conversion from a backlog improves somewhat, then, you know, these factors considered would mean a Q4 sales or delivery level, you know, well, essentially quite a bit above the Q3. I'm just, you know, are there any factors that you see or expect that might make that not the case? I think we have pretty good control on what we're expecting to do from now on and for the remaining part of the year. With that said, will order intake be in accordance to expectations? It's all about the timing. I mean, we can't really expect to say when it comes more than that it will come. When it comes to delivery, as you said, I mean, Q4 is normally the period where it is good distribution of sales, and that is how our clients normally make their orders in the beginning of the year. They want to have deliveries in the end of the year. They have maintenance stock and other things. Has that changed? Well, they have still the same need for sure. We have good control of what we are expecting to do. We also have limited, I would say, possibilities to increase or add anything new. That is because of the uncertainty about transportation, but also from the point of view where material supply lead times has actually gone from normal to almost double in the way. That is, of course, shortening the window for us to turn orders into sales. We are expecting Q4 to still be a good quarter for Permascand. I mean, that is how the sequence and the cycle for Permascand is from the behavior of mainly our Industrial Solutions customers, but also from electrification and renewables. Water treatment is more normalized over the periods. Because of that, we receive long orders for long period of time, and we are able to kind of distribute that in a sensible way so we can kind of manage that in efficient way that we have. We see that we have had some low periods in water treatment during this pandemic. I mean, last year it was Q2. We had a low quarter in Q1, which was kind of the second wave or the third wave of the pandemic. We also see that Q3 for water treatment is also a little bit low. As I said, indeed during the call, is that it looks like it is stabilizing and if they get a more positive view on how this will happen now, going forward. Understood. My final question before going back into the queue is just also on the very impressive profitability. I think in prior quarters when sales were a bit lower, you mentioned that you know you saw a bit of headwind from less capacity utilization. That doesn't seem to have been as significant of a headwind now. Out of curiosity, just these investments, robotization and everything, which of these actions were not in place during the Q2 that are now in place during the Q3, given you know the significant step up in gross margins since Q2 despite the lower sales? I mean, during Q1 and Q2, I mean, as I said, we were finalizing automation and robotization. During the end of the year, we started to kind of understand or run the operation in the beginning of the year. It's always when you have new equipment and new tools, it takes some time to kind of get it up to speed. I mean, we had some issues during Q1 and Q2 that we have to deal with and make sure it runs more properly. The same, we are focusing a lot on coating and coating efficiency and how we can kind of do things in a more efficient way, but also in a way where we are gaining results. I mean, you don't see the results right away. It takes some time until you start to see the results of the activities that you're doing and the activities you have implemented. We maybe thought it was going to take a shorter time to start to see the results on one hand. On the other hand, we see the results of the activities that we have done now. I mean, they are really promising for the future. Understood. I'll get back in with you. Thank you. Okay. Thank you. Thank you. We have another follow-up question from Gustav Österberg from Carnegie. Please go ahead, your line is open. Yes. Hello again. Thank you. Just a follow-up on sort of the manufacturing efficiency here. I mean, if you look at the old product ranges within water treatment, but then consider that you also have a newer versions for the electrochemical cells. I mean, should we expect any large differences in terms of gross margins on new versus old products, or are you able to comment on this? I can say, if I say it like this, I mean the next generation of products we are launching or ready to use, I mean, there's of course a lot of steps in the assembly and in the design that will gain the customer. For us it is very much I mean a similar process. It is the same machinery, it is the same way that we are operating. That is on one hand. On the other hand, you also have to take into consideration that material prices have gone in the wrong direction. Will that be a cheaper product or will that be a higher margin product? I think that needs to be proven. It is not going to be worse. It will be that is all the whole kind of assumption that it will be beneficial for both the customer and for us. For us, when it comes to this efficiency improvements, it doesn't really matter which product that we're running. If it goes through the same machinery, it is a little bit how efficient we can be in running the machinery. Can we be faster, have less stops, less interruptions? Of course, that gives us a higher output, and that is what is important for us, maybe not the generation of product that we're running. We're working from both the pricing side with the customer, but also internally how we can improve our positions and improve our results both are as important as one or the other. All right. Perfect. That's all questions from me today. Thank you very much. Thank you, Gustav. Thank you. We have another follow-up question from Karl Bokvist from ABG. Please go ahead, your line is open. Thank you. My first one, just on the Industrial Solutions side and the master supply agreement, I believe you, in your press release, you mentioned that you already had a small amount of sales to this customer, just a couple million SEK or something. Just to understand, were these commercial deliveries or is this, you know, a type of example that I believe you've highlighted before when you've worked for a long time with a customer with test deliveries and everything, and those sales were related to tests, and now you have your first firm commercial supply contract, just to understand, you know, the potential of new customers in North America and whether or not this was one of those. No, if we take this specifically, we have done a smaller sized commercial delivery to them during this year. As you said, I mean it starts with test deliveries, and that was done a couple of years back where they are testing our products in a very small form. That has led to that we have been able to take a little bit bigger pie of their needs, but still not a supply agreement where it is like you are supposed to deliver every quarter this amount of electrochem cells to us. It has been on an ad hoc basis that where we have been invited and said, "Okay, we want this amount of electrodes to be delivered to us," and so on. That is how it normally works. It starts with tests and then you get an ad hoc smaller commercialized order and they test that. When they found it to be good results, I mean, then you are invited for a supply agreement and that means that you have a running business with them. They are guaranteeing to you that certain volumes will come. If they have a need of X amount of electrochemicals to refurbish, they will distribute your share that you have agreed, and then they will distribute the other share to the other supplier that they- All right. My second one relates to E&R. Just a bit curious on the progress that you see here, when it comes to. I mean, you've announced partnerships and so on, but other areas of your venture into green hydrogen, for example, when it comes to finding a venue for your potential test facility and all those sorts of things. I mean, we're running in accordance to the plans that we have put up. I mean, there is a mixture of course employing skilled competencies. It is to order the equipment that we will need. We said that we will start up and make sure everything works from the facility we have in Ljungaverk. That is the starting point. We will need to find a place outside of Ljungaverk. We haven't decided yet where that should be because it is a little bit depending on customers and where we believe that there will be a lot of activities going on in the future. We will make a decision in a year's time, or something similar where we believe that will be. We're running a virtual organization, so it's not necessarily important exactly where it is. I think it's more important that it is in an area where we have a lot of attention regarding this type of technology and this type of products. That will in the end make the choice of location. Right now it is to make sure that we are building this up in a good solid way, that we have the right test equipment, the right equipment to do the development of products, but as well the development of production methods. We're running it with customers, with other collaborations, universities and we're kind of increasing our footprint every week in this area. We let it go fast. We have said that this is when water treatment legislation starts to be finalized, then we're expecting this part of the business actually starts to grow and have a bigger pie within Permascand. It will slowly increase its presence in Permascand during these years. It's also about production capacity. I mean, as I said, we have production capacity free in Permascand at the moment, and we can scale up our ability to produce. It's not like we are in the immediate need of adding investment into capacity because we can grow the coming years with the investment we have done. We look a bit little bit on the longer run. It is of course a capacity increase that will be necessary to meet the expected demand for catalytic coating electrodes and electrochemical cell assembly. I mean, this is really big market if we're going to realize what every company is stating that they need from hydrogen production. All right. That program that goes a little bit, to be honest, we have a strategy up to 2030, and the different steps that we need. In the beginning, it will be more competencies and test equipment to build all these projects, and in the end it will be more to realize and have available capacity. All right. Thank you. My next question maybe is more related to you, Linda. Just looking at the CapEx levels we've seen here in 2021, it looks like we might end the full year on a sort of CapEx level of maybe a bit more than SEK 20 million. Just interested if that would be the right way of thinking about it, that 2021 as a whole will be a bit of a slower year in terms of investments and that we should, you know, expect the significant ramp up in CapEx to kick in first during next year. Or will there be any major investments in Q4? It's definitely a slower year regarding investments compared to previous years, since we had a kind of massive investment plan that we are finalizing right now. I would not say that we are expecting the big ramp up immediately. I mean, we have a plan that we are following and it will be later in 2022 that we will see more investments or maybe 2023. We are not expecting to see any fast increase, no. All right. We're following the- Understood ... we're following the plan that we presented in the IPO and that we have in our documentation pretty well. Mm-hmm. We haven't changed the direction or we haven't changed strategy. I mean, we're doing the activities and we are- Yeah kind of ticking the boxes off one by one. Got it. My final one is just, I apologize if I go back on something, but on the order book you have today, and you said, you know, these are firm committed orders, I imagine that you yourself have a quite high degree of, you know, control when it comes to deliveries of those. If not, you know, correct me here. But on the firm orders you have in your backlog, what's your view on, you know, the planned deliveries for early 2022 and the Q4 of this year? You know, are there any aspects here that might limit your own ability of planning your deliveries on already committed orders? I can take that one. I mean, as I said, once we have a committed order, we also have a back-to-back when it comes to supplier material and to transportation. We haven't planned anything that we don't have in kind of confirmation from everyone around us. It's also that, I mean, we have a sourcing strategy where we're kind of locking our deliveries when the orders is coming. We feel a bit confident that we will be able to deliver in accordance to those kind of commitments, to those expectations. It is a challenge, of course, if you haven't a commitment and so on and so forth, because there is a little bit of a sluggish environment that we are in. New orders, of course, then you need to add, you need to work with the lead times and the prices that we have, and then you need to have the commitment, and you need to kind of set that into your production plan. Those are, of course, for hopefully, as we said in the beginning, we believe they will normalize during the quarters to come. There is a longer lead time for deliveries if you place an order today than it was six months ago. That could impact this quick order intake that become these ad hoc orders. I mean, can you deliver in 16 weeks, yes or no? If you can, then you get the order. Those are a little bit more challenging today, but we're also looking into how we can improve our situation despite the fact that the lead time is for the customers. There's a lot of work ongoing in the company to kind of improve our positions despite the fact that it's a difficult situation out. Understood. That's all for me. Thank you. Thank you. Thank you. As we have no more questions, I hand back to the speakers. Okay. I think we are done for today, and I can only say thank you for listening. We will be back with the 44 report in February, and then I hope we will have more educational part of Permascand, but also, of course, that we will deliver positive news around the activities that we're doing and so on and so forth. Thank you very much today and have a good day. Bye-bye.