I-tech Stock

And we are live here at Investor Studios when I-Tech has published a report for the third quarter. Joining us here in the studio is the company's CEO, Markus Jönsson. Welcome.

Thank you very much, Mike. Great to be back.

I will soon hand over the word for you to give a presentation. But before I do that, I would like to give a final reminder to our viewers that if you have any questions, please post them in the chat. So Markus, go ahead. Thank you very much.

All right. So at first, we start with a little short introduction of I-Tech, right? right? And the space that we are operating is the maritime space, right, the maritime industry and industrial shipping. So we typically pose this question, what if 1/3 of the global fleet of 110,000 commercial vessels were using 36% more fuel than needed even for a day.

What would that mean for operating cost and emission? And this is actually then data from our studies of indocking performance of ships coming in after 5 years at sea. So the picture is this bad. So there's much to be done exactly to target biofouling going forward, and it has huge costs. So I-Tech's solution is called Selektope, and it is originally a pharmaceutical ingredient that has been developed as an antifouling substance. And it has a unique property to help stop hard fouling, more particularly barnicles.

And this helps the ship operators to reduce their emissions to air to help to protect the sensitive marine ecosystems from the transfer of marine invasive species and also reduce the emissions to the ocean because Selektope is highly effective and efficient, so you need very small concentration.

So I-Tech today then, we have a unique technology. We are focusing on building intellectual property and formulation know-how around using Selektope and also new solutions now going forward. We are asset-light in the sense that our production is outsourced, and we estimate that our penetration is quite low still, 3,500 vessels out of the commercial fleet of 110,000 vessels.

So our customers are the major antifouling coating producers, the coating companies, and there are actually 9 major companies then representing more than 95% of the addressable market. So we work, of course, closely with all of them. So if we look at I-Tech's journey since its IPO in 2018, it has been a growth journey essentially, right?

We have grown nearly 30% year-on-year, and we see also that until quarter 3 this year, we are continuing the growth journey. So it's really nice to see that the use of Selektope is continuously increasing. So then we dive into the Q3 results. And this, I can say then that the organic growth continues essentially, right?

If we look at sales or currency adjusted growth, it is 18% versus Q3 last year. And we see then the year-to-date sales grow with all our major customers, which is great to see. So it's a little bit lower sales than the previous record quarter, which was last quarter, Q2, but still a very good quarter overall by our standards. So looking a little bit into the numbers then.

So net sales in SEK grew by 19% and reached SEK 48.8 million. The gross margin continued to improve or be more stable at a high level, so 60% versus 57% last year, right? EBITDA rose by 16% to SEK 15.1 million and EBIT then by 20% to SEK 13.3 million. So operating cash flow was lower this quarter than the corresponding quarter last year. However, this is an effect mainly due to skewed accounts receivables because we had a very low sales quarter in Q2 2025.

So the operating cash flow we are seeing now in this period is more resembling, you could say, how it should be, right? The cash balance continues to grow, and we have now SEK 177 million year-to-date.

Okay. So looking at the geographical spread of sales then year-to-date, we can see that Korea continues to cement its #1 position. So 46% of our sales year-to-date has gone to Korea, 27% to Japan, 21% to China, 3% to Singapore and also 3% to Europe, right?

So that is the sales split that we are looking at now. So we see continuously strong development from all the Asian markets here. And growth, you could say, in Q3 have been driven a lot by both South Korea and China. So to summarize the quarter then, yes, 18% organic sales growth, still a very good momentum here. I think the diversification continues. We see higher growth rates with our smaller customers, which is positive.

So we are becoming sort of less dependent on #1 or the biggest customer. The margins, we are very happy to see that we've been able to maintain really high gross margins despite the turbulence that has been, you could say, with raw material prices this year and that we continue to have a strong resulting EBITDA and EBIT percentage.

So all in all, we are very satisfied with the results. So now we come to the outlook. And you have heard me talk also in the previous quarters this year about the market and sort of that we are in, you could say, a mini boom at the moment, right?

But just sort of zooming in from the bigger picture, there are around 2,000 new vessels being built every year, and there are around 20,000 service events or dry dockings where ship come into service and where they apply a fresh layer of paint. China represents more than 60% of the dry docking market and nearly 60% of the new vessels.

So China continues to expand their #1 position in the market. meaning that it's also one of the key markets for I-Tech for securing additional and future growth. So if we look at the market as such then this year, I think the closure of the strait of Hormuz, right, has meant, you could say that the loss of volume here has been able to be mitigated by alternative routes and sources, right?

And in fact, what has been the consequences is that you could say the availability of ships or vessels have decreased. So prices have gone up, right? We do see, however, that overall seaborne trade has actually gone up year-on-year, right, by 1.1%. So the charter rates, which is then sort of the price you have to pay to ship goods has increased 61%, sort of the overall indexes year-to-year.

And we see also then a very active ordering of new ships, right? So that is up 33% on the full year 2025. So it means that we have seen a tremendous bump, and that is actually shown also in the top graph here to the right, right? You see that expected deliveries have increased for the years to come, which is, of course, good, you could say, from an I-Tech perspective. There will be more ships built that need a new fresh layer of antifouling coating, right?

We also see that the shipyard output has increased by 14% year-to-date, right? So we often talk about the shipyards being full or at their capacity, but we also see that they continuously expand their capacity. And of course, the elevated fuel costs continue really to underscore the value of a premium antifouling solution.

So all in all, you could say the macros are quite positive for antifouling coatings. We also note, you could say, an increase in the number of repair events. And this is, of course, quite linked to the available fleet and their service schedules. But it's all in all, a very positive view. All right. And now we come to the regulatory part, and I'm really glad to have brought with me another fantastic I-Tech employee for this session.

So I will hand over now to Cecilia Ohlauson, Head of Regulatory Affairs and Sustainability.

Thank you, Markus. So as most of you know, Selektope has been going through a reregistration process in Europe for the approval as an antifouling bioside. And this has been a long process. Selektope has been discussed several times by the Standing Committee of biocidal products.

And what's been happening this quarter is that there was a meeting in June with the standing committee where a draft proposal for nonrenewal of Selektope was discussed. following that meeting, it was decided that a vote would take place. So in the meeting in September, Selektope was not discussed.

But following that meeting, a written procedure for voting was launched to the member states, and that is currently ongoing. So the voting is running from the 7th to the 21st of October. And as we also indicated before, the approval for Selektope currently expires by the end of this year.

So Selektope is not the only antifouling biocide under pressure in Europe. And we, as I-Tech has tried to draw attention to this problem for several years now. And finally, I would say that European maritime industry is also waking up. So with the support of buy sides for Europe and SEP, a petition has been launched to activate industry in Europe and highlight the risk that we're facing of losing efficient antifouling.

So to date, there are 30 organizations, companies similar that have signed, some very influential trade associations have signed, but also shipyards, paint manufacturers, ship owners. And the intention is to send this letter to the member states but also to European Commission, to European Parliament, et cetera, to really highlight the risk that we're facing here.

So what would be the consequence if Selektope is not approved in EU? What could the impact be? Well, if we look at how Selektope can be used, there is very few limitations actually. What is the limitation is that paint containing Selektope cannot be placed on the European market. Hence, you can't sell paint containing Selektope within EU.

Another limitation is that treated articles cannot be traded within EU. And what does that mean? Well, a ship is considered a treated article under the BPR. So a ship treated with Selektope containing paint cannot be sold to a European owner for Europe -- or I shouldn't say European owner, an EU-based owner for EU use. So it is a quite small limitation.

Roughly 5% of the addressable market would be impacted, while 95% can continue as usual. So port calls in EU are -- continues to be acceptable trading -- sort of traveling in EU water is continued to be approved. So there's a very small limitation here actually. Yes.

Thank you very much, Cecilia. All right. So then we move ahead to the business development pipeline. So we had a press release yesterday that we will come back to in just a few seconds. But we can say that we are very much actively working on our opportunity pipeline at the moment. And as we have talked about here numerous times, we are looking at what complementing technologies and products we can bring to our existing customers.

And that could be other active ingredients that could be complementing technologies such as binder technologies, et cetera, that we have talked about earlier as well. In addition to complementary products and technologies, we are looking at adjacent markets.

So other marine markets that have really big challenges with biofouling. And here, aquaculture and the yacht market are in our focus, as you know. And then shifting gear and talking about the recent acquisition, it's actually a license agreement that we have signed with a company called Titanium Technology.

It's a Spanish start-up company, sort of similar in profile to what I-Tech looked like 25 years ago. They have actually tested and proved the value of their technology in a number of pilot tests already. But of course, they would highly benefit from an experienced partner like I-Tech in terms of commercializing their technology.

So we have then signed a worldwide exclusive license to commercialize their technology within aquaculture. And what is their technology then in essence, right? So they are working with titanium surfaces. And the innovation that they have found is that if you use an electronic control system and you apply a certain type of current or electricity to the titanium material in a sort of a varying pattern. That really limits the ability for microorganisms to settle onto the surface.

And this is mainly, you could say, an electrochemical effect. So you have like the charge, the surface charge and the pH at the surface that is varying, and this is preventing species to settle. So it's not a biocide containing technology per se. So what this enables then is to create really fouling-resistant structures. And for aquaculture, this would mean much smoother operations,right?

If you have no fouling, that means that you can have better water flow. You have more oxygen and less pathogens coming into your species that you're growing. This means that you can reduce significantly the maintenance that is today applied to clean and remove biofouling from underwater surfaces.

If you have no fouling, that means that you can have better water flow. You have more oxygen and less pathogens coming into your species that you're growing. This means that you can reduce significantly the maintenance that is today applied to clean and remove biofouling from underwater surfaces.

And with this type of technology, you could also envision a much lower environmental impact since this is an electrical signal and it's not a release of chemicals to the environment. So all in all, we are quite excited. And we also brought to you some pictures today to show you how the technology has been validated today. So these are actually 4 different pilot validation studies.

So what you see here further to the left is actually a big water tank that is used to evaporate liquefied natural gas. And here, you can see the technology then really applied as big sheets of titanium aluminum to keep fouling from growing on the inside of the tank. The second picture is actually a pipe.

And you can see on the outside of the pipe, you have a lot of fouling on the inside where you have the active titanium surface, it's actually completely clean. Same goes for the third picture, maybe a little bit difficult to see here, but this is a grade so that sort of filters and gives a basic filtration for the water.

And also the picture #4 in the bottom there is a separate grade. And you can see in the frames how much biofouling you have and also on the top part here of the grade, how much biofouling you have and how clean the underwater surface titanium area is, right? So we have seen and it has been proven to work really technically. And of course, what remains now is to prove the commercial validity of this technology for various aquaculture applications.

And here, there is really the benefit of high-tech and titanium technologies working together then going forward. So that was a brief overview of the Q3 results. And coming now to the business outlook. We are continuing to work very actively with the business development pipeline and the opportunity pipeline, so we can foresee additional strategic partnerships going forward.

As you heard from Ceci, we remain very active on the advocacy side, both linked to the European Union market, but also the U.S. and other markets going forward. So that's another focus area. And of course, the business development now to really make these new interesting technologies fly and to get them out to customers to test them. So all in all, a quite busy time ahead for I-Tech. Right.

Thank you very much, Markus. I think Cecilia will also be joining us here for the Q&A. And for the Q&A, we will soon hear from ABG Sundal Collier, analyst Lara Mohtadi. But before we do that, I thought I could -- I extracted a question from the viewer base here in the chat. There's a lot of activity going on there as usual as well. Is Selektope used in the defense industry? And if not, could it?

Well, then I think the spontaneous application that you would think for is, of course, for an antifouling solution for a naval ship, right? To my knowledge, there are no products today that are really specifically targeting the naval segment. But of course, there is nothing, you could say, blocking any of our customers to promote products for naval application.

We'll now turn to analysts Lara Mohtadi from ABG Sundal Collier.

Yes. A couple of questions from me. Well, sales, as you said, it was still a very strong quarter. You had 18% organic growth, but it was still down a bit sequentially. What would you sort of say what drove that sequential decline? Is it just simply put order timing? Anything on customer inventory levels, anything else? Or how should we sort of think of Q4?

Yes. Well, Lara, as we point out, I think, in many quarterly reports, right, our sales do vary quite a bit between various months, right? And you could say, if one order ends up on one or the other side of a quarter, right, it can actually have a big impact.

We have a few customers that place rather big orders, right? So -- and we tend to say it's a natural variation. I think overall, we see with Q3 that the growth momentum we've seen this year is continuing, right? Of course, Q2, we had very easy comparables, right, to last year, et cetera. So there is the element of natural variation, I would say that sort of is the predominant effect here.

Very clear. And you mentioned the turbulence in the raw material prices and the costs that you flagged earlier this year, they haven't really materialized, so we cannot see that in the gross margin. What would you say is the current situation for your key raw materials? Do you still sort of see a risk of higher prices going ahead? And to what extent can you sort of pass this on to your customers?

Yes. I think there are 2 things here. I think the worry is, you could say, for I-Tech's margins, but I think the worry is also for our customers, right, to be able to obtain the appropriate amount of raw materials to produce their products. And I think in the start of Q2, there was really a worry among some of our bigger customers, right? Because of the disruption of Hormuz, et cetera, will we be able to source enough raw material to meet the demand, right? So that was really a question you could say, in the start of Q2.

We see that, that has sort of settled a little bit now. So availability is not a problem, but you could say raw material prices have sort of stabilized at an elevated level, right? And you could say that I-Tech had to take action as well during Q2, right, to adjust prices and, of course, work with our suppliers, right, to mitigate the effect. And I think we are quite happy and proud of being able to keep our good gross margin, right, also in Q3.

Yes. Obviously, you touched on this a bit. You had a very strong gross margin of 60% this quarter. Should we sort of see this as a sustainable level going forward?

Well, this is definitely our, you could say, target, right, to keep it at a higher level. However, it will vary, right, as we know between the mix between different quarters, et cetera. But plus/minus 2 percentage points, I think, is reasonable, right? But it is our clear intention to keep the good margin.

Okay. And also on the operating cost side, you had some license fees and costs related to the acquisition of the aquaculture technology. On the license fee side, is that something that will be recurring? Is it -- yes, basically.

It will be a recurring license fee going forward. And the level you could say, is performance-based as well. So depending on the success.

Okay. Also on your aquaculture technology, still very early. Can you give some sort of indication or time line to which -- when you think this will start generating some revenue?

Yes. So let's start with the technology then the bio-based additive that we released, you could say, before last quarter. So I think that has progressed nicely now. We have set up an internal validation project to look at the performance. We are actively speaking to prospect customers here. It's really difficult to say how far away sales is. But as I think we indicated, within a few years, it should be reasonable.

If the technology really matches the requirement and delivers on the promises, right, that it shouldn't be unreasonable to say within a few years, Lara, for this technology. In terms of the new license agreement with Titanium Technology, it's very much early days, right? We need to focus now on building pilots to prove the value for aquaculture, right? Sort of you see the pilot test that the technology seems to be working really well, right, sort of to prevent fouling, but this has to be proven then in a commercial aquaculture application as well. So that's where we are now.

And of course, we are preparing a plan for different applications to validate the performance, right? But it's really too soon to say when will we have sales and what is the absolute potential, right, that we are going for here.

Okay. And obviously, you mentioned that you are building pilots to prove the value. Would you say on the commercial ship side, part of the reason for the penetration taking a long time or you would call it, is that you have to test on a dry docking period it's 5 years. How does that cycle look on the aquaculture side?

Well, we talked about that a little bit last quarter as well. I think the good thing with aquaculture is that qualification periods are generally much shorter, right? So I think this is one of the advantages of the aquaculture market, right, that you could say the time to market is significantly reduced compared to our traditional antifouling segments, right? Hence, it's also why it's part of the attractive properties of this adjacent market.

And just on the cost side, what type of cost should we expect for these technologies? Obviously, it's very early. Should we expect elevated R&D costs? And will this be expensed or maybe capitalized?

No. I mean, you should expect us to continue to invest in our organization, right, to be able to take care of these new technologies and to really develop and commercialize them, right? We need, of course, resources to do that. However, knowing I-Tech, we will do this in a cautious manner, right, also to balance, you could say, cost and what we are able to deliver in the projects, right? So you should expect a continuously prudent increase of our cost expenditure.

Yes. And if we move on a bit to the EU regulatory process. As Cecilia mentioned, the approval expires at the end of this year. In an event if the vote is negative, are there any sort of transition periods for selling or using existing stock that actually contains Selektope? And when will the actual restrictions take full effect?

Yes, I can take that question. So you will have a 180-day transition period when you can sell whatever is available, what you have in stock, et cetera. Of course, the 180 days starts from when the decision comes into force, so not immediately when it's announced in that case. So there will be some transition time.

Yes. And I understand it's hard for you to know when a decision will come, but the voting is until, I think you said 17th of October. Do you expect a decision from that -- do you expect an announcement from that outcome shortly thereafter? Or sort of time line?

Yes. So the voting runs until the 21st of October. And then normally, a decision will be announced within 1 or 2 weeks, but there is no really fixed deadline for the announcement. So there -- whatever the outcome is, we are in the hands of the European Commission.

But also there's the need for the signature, right? So it doesn't become law until Fund Lion has signed.

Yes.

Okay. So in other words, it could take longer.

Yes.

Okay. And just a final one for me. You mentioned in previous quarters that you wanted to conduct an EOGRT study. Is there an update on this?

Well, we are currently looking into several different CROs or clinical research organizations that could run the study. Since this is a difficult study to run, there isn't that many laboratories that are capable, especially then using Selektope since it is a sedative and it is a long study, you need to be extra mindful to make sure that whatever effects you might see are due to the relevant endpoints or due to the relevant effects and not sedation per se.

So it is a little bit complicated. But hopefully, we should have sort of a starting time and a CRO in place within this year.

Okay. So you're still fairly confident that you will conduct this study? Or is it still a question of you're going to conduct it or not?

Well, I think it will -- of course, we have said that we plan to run the study. But of course, it will also be dependent on the time line when the study could actually be started. I think that will be something that we need to take into consideration.

So viewer questions remain. There's a lot of them. I hope we have time for all of them. First of all, new products, how many new Selektope products did customers launch in Q2 and Q3? And how many projects were paused because of the EU process?

To my knowledge, we haven't really seen any new launch or any product being paused during Q3.

Another question from viewers. What is the reason for the large fluctuation in revenue? Are there any seasonal fluctuation when it comes to I-Tech?

No, I think it's back to Lara's question again. I mean we have a few customers that place rather big orders, right? And the pattern varies between months. So it really matters, you could say, in what quarter a certain order ends, right? So that's the main reason for the fluctuation.

And speaking of your customer base, there's a lot of questions there. Another question from the chat. How much of Q3 growth came from the recovered second -- recovering second largest customer? And is that what is underlying growth, excluding it?

A substantial part in Q3 because that has been the picture, you could say, throughout Q1, Q2 and Q3. I think we talked about this already in Q1 that they recovered much quicker than we anticipated, right? And I think it's reassuring to say that, that momentum has kept, you could say, through Q1, through Q2 and Q3, right? And of course, last year, they were buying very little in Q2, Q3, right? So of course, a big part of the contribution comes from the second biggest customer.

And another question regarding the second largest customer. I it's 123% growth restocking or a sustainable run rate, how much of the receivable does it on?

So in general, the stocking effect is quite minimal for our type of business. Selektope is a very expensive raw material. It's not something that you want to sit on. Paint manufacturing is a just-in-time business, right? However, our customers do need to build stock of their own product to be able to service the service or the dry docking market, right?

But I would say that this -- since the growth has sort of accelerated early on in the year and has maintained, you could say, the level throughout quarter 1, 2 and 3, right? It's a more sustainable level, right? That's what you can say.

Another question from the chat. 9-month growth with CMP was 15% versus 35% in the first half, which implies Q3 fell about a quarter. Was that order timing less Selektope in CMP's formulation? What's the explanation there?

Yes, I would say mainly order timing, but it could also be related to their production planning.

And what's CMP's Q3 change year-on-year?

That number, I unfortunately don't have with me today.

Very well. Moving on then, this quarter results contain a lot more nonrecurring expense than the usual SEK 1.5 million for the EU BPR regulatory process. Approximately how much expense this quarter was nonrecurring?

Well, you have expenses then related to our acquisitions, right, and the license agreement. But I will not go into detail, you could say how much they are individually.

Precisely. And there came a question from Oskar in the chat as well. What can you say about your expected investment and cost structure connected to the acquisition in August and the license agreement recently committed?

So the acquisition that we announced in August, that was -- it's a one-off, right? It's an acquisition of a technology. And so that's essentially how you could view that. With the license agreement, as I was mentioning, this is a recurring license fee, so a yearly license fee. And overall, it is success-based. So it will only increase if we are very successful with sales.

And this is regarding the aquacultural acquisition, correct?

Both of them are for aquaculture.

Right, right. And because there is a question here, what is the minimum annual fee for titanium? What run rate should we be expecting here?

Yes, I will not go into that.

No. But there is a question regarding aquaculture. It was a question from a viewer who wanted to know when, and I think you addressed that with Lara. But also what -- could you describe your competition with TAM?

TAM?

TAM is the -- is what the viewer wrote in the chat.

Okay. Well, that one, unfortunately, if they could provide some clarity. Competition -- could you read the question again?

Yes. We can go with competition overall in aquaculture.

Okay. Well, aquaculture, you could say it's a competitive market, right? We're talking about food production here, right? So of course, margins in general are slim. However, biofouling is a major challenge for them, right? And as I was saying also in the presentation today, the impact it has on yield is quite dramatic, right?

So you can imagine if you improve the yield with a few percentage points, that has huge value for an aquaculture farm, right? So actually, it's that value, of course, that if we can help to enable this additional value, it's an opportunity for us and for our products, right?

Moving on with more questions from the chat. What is order visibility for Q4? Are you seeing any customers destocking?

I mean I cannot comment really on Q4, right? It's not forward-looking. So yes.

Are owners deferring dry docks because of higher charter rates, your reports show repair activity only 3% above '25 run rate.

So as I was mentioning, repair rates or sort of the number of ships that goes into repair, is very much decided, you could say, but how many ships you have that was built, you could say, 5 years or serviced 5 years ago, right? So that has a natural variation rather than you can say it's high economic activity, right?

The ships have to go into maintenance after 5 years. So it's simply a function of the number of ships that are supposed to go into dry dock, right? We merely had it to illustrate that there is really, you could say, an upward momentum and high activity in shipyards overall, right?

The viewer in the previous question regarding competition says that TAM is, of course, total available market, which I think we touched on. Moving on then, can you elaborate on how the new build VLCC order book affects your sales going into 2027, 2028?

Yes. I mean it won't affect us that quickly, right? I think these ships that are being ordered now, they will be coated in approximately 3 years, right? So it's that sort of time lag that we have, right? Of course, then in 3, 4 years, we hopefully will see an uptick then for the VLCC.

Another question. Can you add some color on staff costs?

Well, they have increased this year, right, because -- and we talked about that in an earlier quarter as well. We have invested in our organization. So all in all, we've added 3 FTEs this year, right, on top of sort of the level we had last year.

And the level you have here at Q3 of SEK 5.5 million, is that the new quarterly run rate that investors should expect?

Yes, approximately, yes.

Yes. Moving on then, do you finally see any other competing technologies in commercial shipping antifouling, which are starting to gain commercial process? Or are these solutions still in development?

Well, I think there are many solutions, you could say, competing for this space, right? I mean, we talked, I think, earlier about silicon coatings as being sort of a rather new if you talk about in shipping terms, right, a new technology that is taking market share. A lot of people are talking about sort of proactive and reactive cleaning as an alternative to antifouling. But we cannot really see that there is an alternative technology that is massively gaining momentum. I think antifouling coatings is really the key technology that you need to create sort of the preconditions of keeping your ship clean.

Okay. And see there here comes some regulatory questions, some more of those. If the nonrenewal passes, what are the time lines for entry into force in grace periods for paint stocks and coated vessels, -- when will you file the legal challenge?

Well, so -- we don't know exactly when a possible negative decision comes into force. I would -- based on other substances that have faced similar challenges, I would say likely within this year. And then we have the 180-day grace period. So that is then affecting both antifouling coatings, so paints and then vessels that are placed on the European market.

There's another question here, perhaps to you, perhaps to Markus or you that. Given that EU renewal now is potentially likely nonrenewal, apologies, could you please share how discussions with Asian paint manufacturers are progressing and your assessment on potential impact on Selektope sales in Asia?

Yes. I mean we, of course, keep a very close dialogue with our customers, right? And what Ceci showed you today was sort of a snapshot of what we expect to be the consequences of a nonrenewal, right? So of course, we keep a close dialogue to support our customers, like there are many questions today, when will this happen? What is the grace period, et cetera, right? So it's really key for us to be very close to the customers.

So we have, you could say, an ambitious communication plan for this autumn and into next year as well, right? On one hand, then, of course, to inform them about the process, but also then if there should be a negative decision, what are the implications for you? So that's the plan really to stay close to our customers.

Next question. How should investors think about the terminal value of the company when patents expire?

That is a very, very tricky question, I would say. patents are very important, but you also have other things, right, that really defines your stickiness. So I think the regulatory approvals is clearly one thing as well, right, on top of the patents that give you stickiness. I think also in our case, I mean, we have patents, you could say, of course, the original patent for using Selektope as an antifouling coating, right, antifouling biocide, sorry, that has expired, but there are a number of formulations patents, there are production patents, et cetera, right?

And we also recently filed new patents for Selektope containing products, right? So of course, we try to keep an ambitious sort of agenda of strengthening the IP going forward. So it's really difficult to say the terminal value-wise. Is that really linked to the patent or to -- I think it's linked to the overall market and of course, what potential decisions competitors may take in the future, right, and how they then enter the market, et cetera.

There's a group of question that came in here just as we're about to finish. So I think I'll read those while we still have the time. Speaking of patents expiring and potentially adding new products, is there any revenue right now from other things than Selektope? And if not, when could that come?

Now at the moment, I mean, Selektope is our only product, right? And we just recently acquired these technologies, right? So we have, you could say, also on top of these external technologies, we have internal product developments that will be launched, hopefully, also within, you could say, the coming 1 to 2 years.

And then these new technologies, as I was mentioning, the biological derived additive, also within the coming years. It's difficult to say exactly, right? So 2 to 3 years potentially with titanium technology, it's too soon to say. But definitely, the ambition is that I-Tech will have more products, you could say, to base our growth on going forward. And as you can see then, right, we clearly take concrete steps to make this happen at the moment.

The same viewer asks, how much of your revenue comes from dry docking? And what is the customer concentration?

Yes. So that's -- we try to assess, you could say, how much of our Selektope sales goes into new build versus dry docking. And it's quite easy with the South Korean market because South Korea is a new building market. There is not much service happened there, right? So we know that our sales that goes to Korea is mainly or predominantly into new build, right?

Japan is a little bit different. It's more 50-50. And then as you could see with China, right, it's also close to 50-50, right? But we assess that still around 60% of Selektope sales goes into new build, 40% to the service market. And again, to grow in the service segment is also linked to grow -- for us to grow in China, right? So this is the #1 service market that we need to really address better going forward.

If I remember correctly from the presentation, 3% of your revenues come from Europe, right?

Yes. Year-to-date.

Yes, that was year-to-date. Overall, how much share of revenue is from Europe?

Last year, I believe it was 4% and the year before that, it was only 2%, 3%, right? So it varies a little bit. It has grown, you could say, this year, right?

Following along then, are there any -- oh, I'm sorry, right, the reapproval process for Selektope in the EU. Cecilia, we don't have a result yet, but do you think that it will be reapproved?

That is a very difficult question. There have been meeting notes from the meeting taking place in June, which indicates that there are member states that do not agree with the current development where EU has proposed a non-approval. So it is very difficult to say. I remain hopeful, which I think you might need to be in regulatory affairs in general. But I don't want to speculate.

Do you share that view, Markus?

Yes. Well, I mean, to add some color to that, I think what Ceci is saying, we tend to see that the member states tend to vote in accordance with the proposal from Europe, right, which then you could say speaks to our disadvantage. But as Cecilia was mentioning then a number of states have at least voiced concerns here, right?

And to my understanding, it only takes 4 member states to vote no to this proposal for there to be a blocking minority, which means that then there is not a yes and they cannot actually implement the legislation. So of course, we remain very hopeful that there will be 4 European member states that actually do recognize the value, right, going forward. But again, we shouldn't stand here speculating.

And continuing on you, Markus. Another question, what is normal run rate Q4 2024 and Q1 2025 were good as the viewer calls it and the rest of '25 were "bad". What are normal levels?

What are normal for a growth company, right? I mean we do identify ourselves as a growth company. But of course, everybody asked me, so how much growth will you deliver? What is your plan for the individual year, right? And we do not release that externally, unfortunately, right? But we really -- we identify ourselves as a growth company. We want to deliver, you could say, more than double-digit growth, right? That's definitely our target.

But to say exactly how much that growth will be year-on-year is difficult because of the industry that we are in and the variations we see from customers, right? So typically, we have this variation seen between months and quarters, right? But what happened last year was the second biggest customer coming back and say, no, we revise our forecast for the year, right?

And that -- despite the fact that we grew very nicely with the biggest customer, CMP and all the other customers, right, we had really good growth numbers last year. However, that was completely drowned by the negative effect of the second biggest customer. So it is -- we are dependent on the development of our customers, right, going forward, and it does vary.

You're exiting the quarter with a cash position of SEK 177 million. And there's a viewer in the question again who asks, why won't you launch a share buyback?

Yes. And to our understanding, we are not allowed to being listed or noted on NASDAQ First North. However, there is a proposal to change this regulation, right? And sort of we are awaiting that. And if that happens, you could say, before the end of this year, then of course, we have another tool, you could say, to address, you could say, the value share with our shareholders, right, going forward.

Dividends or share buybacks. Is there any favorable -- favorite system?

We -- I mean we hear both requests, right? So I would say many people, of course, love dividend, but some feel that it's better spend money to do share buybacks. So let's look at doing both, right, and what makes sense.

And what is the plan with the cash position right now?

Well, it is to invest in the business, right? So as we said, the business development opportunity in the pipelines, we need to preserve cash, you could say, for regulatory approvals quite costly, also to invest in our operations going forward, right? But definitely, we will be looking at how can we give more of this back to the shareholders, right? There is no point in sort of having a too high buffer either, right?

Before we move on to the final question here in the chat, I would like to remind you that if you have a question, now is the perfect time to ask it before we wrap up. Is Selektope in silicones yet?

Not to my knowledge, but we hope it should be. It's one of the innovations that we are sort of slowly but surely bringing to the market.

There came in another question here. How much is spent on regulatory approvals?

Yes, I don't have the exact figures. But I think you can compare, you could say, I-Tech's external spending before 2023 and now, right? And you can see the difference, right? It is a quite costly exercise, right?

Markus Jönsson, Cecilia Ohlauson. Thank you very much for being here, answering your questions and also, of course, presenting.

Thank you very much.

Thank you.

This morning, I-Tech published a report for the second quarter of 2026. And standing beside me is the company's CEO, Markus Jonsson. Welcome.

Thank you very much. Good to see you again, Mike.

It's good to have you here with a smile on your face. It's a very strong report, and I can't wait to hear more. You will give us a presentation. So go ahead.

Thank you very much. All right. So first, a very brief introduction for those of you who may be encountering us for the first time today then. But I-Tech, which industry are we operating in? It's actually in the maritime business. And usually, we say this is our intro statement. So what if 1/3 of the global fleet of 110,000 commercial vessels were using 36% more fuel than needed even for 1 day.

What would that mean for operating costs and emissions. And actually, the truth is the picture is this bad, right? We have had data where you actually look at the conditions of ship when they come into dry dock after a service period. And it's actually full of biofouling, and that's a serious problem for the international shipping community.

So I-Tech then, we have a solution for part of this problem. So our product, Selektope helps actually to prevent barnacles, which is hard fouling organism to settle onto the ship's hulls. And this helps the shipping companies then to reduce fuel costs and also reduce the emissions to air.

Also, it helps to protect sensitive coastal environments because fouling is actually one of the #1 vector for spreading of invasive aquatic species. So having a clean hull is very important also from a preservation purpose of the ecosystem. And also then reducing emissions to the oceans because Selektope is a very, very effective and efficient product. So you need very little of it to get a good effect.

So I-Tech has been built around the product of Selektope. Our customers are the top coating manufacturers that are making then antifouling coating, which is coated then on the underwater surface area of ships. And it's a quite consolidated market, sort of we have a commercial relationships with the majority of the customers and working very actively with additional coating manufacturers to get Selektope into their formulations and products.

So it's quite a unique technology. We are a company based, you could say, on intellectual property and formulation know-how. Our production is outsourced. The penetration of Selektope is still rather low. We estimate that it's today on approximately 3,500 ships out of a global fleet of 110,000. So much more to do as well in terms of penetrating the market with Selektope. I-Tech was introduced to the Nasdaq Stock Exchange in 2018. And since then, we've had a tremendous nice growth journey. So nearly 30% year-on-year growth. So -- and that continues at least for the first half of this year. So it's very good development. And now we come in then to the quarterly results. And then I would like to hand over to Magnus Henell, CFO and Head of Operations. Here you go.

Thank you very much, Markus. It's really nice being here today to talk to you about the quarterly report. And as you can see in the picture in front of us, we have a tremendous development for this quarter. Of course, compared to last year, it's a huge development. But on the other hand, we are comparing with quite weak numbers in Q2.

We should be very open to say that. But we given the fact that we are comparing to weak numbers, last year, we still have almost 10% growth compared to our best quarter so far, which was the previous quarter, Q1 in 2026, which means that this is, of course, the best quarter we have had on the sales side as well as the results side. And we have done this by increasing the volume both with all -- almost all our existing customers. It's very much based on the top 2 customers where the top 1 has had very nice growth as well as the second one, which come back quite much better than previous year when they have a significant drop, and we can come back to that later on maybe in the Q&A as well.

So given the hard facts, we have an 86% growth compared to previous year, almost SEK 60 million in net sales for the quarter. And which is very nice. If we look on the volume side, it's roughly 100% growth. And the main difference here is mainly the volume price list that we have. We have customers who have taken the next step in their pricing, which means that they have reduced the price a little bit, but also the general mix and as well as the currency effect, of course.

Previous quarter, we were talking a little bit about gross margin and that we were a little bit afraid that we should drop a little bit for this quarter and the coming quarters. We have so far been able to manage all of these risks. There are still a small risk that we -- for the coming quarters will reduce the gross margin a little bit. But for now, we see that we have managed the sort of large risks in this together with our suppliers and our customers, of course.

So the effect of this growth in top line as well as the continued high gross margin is, of course, that we're coming into a quarter with a very nice EBITDA. We have an EBITDA level of 40%. We have an EBIT level of 36%, which is very strong. And of course, we are comparing to weak numbers last year where they were significantly lower.

But on the other hand, we have had the same EBIT and EBITDA level for the first 2 quarters this year, and we show that we have a stable cost base, even though we have this significant cost for the EU regulation, et cetera, still hanging over us, but we are growing, but we are also growing on a stable cost base.

Finally, maybe I should point out that we still have a very nice cash conversion, almost in line with the EBITDA level. Of course, this is not something that we can keep on for eternity. But as long as we have these sort of onetime effects every year for the tax for the previous years, then we will continue for at least 3 out of 4 quarters have almost the same cash conversion as the EBITDA.

When looking into the different markets, of course, Asia is still very much the highest model. We have taken even further step, 96% this quarter compared to the 4% in Europe. We have very small also to the rest of the world, but not shown on the screen. To point out here maybe is that Korea has significantly improved compared to the previous quarters.

And that is main to the 2 largest customers that I was talking about and a large part of their increase was in Korea when we are comparing quarter-by-quarter. So to summarize the Q2, the highlights are, of course, we have 100% volume growth, which is then the strongest quarterly volume so far.

We are continuing to diversify, and we have a Korea that is really strong for the quarter and strengthened its position. And we need to point out again, we did point out last quarter as well, but we have a stable high gross margin, 59% and which then results in a very strong EBITDA and EBIT on 40%, respective, 36%.

So now having that said about the numbers, I think Markus will talk a little bit about the upcoming events and other development in the company.

Thank you, Magnus. Really strong results indeed and happy to see that we are able then to preserve the margins as well. All right. Looking then a little bit into the future and starting with the outlook. So those of you who know us, you've seen this slide many times, right? But this is essentially the market that we are operating in, right? So we were mentioning a fleet of roughly 110,000 commercial vessels.

There are approximately 2,000 vessels being built each year. That number will go up this year because output is increasing. But there are more importantly than around 20,000 dry dockings events happening, right, where fresh antifouling paint is applied. So we estimate sort of the opportunity for Selektope and for other premium antifouling components to be around USD 300 million to USD 500 million.

So China has really further strengthened their dominating position within sort of the shipbuilding, but also ship service market, right? It's a very, very important market, and it's also a key growth market for I-Tech going forward. But you can see also then Japan and Korea, where we do have a very strong position, right, is also very, very important.

So that's the market, right? If we look at sort of recent developments then, I think geopolitically, shipping has been on the front line for the good part of this year with the Strait of Hormuz issues, right? But despite actually that loss of volume, you could say, from the trade through the Strait of Hormuz, that the shipping industry, as if you just look at the macro, is actually doing quite well, right? Because as an effect of this squeeze in the Strait of Hormuz, the charter rates have actually gone up significantly this year. So at this stage, the ClarkSea Index, which is sort of the average charter rates that the shipping companies can exert from the market is up 61%.

And of course, that cash that fuels, you could say, their future investment into their business as well. So we see that also panning out because there has been a really high uptick in the ordering of new ships or new vessels, right, as a consequence of this also, right? So you could say that a large part of the fleet is old. It needs to be renewed.

And also up until recently, we had consensus, you could say, on the climate ambition and the decarbonization of shipping. This is still a factor as well, right? But now we see that recent events is actually spiking the new orderings as well, right? So shipyard output continues to increase as well. It's up 14% year-on-year.

And then Chinese shipbuilding and shipyards in particular, have been growing their capacities. Also as a consequence, you could say, of the Strait of Hormuz, we have very elevated fuel costs, right? And that really continues to underscore the value of premium antifouling. So you could see here the graph in the bottom here, the bunker fuel price has increased by 70% so far this year.

So of course, every liter or every ton of fuel that you can save means a huge thing, right, for the shipping companies' bottom line. So we see -- I mean, geopolitical issues is a major risk to the business, but it's also actually one of the underlying drivers to our growth momentum in the company, right, because shipping is doing sort of kind of okay, right, or really good actually as a result of these various geopolitical issues. So that's sort of the market context.

For I-Tech then and for those of you who have attended a number of this meeting, you know that our ongoing reregistration process in Europe is a sort of reoccurring item of discussion, right? And then to give you the latest update, we know now that in the June meeting of the Standing Committee on Biocidal Products in Europe, you could say where the member states and the EU Commission meets to discuss various renewal processes and yes, market approvals of biocides, that they actually discussed the draft proposal for nonrenewal that we actually made a press release from in December last year.

So that suggestion was now on the table and was discussed. We also know that they have started, you could say, the last formal step of this reregistration process, which is the so-called WTO-TBT process. So it's World Trade Organization's Technical Barrier to Trade. And this is a 60-day process where other members of the WTO, other member states outside Europe have the chance and opportunity then to comment on new proposed legislation in Europe, right?

So they have then you could say the opportunity to comment on this nonrenewal proposal. So as I said, this is a 60-day process. So the earliest that you could see that the Standing Committee on Biocidal Products could vote on this proposal then would be sort of end September.

Theoretically, it's a possibility maybe at their meeting in end of September, but more likely then a voting can take place either at their December meeting or between the meetings with the so-called written procedure. So if -- I mean, until then, you could say I-Tech continues, of course, to advocate and to have a close dialogue with the member states and also with the Commission regarding this reregistration case.

So if there would be a negative decision in the end, then I want to stress that we are ready then with the appeal process to simply make a legal case out of this, which is, on one hand, good because it's the first opportunity then we have to challenge actually the recommendation or the conclusion that medetomidine or Selektope should be viewed as an endocrine disruptor. So that is ready, the legal case.

The current approval in any case, expires in December 31 this year, and it was extended, you could say, from midyear until end of the year during the March meeting. So this is the latest status on the EU process. We have also talked about our business development pipeline, and I'm happy to say that there is a lot of momentum and good progress here. But essentially, we are looking at, you could say, complementing technologies and products to our existing customers, but also then looking at other marine markets, such as aquaculture and yacht market where we are not so present today and also looking into various new technologies and new business models.

But essentially with the aim then of broadening I-Tech's product offers and also our focus markets. But we will really -- we are intending to stay within the marine space. And of course, antifouling, that's where we have our expertise, right? And so today, we're going to talk a little bit about aquaculture.

And this is a very busy slide, so forgiveness for that. But I think what is important here to actually state that fisheries and aquaculture is a substantial business, right, almost as much as the trade, you could say, of terrestrial meat products, right? So the fish and crustaceans, et cetera, coming from the sea is really, really important, you could say, for food security and sort of for poverty alleviation and for nutrition actually for the world's population. And I think what is important is actually the graph in the bottom left on this slide is that aquaculture, which is, you could say, the farming of fish and various aquatic animals has increased a lot during that.

And it's actually the majority today of the volumes that are coming out, right, is being actually farmed and produced in aquatic farms, both inland and coastal farms, right? And actually, this is also where all the growth in the future is set to come exactly, mainly from expansion of various aquacultures.

And if you look at the graph next to that one in the bottom, you see, okay, who are the leading producers. And here, again, Asia is really dominating. China, almost 2/3, India, Indonesia, Vietnam, et cetera, right? And this is, of course, in terms of produced volume, but you also have to look into the value and sort of the export patterns.

And here, our neighboring country, Norway, right? They're actually the second biggest in the world in terms of export value, right? And that's largely thanks to their salmon production, right, and salmon business. So it is also an important business, you could say, close here in Europe, also in other places like Scotland and also in the Mediterranean, right?

So aquaculture, we see as a very interesting market segment for I-Tech to explore further, right? And what is the link between what we are doing in aquaculture? Well, in reality, you could say that the problem with biofouling also exists in aquaculture. And you can see here to the right, there is actually a picture of one farm, right? And you can see then, in this case, the fish, they are kept in these large, large nets, net cages that is sitting sort of anchored to the bottom of the sea, but really out in this case, in the fjords of Norway, right?

And these -- the protective cages and the nets, they also get fouled, right? because it's even worse, you could say, than for ships because they are not moving through the water. They are sitting still. And in the summer period, there is plenty of nutrition available. So a lot of fouling species can settle on to the net. And this affects, you could say, the operating costs very negatively, but also it affects the animal health and welfare, right, and results in a lot of yield loss.

So essentially, fishes and crustaceans, they die as a consequence of fouling, right? And also to manage this fouling is a compliance issue, right? So you want to sort of be compliant with the various local regulations around the production of aquatic organisms. And here, fouling is really presenting itself with a big challenge for the producers.

So one popular strategy today then is to actually impregnate these net cages with a sort of impregnation coating, right? And that's the graph here to the right. Where we are showing, you could say, the market size roughly in million liters in sort of the Western Hemisphere, which is sort of an area that we are focusing on from the beginning.

You can see there. In total, we estimate this to be around 20 million liters, and that should be compared then to antifouling coatings for ships where we are operating today, which we estimate to be around 75 million liters, right? So a little bit smaller in terms of the number of liters. But I think also the market characteristics are somewhat different from antifouling for ships.

So actually, the life cycle of these nets is much shorter. It's essentially one season, around 1 year that the coating has to survive. So you have a much quicker replacement of the coatings. And it's also, you could say, then quicker qualification periods and quicker way of turnaround to test your innovation, which is an interesting feature compared to the markets where we're in today then.

So we actually announced then 2 days ago that I-Tech has acquired new technology, and this is a natural inspired or nature-inspired technology. So it's a naturally occurring microorganisms that is actually producing then a biological additive that can be used as an additive for these net impregnation coatings, for example, to modify the surface characteristics.

And this really then reduces the fouling settlement. So it's a quite neat and nice technology if you want to create sustainable antifouling solutions, right? And I think the market where we have come the furthest here is actually within aquaculture. But you could say, over time, it also opens up new opportunities for other areas such as yacht, but also traditional, you could say, commercial shipping and various industrial applications as well.

So we see this as a very nice technology that we now bring into the portfolio and that we will be working to qualify them with customers. And you could say commercial sales is probably or likely a few years into the future. But we are quite excited as I-Tech to take this technology on board.

All right. So we come to the final -- the business outlook then. So you could say next to this business development opportunity, we are also working then to extend other strategic partnerships. So that continues to be a focus area for us to really work on the business development pipeline.

Also then, as you imagine, advocacy then linked to regulations in Europe, but also other places. We didn't talk about, you could say, the new registrations that we are doing in the U.S.A. and New Zealand and so on today. But this continues to be active projects that we are running, you could say, within the regulatory space.

And of course, then business development to continue to work on expanding the business for Selektope and then also for these new technologies that we have then to actually create successful future businesses of this. So that will be the focus in the coming period. All right. Thank you very much.

Thank you as well, Markus, and Magnus will also be joining us here for the Q&A. I will now be opening this Q&A. I will turn to one of the analysts who are joining us here on the call, Lara Mohtadi, who will ask their questions from ABG Sundal Collier. Welcome.

I just have a couple of questions. My first one is regarding the recovered customer that well, essentially contributed to -- well, I don't know if there was nothing, but not a lot of volumes in Q2 2025. And now they're back to more normal levels. Are they now at a stable run rate? Or would you say that this is some sort of catch-up that may not repeat in the coming quarters?

I think it's fair to assume that we are on a more stable run rate as of now with -- and if they have caught up fully or a little bit more than previously, that won't be said. But we should assume that we are on a stable path moving forward.

Okay. And CMP, they grew 21% in volume in 2025, and you said that they grew 35% organically for the first part of this year. Could you comment a little bit about CMP? Are they reaccelerating? Maybe if you can comment a little bit about its total share of sales if you're comfortable with that?

Actually, I don't have that figure on top of mind, Lara, right? But since they have been growing so nicely this first half, right? And since they represent such an important part of the overall business being #1, I would assume that they have expanded actually the total share a little bit then during the first half, right?

But to comment on the reason for that, I believe that CMP has had a really good first half as well, right? We look forward, of course, to read their next report as well to see how their business develops. But we believe that they have been successful, you could say, with the products and containing Selektope in particular, and actually have been able then to expand their business as well as a consequence of sort of where the shipping industry is today.

Okay. Very clear. And in this quarter, personnel costs were up a little bit year-on-year. And I think you mentioned something about bringing on 3 new full-time employees this year. Where are you in that hiring? How should we sort of think about operational costs through the second part of the year? Is this a new base level? Or is there more to come?

No, I think we are done with the 3 new recruitments, Lara, that you -- that sort of we referred to during the last quarter calls, right? So they are now part, you could say, of the permanent pool of employees, and we're happy to have them on board as well and contributing to the team. So that's really great. So there are no major expansions now in the plan, right? So you should see this as sort of the new base going forward.

And maybe just come back to that because we have indicated earlier that we might start a quite large regulatory study in the fall, that could have an effect on...

On total fixed costs.

Yes.

Yes, indeed, indeed.

So we don't forget that part.

That was actually my follow-up question. I was going to ask how you -- well, it might be hard for you to tell now, but how you're going to book those costs?

This regulatory study that we are to -- if we're going to do it, we're going to conduct it in line with the EU renewal process and which means that this is a project where we have an existing approval, so to speak. It's nothing new.

So it's just defending cost for our existing approval, which means then that we will take the cost on the profit and loss as a normal just study cost. It's not a new investment. So we won't put anything in the balance sheet. We will take it over the P&L.

Okay. And it will be half of the cost will be this year and half of the cost will be next year in 2027.

Yes, maximum half the cost this year, I would say. It depends on when and if we are able to start it.

Okay. And the cost associated to the regulatory process you wrote in your report. So these aren't any one-off costs because you've had them for a longer period of time. And usually, these are around SEK 2 million per quarter. Was it in line this quarter too? Or was it elevated?

No, it's been a little bit up and down, but that level is quite a good assumption. And of course, these costs have differed between lobbying costs or legal cost, preparing the legal case, et cetera. But now depending on what happened, at least we shouldn't elevate those kind of costs anymore.

But let's see what's happening moving forward.

Very clear. And well, I have a few questions on the newly acquired technology, very exciting, obviously. Can you maybe tell us a bit more what's the moat here? You mean there is already conventional copper-based net coatings and you said there are some other technologies. Why use this technology?

I would say, Lara, from an I-Tech perspective, the motive is really then to, you could say, on one hand, broaden our available portfolio of solutions that we can offer the customers and also look into adjacent markets, right? So new markets like aquaculture and so on to complement the focus that we have today on commercial shipping, right? So that you could say from a strategic point of view.

From the customer's perspective, it's a very interesting technology. It is biologically derived. It's readily biodegradable and it comes from nature, it goes back to nature, right? So it is potentially a very interesting technology then to build new sustainable net coatings on, for instance, right? Today, like you mentioned, copper and other biocides are also used in net coating.

But we also see that some producers, they choose to go biocide-free and then have more of a cleaning or net exchange approach, right? So there is definitely -- we see an opportunity for new sustainable technology also in this space, right? So there's definitely, you could say, a positive momentum for that in the aquaculture market.

And 2 follow-ups on that. From the strategic point of view, do you see this as -- if I understood you right, you can maybe use this as a complementary technology alongside medetomidine? Or is this a stand-alone alternative? And can you use this in the commercial shipping space as well?

There has been tests, you could say, also in traditional or commercial antifouling formulations to our knowledge that have been positive, right? In theory, you could say that this may have a broader effect than Selektope, right? Selektope is very specific, you could say, to prevent the barnacles, right? And here, you could say we can address maybe more fouling types with this type of technology.

But I think it's too soon to say. It won't be a one-to-one competitor to Selektope. I think that we can say with certainty, right? But exactly how it can complement Selektope or sort of offer other benefits to the customer, I think we still need to validate. I think the market that we are the furthest to develop here is aquaculture, right? And that's also our initial focus for this product.

Very clear. And is this similar to Selektope, also seen as a premium coating?

Most likely, yes. Yes.

Okay. And just a last one here on the technology. Does it bring you sort of to a different customer base? Or because in -- sort of commercial shipping, you have 9 major coating manufacturers. In other words, will you be selling to these existing customers? Or are we looking at a whole different customer base?

It's partially overlapping, you could say, Lara. So some of our current customers, they also have business in aquaculture, CMP, for instance, to mention one. However, it's also like you say, there is -- there are new customers to us, right, that sort of specialize in aquaculture coating formulations. So it is a bit of both here in this case.

Okay. Very clear. That was all from my end. Thank you very much.

Thank you very much, Lara. We have a lot of questions from the chat as well, so I'll read them up. And Lara, if you have any more questions, you need to only raise your hand and make yourself known and we'll get to you shortly.

Following up on the acquisition, there is a viewer who asks, for the recent acquisition, can you describe the purchase consideration, payment structure and expected return on invested capital?

Yes. I mean we were talking a little bit about the rationale, right, the strategic fit for this product, right? So I won't repeat that, right? But I mean, exactly the return on investments, I would say we describe it as medium maturity. So there's still validation work to be done, right? So when we have actually, you could say, sized and defined the opportunity, we will come back, you could say, with more firm numbers on that. It's not really possible to say that at this stage.

The same viewer also asks given I-Tech's SEK 165 million net cash position, why do you need authorization to issue up to 10% new shares? And under what circumstances would you use it?

Well, that is just a standard procedure that repeatedly every year. And that is -- the only reason why we would use it is if we come up with a very nice M&A proposal where we need to sort of issue shares in order to finance that. To be honest, we don't have any such case on the radar right now where we need those kind of money and need to use this authorization. But we should really see it as a standard procedure in order to have the maneuverability for management and the Board.

To be ready really if the opportunity arise, right?

Yes.

Some more questions then. You said in Q1 that there were higher sales to Korean distributors. Given that there are so few paint makers, why do you even need a distributor in Korea? Do you use distributors in other countries?

We do use distributors, you could say, in different various markets, and they perform, you could say, services that are sort of asked for by the customers, right, sort of really local market services that they do better than we do.

Another question here from Henrik. Your top priority is to further penetrate the maintenance market in China. What are you doing specifically to address this segment?

Actually, both new build and maintenance in China, we don't discriminate. We want to further penetrate both of these markets. It's important to us, Mike. And what we are doing now, we are looking into various ways to sort of boost and strengthen our presence. We announced, you could say, in December that we have initiated a dialogue with a local company called [ Highway ] or Havey, which is a binder producer.

And sort of these discussions are also progressing, right, in terms of finding new ways to collaborate specifically on the Chinese market, right? So we are having various initiatives to say how can we strengthen and boost sort of our access to the market in China.

You and Lara talked a lot about the costs relating to the EU regulatory. And there is a question here in the chat about that, but I believe this one asks the question a little bit more concretely. What was the level of cost in both Q1 and Q2 this year relating to the process?

We've been talking about it. And it is roughly SEK 1.5 million to SEK 2 million per quarter.

So SEK 4 million in that sort of ballpark, yes. Moving on then, Henrik asks, I assume that you have started making price adjustments to compensate for higher raw material costs. What's the order magnitude? When will they feed through into your sales?

Yes. As I was talking about in the presentation, we have so far managed the threat of increased costs from our producers and the increased raw material costs. So actually, we haven't introduced, well, slight increases of the production costs so far.

We are continuing to work together with our producers in order to find a way either through yield or through other means by other suppliers, sub-suppliers and sort of that to reduce and keep the raw material cost level. So far, we have managed to control it.

And also on the top line part, right, we talked about it in the last quarterly call, right, that we have been adjusting prices as well, right, to accommodate for this. And I think that's -- it's one of the great achievements besides to say all the other financial goodies, right, is actually we are able to preserve the gross margin. So it is, of course, thanks to Magnus and the hardworking team for the operations side, but also, I think also from sales, right, to actually achieve price adjustments.

Henrik continues. If I understand correctly, you have 4 sizable customers. Are there any -- are any of the others planning to scale up in a more meaningful way during 2026 and 2027?

I would say our customers do not have full transparency with us in terms of their future plans, right? So of course, we have a continuous dialogue, you could say, on the forecasts and their offtake, et cetera. I would say that we are not expecting any unusual development, right, this year. I think that would be fair to say, Magnus.

Another question from the chat. How much order visibility do you currently have into the second half of this year and 2027? And should we expect any pull forward of customer stocking into Q3?

Very good question. We -- normally, we don't have very much visibility in the future, a month or 2, actually, when we talk about real orders. Of course, we have discussions with our customers. So we know fairly well how they look on the coming half year, I would say. But as we have never done it before and we will not do it today, we will not talk about the future-looking statements.

But when you're talking about stocking, there -- of course, there could always be a small part of stocking between quarters because since we are delivering quite large volumes in every shipment, if a shipment ends up before or after the sort of the full quarterly break, that could be quite significant change. So -- but that is the only sort of stocking that we see today, at least, and that we know of.

That was the final question so far from the chat. So I'll ask a few more in waiting for potentially more questions. So to begin with, Magnus, you mentioned in the presentation that you had high cash conversion in line with EBITDA. And while it was high, you also mentioned that this can't go on forever, but just for how long do you expect it to?

No, no. But of course, since we're also on the EBITDA level, you don't have any tax cost, for example, no effect of tax. And of course, we are in a tax position in Sweden. We reported last previous quarter that we took the cash flow of the tax cost for 2025 in one quarter.

And most likely, we will take the cash cost for 2026 in the first quarter of 2027. But at a certain point, we will come up with a more even flow of also the cash effect of the tax cost. I would say, from 2027 and forward, I would say we need to be in a more normal prepayment status as well. But we don't need to do it. So then we don't do it.

Something else that you mentioned in the presentation was Strait of Hormuz. And despite the challenges there, you managed to deliver a very strong quarter. Charters were one explanation behind that. But I'm curious how we should see I-Tech's value. Should we look to the number of hulls in the water or miles traveled?

I think it's more the sort of how many square meters of undersurface area to some extent, you could translate our opportunity to, right? I think that's more appropriate. When it comes to the dry docking, right, the ships to be compliant, they have to come in at least every 5 years, right? So it's a very regular and steady service business, right? And of course, then who of the coating companies wins the contract and what coating products end up on the ship, right? That also, to some extent, decides sort of if we have a part of that cake, right, the share of that.

So -- but I think it's more fair than to compare it to the total underwater surface area, right, that needs to be recoated.

I have a few more questions from the chat here. So I imagine that I will end up -- end with those. Have any customer indicated that a final non -- that question was removed. So instead, I will ask -- tell us more about the EU regulatory process right now. We're considering that the approval has been extended, but only short term towards the end of 2026. Has that caused some uncertainty among your European clients?

Yes. But I think this is the environment that we have been in since 2023, right? So I mean, regarding the future of the EU market, right, it is uncertain. As you can see in our numbers, right, it's varying between 2% to 4% of the total sales, right? But of course, if Selektope does not get a renewed approval for the EU, right, it will not be possible for our coating customers to produce and sell the product to be used in the EU, right?

They most likely could still produce but export the products, right? So exactly the impact, right, we will have to see, right? But it does create uncertainty, right? And it definitely has had a cooling effect, I think, for some global customers to adopt the technology as well, right? There has been a preference, you could say, to work with globally approved technologies.

This becomes harder and harder for the coating companies because also other markets, you could say, like South Korea, for instance, are developing their own more strict regulation, which takes a different approach than the EU, for instance. So it becomes difficult, you could say, to have products that are globally compliant going forward, right? So I think we can definitely see a scenario where you have more regional antifouling products in the future.

What's the contingency plan if the approval gets delayed or doesn't arrive?

Yes. As I mentioned, I think if there was a vote and that was negative, right, that Selektope would not secure, you could say, a renewed approval, the first thing that we would do is to appeal that decision, right? Of course, we believe that we have to say, strong legal arguments for why the conclusion that medetomidine is an endocrine disruptor is not correct at this stage, right? We also believe I could say that the process as such, right, has not been conducted in the most optimal way. So we, of course, would like to appeal such a decision in that case. So that's the first step. Then Magnus was talking also about the additional tox study that we are sort of preparing to start, right?

That is the next level because, of course, we have the opportunity to generate new data around, you could say, the effect of Selektope, and hopefully, such new studies then will be able to remove uncertainties regarding sort of how Selektope and medetomidine affects the endocrine system, right? So that is the next, you could say, level of battlefield, you could say, with Europe then if the sort of a legal case wouldn't be unsuccessful, you could say.

We have more questions in the chat, and I will address them shortly. But before that, could you answer very briefly the new technology that you have in biofouling in regards to aquaculture. Is the EU regulatory process relevant there?

To some extent, but not the biocide legislation, right? So it's more natural or normal chemical regulation that is effective, right? But this is -- what we see so far is a physical effect, you could say, rather than a biocide effect.

Looking at the chat then, some more questions. With inventories down 48%, is this mainly better efficiency or sign of tighter supply?

No, it's just a normal effect. If you look on the inventory levels that we have, they are very small compared to the sales. And the inventories, we only keep them in Sweden in order to have swift deliveries to certain customers. So all the normal deliveries are run through our suppliers' warehouse, which never ends up in our inventory.

So you shouldn't focus too much about the current inventory levels or not.

Another question. Has the Hormuz situation generated any useful comparison data between Selektope formulations and conventional ones?

To this date, I mean, we are still waiting to have, you could say, the black-or-white proof. I mean there has been a lot of articles published around how challenging this situation has been for the ships who have been stuck, you could say, on the inside of the Hormuz Strait, right?

We have seen pictures and videos of ships that are completely covered in barnacles and other types of biofouling, right? So definitely, we know that this has had a huge impact, you could say, on the ship stuck there. And we are, of course, looking for having comparative cases where we can see the relative value of Selektope in this case. So if we get that, we will definitely come back.

And finally, a chat from the viewer wishes to congratulate you and the I-Tech team on a great quarter. And with that, I think it's a good place to end this broadcast. Thank you very much for being here presenting and answering your questions.

Thank you very much, Mike.

Thank you very much. Have a good day.

It is early afternoon and we continue to dive deeper into today's reports release. Now we shift our focus towards I-Tech, who during this morning published their report for the first quarter of 2026. And standing next to me is Markus Jönsson, who is the company's CEO. Welcome.

Thank you very much, Mike. It's great to be back.

It is good to have you back. So you will give us a short presentation and then I'll return to ask a few questions.

Indeed. So firstly, then for those of you who are sort of experiencing or meeting I-Tech for the first time, just a brief introduction before we jump into the numbers and sort of the outlook going forward then.

So the space that I-Tech is operating in is today marine transport. So our sort of innovation space, you could say, is this statement here. What if 1/3 of the global fleet of 110 (sic) [ 110,000 ] commercial vessels were using 36% more fuel than needed even just for 1 day. What would that actually mean for operating costs and emissions? And the fact of the matter is it is this bad, right? This is actually our data when indocking ships coming in after 5 years of service. They are using too much fuel. And it's the effect really of biofouling on the ship's health.

So essentially, when a ship is submerged under water, organisms start to grow on the ship hull. And in the beginning, it's typically slime. Later on, there could be weed and also then different hard fouling species like barnacles, for instance. And this significantly increases ship's fuel consumption. And of course, that is impacting, you could say, operating costs, but also then elevating sort of the emissions of CO2 and GHG gases. So really having good biofouling control is an important topic. And that's then where I-Tech and our product, Selektope comes in, right?

We help the ship owners and ship operators to reduce their emissions to air. We help to predict marine ecosystems because biofouling on ship's hull is actually seen today or viewed as the #1 source for transfer of invasive aquatic species and we need to protect our sensitive coastal environment. And lastly, what is also important is that we want to reduce the emissions to the sea, to the oceans. And here also Selektope presents a very sort of great innovation in terms of how much chemicals are actually emitted to the ocean.

So briefly on I-Tech today then. We believe we have a very scalable business with plenty of additional potential. So we have a unique technology and we possess sort of intellectual property in terms of patents, but also, you could say, know-how in terms of formulations and coating developments, et cetera. We are an asset-light company, so our production is outsourced. So the company today mainly focuses on sales and marketing and innovation.

In terms of market penetration, then we estimate that Selektope is today present on around 3,500 ships out of the global fleet and of around 110,000 commercial vessels, as we said in the beginning. So plenty of room for continuous growth. And this is the development that I-Tech has had since the IPO back in 2018. So a really solid growth journey and we see that also is continuing for now, right?

So without further ado, then let's dive into the Q1 results. And hereby, I will hand over to our CFO and Head of Operations, Magnus Henell.

Hello, everyone. Yes, it's nice to be here again, and it's also nice to be here presenting a good result. And before Markus continues to discuss the outlook further on, I will dig in a little bit through the numbers.

As you -- as Markus said before, we have had quite interesting growth from IPO until 2025 with a small hiccup during 2025 with some lower volumes. And as you can see on this graph up here, 3 out of 4 quarters during 2025 was actually significantly lower or at par with the previous quarters, the year before. So it's really good now to see that we can come back with actually a growth, both in terms of volume and in terms of currency adjusted revenues.

We are losing 7% on the top line in Swedish krona, but that is mainly the exchange rate. Well, it's, in fact, only exchange rate. And the growth and the base that we are working on with our customers, it is solid. Amongst our largest customers, we have a very solid base and we have significant growth with the smaller ones. And as we discussed last year, we had 1 customer that took significantly lower volumes than the year before. They are now back on a more normal level for this quarter, which then means, as I said before, on the top line, we lose 7%, but we gain equally much in Swedish krona on the gross margin because that is also significantly improved.

And that is -- the main effect of the gross margin is the continuous work with our producers, but also the customer mix. It's a little bit more of the more higher revenue customers for this quarter than for the previous ones, which then coming back -- coming down to the sort of the more main profit, EBITDA and EBIT, we are strengthening them a little bit, SEK 1 million up on the EBIT level, significantly on the margin level, we are going from 35% to 39% for this quarter. So a very good quarter financially.

What we can point out is actually what you see in front of you as well that the operating cash flow is significantly lower than last year. One main effect is that now when we use all our tax benefits, we're actually starting to pay the taxes. So the main effect here is that we had almost SEK 10 million in tax payment effect from previous year coming into this year. So it's a little bit more normalized cash flow. But on the other hand, also we had quite much more revenue coming from Korea, which I will talk about the next slide, where we have a little bit longer payment terms with our distributor there than we have in the rest of the world. So that is also one effect for the cash flow this quarter.

And coming into the geographical spread, you can see that Korea's share has increased quite significantly. It's both due to the second largest customer, but also to our main customer, CMP who has also higher growth -- higher sales in Korea than previous quarter last year. The other regions are a little bit lower in terms of volume, but I would say that, that's mainly a distribution in time effect over the year. It's been a positive development also for these regions. But I think Korea is really sticking out on this quarter.

And now we also look into the small highlights, if you say so from the financial part, of course, the growth being back on a growth path again is really wonderful to stand here and present for you. The diversification amongst our customers is also very interesting that we are continuing to diversify the customer base and with the strong sales in Korea and of course, our margins. We should have high margins. We're having high margins. And hopefully, we can continue to have high margins. On the gross margin, Markus will come back to some issues that might soften that a little bit in the coming periods. But in general, it's been a very nice development for the quarter.

So then I'm leaving over for Markus again to take on the outlook.

Thank you very much, Magnus. Very great numbers indeed, and happy to be able to present that today. So a little bit on the market outlook then. Our sort of familiar viewers, you have seen this slide a number of times, right? But it's just to explain the market potential as we see it, right? So every year, approximately 2,000 new vessels are being built. But at the same time, then this fleet of 110,000 commercial vessels, they need servicing, right? And they have to do that at least every fifth year. That means that there is roughly 20,000 dry docking events happening each year. So the dry docking, the maintenance segment is the big segment for I-Tech to focus on going forward as well.

The opportunity for sort of sustainable antifouling solutions, we estimate to be roughly in the range of USD 300 million to USD 500 million as a gross potential. The graphs in the bottom just showing you the split between the different markets. In terms of new build, China is dominating with more than 60% and actually have increased, you could say, the share of new orders also now in the first quarter of 2026. So they're really dominating then followed by Japan and Korea. And probably that order has been reversed this year as well in terms of new orders anyway.

Also for the dry docking for the maintenance segment, China is dominating. And here, you can see that it's other Asia, including Japan, but also Turkey and to some extent, still Europe has a role to play in the maintenance segment. So that is sort of the gross market potential as we're looking into and a little bit of explanation.

If we look at the outlook for shipping as such, we talk about -- you could say both about the earnings for the ship owners and the ship operators, but also then on the activity in terms of new building. And there, of course, we are specifically tracking new orders, sort of new ship orders that are being placed because it's important to see then in the future, what would the market be like.

So if we start with the ClarkSea Index, which is sort of a measure to see how well paid are the shipowners for their shipping goods. And here, we can say it's up tremendously in the first quarter this year. And that sort of solely comes as a consequence of the uncertainties and sort of in the Middle East. So it's the tanker segment and crude tanker segment specifically that have seen really increased charter rates, right? So the price of shipping oil has increased tremendously.

The other charter rates are more stable. So you can say that, that has not moved so much in Q1. If we look at the newbuilding and the contracting of new vessels, we can see that, that has also actually hit a 17-year high as the activity or new contracting activity rose 40% year-on-year. And this has been driven, you could say, by a tripling of new tanker orders. So at the same time, as charter rates have increased, also the number of orders for new tanker vessels have increased. And also there has been a rebound in the LNG contracting, LNG tankers.

So Chinese shipyards, they continue to advance their positions. They really got the lion's part of the new contract. So 70% of these new orders actually landed in Chinese shipyards. Korean yards captured another 20%. So they also had a strong start to the year. And if we look sort of going forward for this year, it's the geopolitical issues overall, you could say that remain one of our major risks to the growth momentum. And we'll come back to that in this slide that is [ Asia ] here.

So essentially, what is happening now that we are in a tightening supply situation when it comes to crude oil, but also all the derivatives of crude oil. So essentially, all the chemical raw materials that is needed, you could say, on one hand to build ships, but also then to produce the antifouling coating that ends up on the ship. And this has been covered now as well, right? We see, especially in Asia, really a crunch in terms of the availability of raw materials.

For I-Tech, it's not so much an issue of availability since we are producing quite low volume. But on the other hand, we are hit by tremendous price increases on raw materials. And that's what you can see in the graph to the right here. So you can say -- you see that raw materials have steeply increased, indexed, you could say, at 140 compared to 2023. And coming back then to what Magnus was saying, so we have been able to negotiate, you could say, better production fees. But of course, this is impacting our total production costs as well going forward. So measures will have to be taken then from our end going forward.

So we come to the reregistration process of Selektope in the EU. And this is also a long runner here. And what has actually been news, and we released that this week is that the standing committee on biocides has actually made a written procedure, a so-called voting in writing to extend the current approval of Selektope to the end of the year, so December 31, 2026. It was actually set to expire now in the end of June, but we can see then a proposal for nonrenewal has not been discussed in the committee, and they haven't initiated the final stages of the process, which is inter-consular services and the WTO TBT process, which has not started.

So it's mentioned then as a way to be -- you could say, to have the time necessary to conclude on the case. We, of course, view this as very positive because that gives us a sort of an extended time line, of course, to influence the outcome. And of course, the standing committee on biocidal products, they will have more time to review all the input and the data that have been put forward. And also I-Tech, we are commissioning a new and an additional safety study to try to iron out and solve some of the unsolved issues on the science part, right? So the data available for the assessment of the safety of Selektope. So that is very positive.

If we come to the business development pipeline, it's also been something we talked about throughout the last year and which has continued to advance in this year. We are looking into complementing technologies such as additional active ingredients, so additional biocides that could be complementary or synergistic with Selektope, but also other additives like -- and also like binder materials that represent also a significant part of the formulation cost of our customers.

We announced in December a new collaboration with Havey and those discussions have advanced very favorably and in a positive direction. So we hope to be able to talk more about that during this year. We are also exploring, you could say, additional market segments like aquaculture and the yacht market going forward and also looking into new and more innovative business models. So all in all, we hope to be able to share more information about this during the course of this year.

So wrapping up and then coming to the business outlook. So we definitely foresee the need for price adjustments as a response, you could say, to the escalating raw material price situations. So that will be a theme for this year. As I already said in terms of new strategic partnerships regarding technology and business development, we definitely aim to have more news here throughout the year.

And of course, a continuous strong focus then on advocacy linked to regulations, not only in the EU, but sort of we have a number of ongoing cases also in the U.S. and New Zealand and other places. So more work being done here. And also, we have been welcoming new team members in I-Tech. So we are growing the team, and that's essentially to be able to grapple with all the new activities that are ongoing at the same time.

So that was in short, you could say the presentation. Now we really look forward to the questions, Mike.

Yes, very much. So thank you very much, Markus Jonsson and also Magnus Henell and there's a lot of activity in the chat, and I'll try to balance both questions here. But first of all, you're delivering a record quarter for I-Tech relative to your volumes sold, but despite this net sales dropped 7%. You mentioned that this was due to currency effects. But is it solely due to currency effects? There's no sales per volume metric that also been affected?

No. I would say it's only the currency effect for this time. And if you look to it, we have a 13% degradation of the U.S. dollars compared to Q1 last year. So it's been quite stable for Q1 this year, but still when you compare the quarters between them, you have this 13% degradation and that comes directly into the effect on the top line, unfortunately.

And moving further down a little bit in your P&L, you reported good margins as well. Gross margin increased to 60% operating margin, 35%. Magnus during the presentation, I believe you heard -- I heard something about margins maybe softening in the future. What would cause that?

Yes. But as Markus explained, we are now looking into a quite turbulent world market on crude oil and all the derivatives from the crude oil. And we anticipate that we will have higher production costs moving forward. We're also anticipating to take some of the effects of that from the customers, I would say, and increase prices towards them.

But I'm not looking for a huge amount of percentage, but some small percentages dropped, it could be for the coming quarters. It's not written is still, but we need to bring it up. But compared to previous year, there should not be any major effects.

And Oskar also asked the increased production costs, that's something that you're already noticing? Or is that ahead of time?

That is ahead of time. All the production, and you can also see that on the gross margin because we haven't been able to increase the prices towards the customers for the first quarter. And of course, you see that we have a very good gross margin. So that is ahead of us. Yes.

And in talks of also raising potential prices to clients, what is the price -- how would you describe the price elasticity?

Yes. So I would say, in normal circumstances, price increases are quite challenging, right? Because, of course, we are talking about long-term contracts, new ship orders have been placed, et cetera, right? Maintenance market is more fluid and it's maybe easier there in general.

And then, of course, we have commitments, you could say, to our customers. However, the situations right now are quite extraordinary as a consequence really. And we see that sort of also from our customers, right and downstream of us, people are implementing price adjustments simply to be able to cope with the situation, right, to be able to have material to offer to the customers and to be able to complete the projects, right?

So I would say there is also a general understanding that price increases will have to happen throughout the value chain as a consequence of the uncertainty. And even if we have sort of some sort of a conclusion to the existing situation, right, we have created a backlog of issues, right? This will take months to sort out in any case, right?

So even if we take sort of a very positive development from now onwards, right, we're talking months of turbulence still in the market before this has settled, right? And we are sort of back to more normal levels.

Do you see any significant risk that driving prices up will decrease volume?

That could be a risk. I see more is a risk that we mentioned in the market outlook, right? Simply that our customers are unable to source the appropriate amount of raw materials because it's not available. So they're actually not able to produce the amount of antifouling coating needed to satisfy the customer, right? I see that as more of a risk, right? But of course, you're right, there is, to some extent, that risk as well.

We'll talk more about the raw materials soon. But before we do that, a viewer asks, please, could you explain why receivables increased so much? Are you extending credit terms to your customers? Or are customers taking longer to pay?

No, we're not extending payment terms, but we have longer payment terms with our Korean distributor. And since the share to Korea increased from a little bit more than 30% up to 45% for this quarter, that will, of course, have an effect also on the credit base.

Last time you were here presenting your Q4 report, you talked about your significant client that decreased their volume during the fourth quarter due to financial difficulties. How has that situation developed?

Well, I think as we mentioned, we saw a stabilization of the order patterns during Q4 already last year. And as Magnus alluded to here, we've seen quite a strong start in the beginning. So I mean, they are back to more normal levels now as we would have expected.

And Oskar asked, do you expect that the second customer's demand is now more normal or stable during the last month? And I assume that the second largest customer is the customer that is [indiscernible].

Yes.

All right. Good. And then continuing on to Oskar's question, he also asks this one. If you have to choose one, which market is the most important for you in the coming 2 to 3 years?

I mean all our markets are important to us, right? But we have obtained quite a strong position in both Korea and Japan, right? So we talked about it, I think, in earlier shows as well, right, that China is our #1 growth market, right? And penetrating, you could say, the maintenance segment.

So if you say China and maintenance segment, these are the key growth areas for us, right, for Selektope going forward. So we, of course, value Korea and Japan, but we need to grow more in China definitely going forward.

So interpreting that then you're choosing growth over stability when choosing more money?

Yes. No. I mean, stability is the base for growth. So of course, like I said, right, our existing customers and the markets are really important to us, right? But in terms of unlocking additional growth, we will need to put additional resources and focus on specifically China and the maintenance segment going forward.

Let's talk about then the Middle Eastern conflict and its consequences. You described in the report that the conflict has affected tanker contracting during March. So far into Q2, how has that developed?

Well, it's difficult to say how it's impacting, you could say, new building contracting, right? There's typically a delay here. Like we say in the report, we saw a decrease of sort of new orders coming in throughout March, right? But we will have to see the April numbers are not really out yet to our knowledge, right?

So I think if there was really a surge in new contract, you could say, in the beginning, right, for tankers. So I would expect them this to normalize a little bit throughout the year, right? Of course, it's an aging tanker fleet. It needs replacing. And of course, they need to meet up to renewable fuel criteria going forward. But also, I would expect sort of the levels to be more normal going forward in this year. But let's see.

And there are also concerns how oil availability and chemical raw materials will affect the shipping sector more long term in the aftermath here?

Yes, definitely. I mean, in terms of availability, right? I think short-term positive benefit for operators of tankers, right? They, of course, can charge more for transporting oil, et cetera, right?

But as we talked about here, sort of the big crunch and the availability of raw materials is, of course, affecting the business negatively. I mean, if you talk LNG or liquefied natural gas, right, here, we know that there are ships sort of idling at the moment because they don't have business, right? The production I think has dropped so much that they do not have business. So there are many impacting sort of -- or yes, parts of the shipping business being impacted of the consequences in the Middle East.

Of course, from our perspective, we are worrying more about the availability of raw materials and the ability of our customers to satisfy the shipyards need for antifouling coating because that will directly impact our business.

Maybe I should point out that it's not the availability of our production of the raw materials. It's mainly the binders and everything that you need to put into the paint where we see an effect of.

Precisely because the question a viewer did ask what specific raw material would be impacted? And can these raw materials also be sourced from other regions?

Well, typically, it's solvents, right? That's one that's been talked about, but also the raw material for binder production. So I mean, that's the problem. We live in a global world, right? And 20% of the available output has been sort of reduced significantly, right?

So -- and it's not only the oil coming out of the Middle East, right? It's all the chemicals as well, right? And of course, you could say there is a possibility for chemical industries in other regions to fulfill the need. But if there is an overall lack for crude oil, of course, then there is a lack of crude oil, right? And it doesn't matter that you have free capacity to turn it into solvents if the oil is not available. So it is -- if this continues throughout the year, it could be quite severe consequences. And of course, not only for shipbuilding, but for all businesses actually right.

And to circle to the oil then, low availability and high prices, couldn't one make a case that, that would benefit you considering you're drawing down -- you're helping clients drawing down their oil consumption?

Absolutely. And also, there are a lot of ships idling at the moment, right, being exposed to biofouling. So after this, a lot of ships would have significant fouling problems, right? So of course, the ones that have invested in good antifouling solutions would have lower operating costs, right? So definitely.

Let's talk about regulations then. The EU has extended their approvals to Selektope to take further time to finish their ongoing process. Date is now the 31st of December. How do you view this decision?

Well, as I alluded to there in the presentation, it's quite positive, right? I mean, although you could say that the extension is sort of expected due to the process, right? They do not have enough time, you could say, to complete the necessary steps of the process, right? So they had to extend it in any case.

However, the positive side of that is, of course, there is more time, you could say, to consider the input that has come into the process. And there is more time, of course, and to generate support for, you could say, a more thorough evaluation of the product segments of antifouling, right, when it comes to all our products, not only our product, right, but the others in this product category. So we view it as quite positive, right? It gives more time to influence the process.

Possibly a very difficult question, but the decision to push up the final decision date, has that changed your expectations regarding the final decision?

I think it's too soon to say. I mean, it's still a lot of uncertainty around that, right? I would say it's not negative. Let's say that at least, right? So slightly leaning towards the positive, of course.

That was all my questions, but we have many more viewer questions. We take them one by one. First of all, can you share any information about new products that are being developed?

Not really at this point, right? We will come back to that throughout the course of this year.

Next question is, what is the estimated market share of I-Tech breakdown to new build and dry bulk?

Yes. So we look a little bit at our market then. So if you take Korea, for instance, our sales to Korea, this is predominantly new build, right? So all that volume tends to go into new build. In Japan, it's more of an even split.

And the same, you could say, goes for our sales to China. So we typically say around 60-40, so 60% new build, 40% maintenance. Of course, with a rising trend, you could say, on the maintenance side, right? But that is simply it's a 10x bigger market. So it takes a longer period of time to grow that share significantly.

Next question is, can you elaborate a little bit on EOGRT that you're conducting? What is the timing on this? And how long will the study take?

Yes. This is, you could say, a complex and long-term study, right, because you essentially study the effects of the chemical onto test species, right, over generations. So you simply -- you look at sort of the offspring of that and what happens to that offspring, et cetera. So it's multi-generations.

I think we are counting on approximately 2 years to complete the study as such, right? And long time, complex study, of course, quite costly to do as well, right? But we are happy to do it as well, right? And sort of it's mainly for other regions that we are doing it, but of course, it's useful in the EU context as well. We hope that, that sort of can really shine some light on the remaining uncertainties, right, of the effect of Selektope.

Is there an endocrine effect or not, right? And of course, we are arguing this is -- there is not a detrimental or a negative effect on the endocrine system. But to be found out with the study.

About to read up the last question from Laura. But as I do, I would like to also remind the viewers that if you have any more questions and please post them in the chat. So of the 9 major paint companies, 2 are still in development stage. Is there any update on commercialization timing for those?

Not really in terms of timing, but the customer #7 is sort of approaching slowly, we would say, to be more of a steady and regular commercial customer. But we are still not changed the classification. So we're still saying it's regular business to 6 out of 9 with an option of #7 and coming and joining soon.

One of the viewers also clarified, it was same you asked a question about the market share. How much do you estimate the market share of I-Tech in the maintenance out of the entire TAM, same for new build?

In general, we estimate around 3% to 4% of the total market share. And as Markus said, approximately the maintenance market is 10x the -- so I would say 0.3% to 0.4% of the maintenance. And well, I don't do the math that fast now, but a little bit higher on the new build side.

New question from Laura. You mentioned some hires during the quarter. How many additions should we expect over the course of the year? And how should we think about the operating expenses trajectory for the rest of the year?

Yes. So we are bringing on 3 new full-time employees, you could say. That's the plan for this year. And of course, that situation can be updated throughout the course of the year. But currently, there is no firm plan. So that is the added effect that we see now. And maybe you want to talk.

Yes. But if you talk in general on the operating cost, of course, we have the entire EU situation, which have driven a little bit more cost during Q1 than Q4. So -- but it's actually a matter of how much that will drive, I would say, how much effort we need.

And of course, we're coming into the study to this endocrine disruption study. that will take significant effort. And we have spoken about it before that it's a SEK 10 million study over 2 years. So we said it before, so I can say it now as well that we take half of this year, roughly.

That was all the questions I had and from the chat. But Markus Jonsson and Magnus Henell, thank you very much for being here presenting and answering our questions.

Thank you very much.

Thank you very much.

It is 1:00, and we welcome viewers here to the report presentation of today where you, as a viewer, also have the opportunity to ask questions to the management, and you do that via the live chat during this broadcast, I will be keeping an eye on it.

Today, we are joined here on stage by I-Tech, who has published their final and fourth quarterly report for the fiscal year of 2025, and standing beside me is Markus Jonsson, who is the CEO of the company. Welcome.

Thank you very much. Good afternoon.

Good afternoon. You have a presentation prepared for us here today, and I will simply hand over the word and come back later to ask a few questions.

Yes. Thank you very much, Mikael. So a new year, new possibilities. We're here live from Stockholm today from the Investor Studios to give you the presentation of the year-end report of Q4 for I-Tech.

So before we get into the numbers, et cetera, I will just do a brief introduction of the company in case there are any new viewers or people that are not acquainted with I-Tech from the past.

So essentially, what I-Tech is and what we are doing, we are a biotech company, an ingredient provider. But our key focus market is maritime shipping, and really, the problems that we are here to solve or one of the major problems is the question that we are posting here on the first slide. So what if 1/3 of the full global fleet were using 36% more fuel than needed even for 1 day, what would that mean in terms of costs and emission for shipping? And that's exactly one of the key challenges that we are addressing in I-Tech.

So our solution is targeting a problem of fouling for ships. So really, the underwater surface area of the ship can get fouled of various organisms. And our solution is targeting barnacles, which is so-called hard fouling. And why are they a challenge? Well, they create a big additional drag on the ship. So it means they increase friction and increase need for power and more fuel to actually smoothly travel through the water.

The barnacles are thriving in most marine environments, so all across the globe. And they are cunning little creatures in a sense that they are super gluing themselves to the surface. So they are very, very difficult to remove, and you risk damaging the coating if you try to remove them. So really, the most efficient strategy is to actually prevent them from settling on the ship is how.

So our solution is called Selektope, and it is actually a clever solution coming from the world of pharma. So originally, it's a sedative that is used for humans and for veterinary medicine, but scientists then found out that it has the opposite effect on the barnacle larvae, it actually makes them temporarily hyperactive. So it doesn't kill or harm the target organism, but actually deter them from settling on the surface. And this really helps the shipowners then to reduce the emissions to air but also protect our sensitive coastal marine ecosystems because biofouling on ships' hulls is today is the #1 vector for spreading of invasive aquatic species. So it's really important to keep our ships clean so that we protect sensitive local ecosystems.

And the third thing, which is so ingenious with our solution, Selektope, is that we are also reducing the emissions to the ocean very, very significantly. It's extremely efficient. So you need a very, very small amount, which in itself then protects the environment further.

So now we will come to the results. And in that case, I will hand over to CFO and Head of Operations, Magnus Henell, who will take you through the numbers, and see you later.

Let's go into the results, and very nice to be here again, talking to all of you. And as we start on this slide, I just want to give you a short overview of what happened in the company over the past years. As most of you know, we have had a very nice growth of the company. Even though we are declining a little bit this year, we're still on an average of roughly 30% since our IPO in 2018, which is very strong numbers over the 7 years that these are presented. And I also want to give you an idea that when we're coming into Q4 and the full year of 2025, we are comparing to very extremely strong sales numbers in Q4 '24 and also in Q1 '25. But these are very strong, and we will talk a little bit about why we are not as strong today.

Looking on the full year, we see that our smaller customers show a really strong growth, but we also see that the sales to our second largest customer is much lower than last year. We will go into the details later on.

Talking about Q4, as I said, we're comparing with a tremendous quarter last year. We have, unfortunately, a decline in net sales in Swedish krona of 33%. I think it's quite important to point out that the currency adjusted growth downturn is only 23%. It's still large, but it's much lower. And then you can see that the U.S. currency has really impacted us.

What is really nice to see for this year is that we actually improved the gross margin by 6%. We're going from 54% gross margin to 57%, and that is due to mainly our operational efficiencies, where we have better production processes, more producers making sure that we have a stable production price, which means that we can also be stable towards our customers.

Coming into the result. Of course, we have reduced both EBITDA and EBIT down 5% roughly on both, but they are still very strong. And this shows also by the very strong cash conversion that we have in the company. For the quarter, we have an operating cash flow of almost SEK 13 million compared to SEK 6 million last year. So on the cash side, it's growing. And our cash balance, of course, is also growing into the almost SEK 150 million.

Looking into '25 as a full year, the comparison numbers are not that dramatic. We are down 6% on the net sales. We are up 3% on volumes. We are up 2% in the currency adjusted growth. But unfortunately, in Swedish krona again then, we are down 6%. Also here, for the full year, where we have improved the gross margin up to 57% also for the full year. We need to point out that our largest customer, Chugoku Marine Paints, they grew by 21% this year, which is a really strong growth compared to what we show in the final end. So with this growth in gross margin, we're in Swedish krona actually larger gross profit than we had previous years. And then we have invested a little bit more in our operational cost, which means that we lower the result of it, but we're still on almost 30% EBITDA level.

And looking into the geographical spread of our customers, which is quite important. We have emphasized before, we're coming back to the regulatory part that Europe is a very low percentage of our sales. It's only 2% for '25 as full year. Last year, it was 3%, which means that Asia has taken yet another little bit bigger part. The ratios between the 3 largest markets, which is Korea, China and Japan has leveled out. Last year, Korea was 50% of the sales, and China was quite much lower. Japan has been stable over the years. But the main reason is actually the very nice growth in China and the lower sales to our second largest customer, which means that China is a really important market moving forward with all their maintenance work. It's really growing nicely, and 96% in 2025 is a very strong growth.

So just to summarize the financial year of 2025, we have forward momentum. We have headwinds in some parts, tailwinds in some parts, but we have a very strong margins and cash position, 57% gross margin, 25% EBITDA. We have a diversification. Our smaller customers grow really strong. They grew by more than 100% over the year. We have our largest customers growing by 20%, and the volume growth in China is 96%, which means that we were quite -- we are confident for the future, but we also need to prepare for all the upcoming work. So in the proposal from the Board, there is a proposed increase of the dividend, of the ordinary dividend from SEK 1 per share up to SEK 1.25, but with no extra dividend for this year. And I think Markus will talk a little bit more about that when he's coming back into the picture.

Thank you very much, Magnus. Yes, as you mentioned, we have underlying very good developments with the majority of the customers in the portfolio. And as you mentioned then, very strong cash generation and really a large cash at hand, right? So what is it that we will be doing with these funds, you could say, besides giving it back to our shareholders then. Well, we want to keep some of the cash to develop the business. And we will come in and talk about business development now in the next section, which is the outlook then, and how we will move the company forward.

So if we start a little bit talking about the market outlook, I mean, overall, for shipping, it's still quite positive. We saw a small increase in seaborne trade around 1.1% during last year. It was a little bit higher in 2024. In terms of, you could say, the shipyards output, it increased actually by 6% measured in gross tonnage, and we expect that to continue actually in 2026 as well and even growing more by 15%. So really the -- at the moment, there is a large output coming out of the shipyards, right?

We see, of course, contracting activity being somewhat lower during 2025. It was quite a bit of a turbulence in the first half of the year that sort of impacted the new contracting. So we are talking then the order books of the shipyard, you could say, 3 to 4 years out into the future, they dropped, but they are still significantly above, you could say, the 10-year trend.

We also see a quite solid outlook in the maintenance and repair market. It is somewhat cyclical, but of course, it's the larger part of the market. We say typically new ships around 1,800 to 2,000 ships per year, and the service events are between 15,000 and 20,000. So it's a much bigger market then, of course, very important for us as a growth market. And Magnus was mentioning that also as China as being one of the key regional markets for us to grow. So I think we look back at 2025 and are really happy about the uptake that we're seeing in China and looking forward to that.

So from a market perspective, of course, there is this risk, you could say, of geopolitical instability. But also you could say on shipping, if we have a more stabilized world, you could say, going forward, it could also be that the tonne-miles of shipped goods could actually go down, right? If the Suez Canal opened up as in the good old days, et cetera, right? So there are sort of risks of stability as well, you could say, to shipping and the charter rates, et cetera, going forward. But we see continued good momentum in the market, really. So that, it's good to see for 2026.

Another parameter that we are following is actually the price of copper. Copper oxide is the traditional antifouling solution that is used, you could say, to prevent barnacles and hard fouling from settling on the ships. And Selektope then, representing sort of a new technology could also be quite interesting from a cost performance perspective going forward. So we have seen quite an increase of copper prices. And actually, what this slide is demonstrating is the margin benefits for 2 companies or, you could say, 2 products competing head-to-head with similar price points at different prices of the copper, right?

So if you go back to 2016, the copper price was quite low. It was around $5 per kilo. And at that time, you could say, it was actually slightly beneficial then versus an entry price level to use a formulation without copper and Selektope instead. But sort of in the recent years, we've been in a market setting actually where copper prices have been high enough so that Selektope is actually more advantageous from a margin perspective, right? And also then looking into the future here, it's predicted that there is actually a lack of copper going forward, right? And that would drive up prices, and it would make Selektope much more attractive as a solution to prevent barnacles as well, right? So we see that as giving us additional momentum for the future for growth of Selektope. So it's really nice and a good factor going forward.

Now we come then to the reregistration process in Europe that we have been talking about, you could say, extensively over the past 2 years. So essentially, where we are in the process for this year, then we reported back in December, that there is now a proposal for a nonrenewal of Selektope's approval for the European market, which we, of course, regret that EU, despite our best efforts to inform, has come to this conclusion, right?

There is still, of course, a chance to influence this decision because we expect then a decision to happen, you could say, earliest in Q2, most likely. So there is still some time for us to affect. And of course, we are preparing for a scenario where there is a nonrenewal, and we also say that, of course, we will take this on more from a legal perspective in that case.

So we should see this as the first round, and it's a story that will continue. So regulatory costs and costs associated, that will be continuing to be on a slightly elevated level at least for this year and probably also for the foreseeable future if we have to do additional testing. So this is the status and the situation with EU.

So if we come to a more positive story, it's the story of our business development pipeline. We also have talked about that quite extensively on previous earnings calls. And we are really, really active, and we can see that now also during Q4 and into this year that our activities are ramping up. So we are speaking to several new interesting collaboration partners in parallel. We were fortunate enough to actually announce our collaboration with Havey Advanced Materials in the end of November. So that is one partner that we are talking to, and there are several others. And you can say then, what is the focus of your business development pipeline. Well, it is to bring sort of complementary solutions to our existing customers. But also looking then into other attractive marine markets such as aquaculture, the more of the yacht market, et cetera.

So we are really actively working here, and we can see also that this is now starting to consume quite a bit of resource from the entire team here. So that's something we will come back to, again, the need really to invest in the company for the future here when it comes to fixed costs and resources. But it's quite exciting results so far. And we, of course, look forward to be able to talk and give more news about the business development pipeline during the course of this year.

So coming then to the business outlook. We spoke about in the report as well, we see new customer product launches, specifically for the Korean market. So we will, of course, closely monitor and see how these products develop. But as we're also stating, most likely, it will take quite a bit of time until these volumes contribute -- sorry, these products contribute significant volumes going forward.

As I mentioned then for the business development pipeline, we are sort of in active negotiations around a variety of new potential strategic partnerships, and that's something we are looking forward to advance and close them during this year. We will have continuous advocacy linked to regulations and of course, engage the European Union, but also our other key markets on the topic of sort of Selektope and Selektope approval.

And as I was mentioning then in order to be ready for the future and to be able to complete all the business development activities, we have taken the decision to increase the team. So we will be welcoming several new team members, permanent members then during the first half of this year. So we also need to bring them up to speed and introduce them to their new tasks, et cetera. So that is the focus of the company.

So coming back then to the strong cash position. So Magnus was mentioning that we're looking into increasing the ordinary dividend. Also, there could be changes in the regulation so that we could be actually -- to be able to consider share buybacks for the future. But we also need to keep some of the cash to be able to realize some of the business development opportunities going forward. So that is really the plan as it looks now for this year.

So with that, I think we're done with the presentation, and we look forward to an engaging Q&A session.

Thank you very much, Markus and Magnus. If I'll begin with sort of the numbers first, looking at your net sales decreased by 33%, and the operating profit almost halved. But looking at the full year, as you explained during the presentation, it's not as dramatic, a respective 10% decrease there. How should shareholders sort of interpret this development in your long term? And how does this quarter sort of reflect your long-term development?

So maybe we should talk about our customers a little bit, right? So we have very few customers, right? And as we have talked about in earlier earnings calls, for 2025, we had a very big and significant customers that actually came back to us and said then due to financial difficulties, they were actually then going to reduce the demand for this year, right? So that was something you could say that happened well into 2025. And you could say that we have grown very positively, you could say, with the other smaller customers. But so far, I mean, it hasn't been able to fully compensate. Although actually, our volumes are higher, right, for 2025 than 2024. So yes.

And considering that the volumes are higher in 2025 than 2024, how come net sales are still decreasing?

Well, I think as Magnus was mentioning, currency has been sort of a big headwind for us as well, right? The fact we are buying and selling in U.S. dollars. So I mean, there is no currency risk as such, right, in the business, but because of sort of the devaluation of the U.S. dollar, it looks more dramatic, you could say, in Swedish crowns than in dollars.

Global seaborne trade has been increasing this year. It's not as big as last year, but this is despite the global uncertainties that you sort of described in your report. A question from the chat asked the following question. Industry data shows strong results, but the company still struggles. Is that suggesting that you're losing market shares?

No, we do not believe we are losing market share overall. I mean on the contrary, we believe that we are actually increasing our market share, right? And I think especially the results in China is demonstrating that, that we are growing so substantially in China, right, for 2025. So underlying, it is actually quite a positive development. As Magnus was mentioning, our biggest customer grows by 20%, right? And we have several of the smaller customers, although from a lower level, growing more than 100%, right? Unfortunately, overall, then you're looking at in Swedish crowns, right, it's not able to compensate sort of the dramatic reduction of volume that we see from one of the larger accounts there, right, which was actually down 2/3, right? If you just compare calendar year, right?

And let's talk about that customer then, 2/3 scaling down that volume compared to your other customers that are sort of scaling up. Talking about the significant customer that is scaling down, what can you tell us about that customer?

Yes. We actually touched upon that also in the Q3 presentation, right? But they were sort of reporting 2 things during last year. One thing was temporary financial constraints internal, right? So that was one reason. And also then, you could say early on in the year that they actually had higher stock levels. So that sort of one thing led to the other, right? And that's why we saw the significant drop. However, long term, we do not see that this customer is in trouble, sort of, and they will most likely recover in the long picture, right? It's not that they are going to disappear from the market, that we see is very, very unlikely, right?

There are many who are wondering the identity behind this customer. And well, I understand that you might not be able to tell us exactly who it is. Can you tell us something?

Well, unfortunately not. I think several of our customers actually do not want us to mention them specifically, right? So we have to respect that. But it is a significant customer, right? And I mean it is, you could say, a financially sound and stable partner long term, but they have had some sort of temporary challenges during last year. So of course, we remain sort of positive in the long run also with them, you could say, to be able to recover and come back from the situation that we have been in during 2025.

And in recovering those volumes for I-Tech, are you seeing that your smaller customers are continuing to ramp up their volumes? Or are you also expecting your more significant customer to recover?

Well, long term, definitely, we would expect them to recover, but how quickly that is happening, right, is, of course, a little bit unclear to us, right? But if you look at the smaller customers, they were logging very impressive growth figures, right? And if you're launching a completely new product or an extension, et cetera, right, they do develop quite differently as well, right? But we see, we previously talked about PPG as one customer that was launching a new product during last year that really sort of replaced an old product, right, and has been taking significant volume, and we see that continuing as well, right?

There are people in the chat also curious about what we can expect from that one significant customer more concretely during 2026, but also your other customers during 2026.

Yes. I mean we cannot go in and comment specifically account by account. And I think it's also fair, and we keep on stressing this, I think, at every call as well, right? There is quite substantial variation between quarters, right? That depends on the customers' purchasing behavior, right? And since we have so few customers, you actually see then quite big deviations between quarters also in sales, right? The long-term prospects are positive, right? And we expect to continue to grow with Selektope. Of course, then Asia being the key growth market, right?

Let's talk about reapproval then on the EU front. The EU has proposed not to renew the proposal for -- the approval for Selektope. What are the reasonings from the EU side? And what are your counterarguments when sort of, how do you call it, disputing this?

Yes. Yes. So this, you could say, proposal is based on what we claim then, you could say, 2 essential flaws, right? So the first thing is that the expert group, which is called the BPC Group, they have then proposed to label medetomidine, which is the active substance in Selektope as an endocrine disruptor, right? And for us and looking into the scientific definition of an endocrine disruptor, we, of course, see that our substance does not fulfill that criteria, right? And I think the key criteria is that you have to cause an adverse effect in the organisms that you're looking at. And it's not -- there is no adverse effects, right? So we, of course, then dispute, you could say, the conclusion that the substance is endocrine disrupting.

I think the second thing, and that Norway then as the reporting state, they were concluding is that there are several alternatives to Selektope in the market. So it's not needed, right? And that's the second thing which we believe is also flawed, right? Because in reality, there are very, very few biocides that actually work against hard fouling and barnacles, while you could say the report is erroneously suggesting that there are 8 or 9 different other biocides, right? They do not even discriminate between soft and hard fouling, right? So you can see that there is really a lack of industry understanding and chemical understanding, right? And then they're also mentioning an array of, you could say, of non-biocide alternatives, which we see they are not really mature enough commercially or available for that type of solution and so on, right? So there are several errors then, right?

And also not only I-Tech, but an array of stakeholders have been pointing this out to the European Commission and the member states of all this what we believe are errors in these conclusions then, right? And so far, unfortunately, we haven't been heard or sort of they haven't listened to this. So hence, we believe if there is finally a negative decision, we will, of course, move on and challenge this legally, right, which we think we have a very stable base to do.

And talking then about cost because you did mention in the presentation that you're expecting elevated costs relating to this reapproval process, can you elaborate on that and sort of what levels you're expecting?

I'm handing over that one to Magnus, actually.

Yes, I think we have quite a bit of cost already today for the year we're trying to influence and that takes external resources. And these costs that we have, which is roughly SEK 2 million a quarter. So roughly SEK 8 million to SEK 9 million for the full year. We expect them to continue, maybe not the same resources, but as Markus says, maybe into the legal resources, et cetera. So that will continue for next year. And that is not an elevation of it. But what we also see is in order to fight this wrongfully labeling of endocrine disruptor, we most likely will, during the year, start a larger study where we actually can prove even more scientifically that it is not an endocrine disruptor. And those large studies, they are around SEK 10 million in cost, which will be spread over a couple of years, but it will still increase our cost. So maybe half of that could come this year. But that is really also depending on what happens in the outcome.

Let's talk a little bit about the outcome then. Someone from the chat is also curious, if the decision becomes negative to say, if it's not reapproved, then is that effective immediately? Or is there any sort of countermeasures you can take to delay the date of effectivity?

Well, when sort of the vote has happened, and it's sort of public, right, there is what they call a 6-month grace period, right? So then sort of it's a grace period for where the customers then have time to adapt, you could say.

Unfortunately, a legal case or a challenge of the decision could take between 6 to 12 months, right? So we actually could end up in a situation then where it can affect the market. Hopefully not, but let's see. We still are hopeful for a positive outcome.

And if we look to the European market, it's still a very small share of your net sales today, 2% if I'm not mistaken. Can you elaborate a little bit on the -- on your strategy to roll out the product in Europe granted that the reapproval is approved?

Yes. Europe is not a big market. It is 5% to 8% maybe of the global opportunity for Selektope, right? So it is quite a minor market from the beginning. Unfortunately, because of this piece of legislation that we have, which is called the BPR, the Biocidal Products Regulation, it doesn't really work in Europe. So Selektope was originally approved in Europe back in 2016. But until today, actually, no end product, so a coating product from a customer has actually received EU-wide market approval under this piece of legislation so -- because the member states have not been able to agree on what they call the environmental protection criteria.

So actually, the legislation is not working today. So it's very difficult, you could say, even with the reapproval, it's very difficult for, you could say, the opportunities to be realized very quickly in Europe as long as we have this piece of legislation that is sort of working from our perspective very less than optimal, right? It's actually blocking new innovation, which we believe is a key challenge for shipping, right? And if we want to stay competitive in Europe, it is an issue that we will have to address, right?

And with this entire process and the challenges you're facing in the EU regulatory, could that potentially cause some concern for potential customers in Europe?

Yes, we see, of course, a negative decision in Europe, right, is sort of tarnishing the brand a little bit, right? And of course, you could say that the other regulatory regimes in other regions of the world work differently. Some of them resemble a little bit of legislation in EU, but none of them have really picked up on the topic of endocrine disrupting so far. So of course, we need to be closely monitoring this, right, and be proactive also in our communication versus, you could say, regional stakeholders and also regional regulators in our key important markets. So that is a key focus for us, right? We do not want this to spread outside Europe, right, in the future.

And what is the risk or sort of uncertainty around that, that you're facing at the moment? I know some of the people in the chat are very curious to know. What is the risk that Asia will also sort of reevaluate this thing?

Well, we assess it as very low at the moment, right? But we need to continuously sort of be close both to the regulators and to the market, right? So to make sure that we are informing them that we bring up the scientific proof on the table, et cetera, right, to show sort of what does the data really say about, on one hand, endocrine disrupting and endocrine deficiencies and then also, what type of alternatives are there out there, right?

For instance, we can mention another region, which is very important to us is South Korea, right? They have also a very restrictive policy around biocides. But they are going about this completely differently than Europe is doing. So they are now looking to implement sort of a cap, you could say, on the amount of biocides that you can use in an antifouling product, a 1% cap, which means that it's actually a source for innovation, right? And that's why we saw these 3 new products that we were talking about being launched in Korea then during the autumn is actually to be able to match this new legislation, which is a headache and it's driving innovation, right? And a 1% cap is no problem for Selektope. We are fully effective at 0.1%, right? So it's actually a positive for us, right?

So we see, you could say, one other country that we're shipping is really important. And they also want to protect ecology and have low emissions to the ocean, but they take a completely and more, what we think, much more educated way of sort of reducing then the emissions of biocide, right? So there are really positive examples for Europe actually to follow on how to regulate, you can say.

You mentioned the 3 new products that you launched in Korea?

We are not launching. Our customers are launching coating products.

Are these expected to be significant contributors to revenue as they ramp up?

It will take time because these products have been developed then to match this new piece of legislation, right? And that has sort of -- it's going to be implemented, you could say, step-wise, et cetera. It will take a number of years before you could say that, that new piece of legislation is phased in and so on. So we expect it to take time also because before these products really contribute significantly. And of course, we should also know that we are already quite big on the Korean market. So you could say there could be some cannibalization between different customer products, right, on the market.

Overall, it's not negative for us, right? If you replace an old product with 0.1%, a new product with 0.1% Selektope, that's an even game, right? So it's, of course, that additional potential that we are after in Korea, which are the products that are not using Selektope today. So that's what we mean. It could take some time before it's significantly contributing to our sales.

Let's talk about your cash position then. You're entering 2026 with a cash reserve of SEK 148 million. It's a rather sizable position considering that it's roughly SEK 12 per share, but also while you're proposing a dividend of SEK 1.25 per share. In utilizing this cash reserve, I know you mentioned it in the report, but could we get a repetition?

Yes. So besides the dividend, we want to keep money, sort of cash at hand for our business development opportunities, the opportunity pipeline, right? So if we are able, you could say, to act on any of these partnerships and there could be elements of acquisitions involved, et cetera, right, or upfront payments, we want to ensure that we have cash available so that we don't have to go out and ask for money for such smaller things, right? And then also, there could be better things to do with the cash than actually giving it back in dividend.

I don't know, Magnus, if you want to comment on development?

Yes. But there is a proposal on the table to actually change the regulations about First North companies or nonregulated market companies to actually be able to buy back shares, not synthetically but really buybacks as the companies on the main market are allowed to do. And we are actually then also considering waiting in this legislation for us to be able to buy back shares instead of increasing the dividends.

Yes, there's a question -- there's a viewer who's asking a follow-up question. Why are you not doing share buybacks in the first place instead of dividends?

Yes. As I said, today, on a nonregulated market, you could do -- I'm not totally into it, but you could do some kind of synthetical buyback twist, which we are not really interested in doing right now. But you need to be on the main markets, the main regulated markets in order to follow regulation and be able to buy back shares. But that regulation is considered to be changed by end of this year.

And Markus, you mentioned you wanted to have cash on hand. How much?

How long is a string? Now we see, and you can say several of these opportunities, it's ranging, right, how much would be needed. So we prefer to stay on the safe side, right, for now. And let's see. Hopefully, we want to really act on some of these opportunities and move fast, right? And then it's better to have the cash at hand to be able to do this.

There's a lot of viewers who are posting their questions here in the chat. So I'll just fire off as I see them. Following question, your balance sheet shows an increase in year-end current liabilities of SEK 3.6 million but your cash flow statement shows that liabilities consumed SEK 4.2 million of cash. Could you explain this discrepancy?

I actually can't say without the numbers in front of me exactly what they claim from the cash flow analysis that liabilities consumed those SEK 4.2 million. But there is -- there are normal changes in the current liabilities with the vendor payments, et cetera. But of course, we also are increasing our tax liability as a current because we need to pay it during 2026. So that might be the discrepancy that he is talking about.

Regarding the MOU that you have with Havey, for those of us without a background in chemistry, could you please explain in simple language how this helps to diversify I-Tech's current portfolio of products?

Yes. So I was showing a paint can at the slide earlier here. Maybe we can go back to that one. It's maybe easier to explain. So if you look at the paint can, you see here what are the contributions or the value in that paint can of different raw materials. And today, we are in that part, which is called additives here, which represents 30% to 40%, but it can be even higher, you could say, 30% to 40% of the value of the raw material cost of the formulation. And what Havey is doing, they are working with the binder systems or as it's called here, resins, which is essentially the part of the formulation that binds the coating together. So the biocides and the binders, so the resins, these are the 2 key ingredients that actually, on one hand, represents the majority of the cost of the formulation, but also then provide sort of the key performance criteria and benefits of the formulation.

So we have been working, you could say also before Havey then with binders as one of the innovation tracks, you could say, in I-Tech. But sort of we have started to work together on looking at future innovations here. You could say, both better performance but also more sustainable antifouling solutions going forward. So we hope to be able to continue and close that discussion, you could say, during this year as well. And then we have a very interesting space for future innovation and something that can also contribute significantly to sales.

We hope that answer will suffice as we move on to the next question. You also wrote that you will be welcoming new permanent members in the first half of this year. Can we expect the operating cost to increase moving forward?

We have been talking about slight increases. We are increasing the staff by a few numbers over the year. We have been talking about what kind of costs we are driving from the regulation part. There will be some external costs, maybe not increase, but we will still have external costs in regards to the business development activities. And of course, if we come up with a really interesting internal business development where we need to spend a little bit more R&D cost.

But significantly changes -- the only significant change, I would say, that would be if we go into this long-term study on the endocrine disruption. But otherwise, yes, small increases. But we are at -- we have a slim business model, and we should try to keep it slim. We have like, for the full year 2025, we're almost 30% EBITDA. So we shouldn't, even if we make a lot of money, we shouldn't start spending too much money, but we should spend money on developing the company. And there, we shouldn't be afraid. If we need to spend money there, we should spend money because we're making money as well.

As we move over to the next question. As with the new building activity up in 2026 and much easier comparables, is there any reason why we shouldn't expect a strong growth in Q2 2026 and onwards?

Well, as we said, long term, we remain very, very positive on the case, right? We have very, very good momentum with the majority of the customers, right? So we stay very positive sort of on the long-term prospects for Selektope, but of course, also for the other interesting things that we have in the pipeline to complement, you could say, and build a more diversified and stronger I-Tech going forward, right? So yes.

I just want to complement that. As Markus is talking about the organic growth of the company, we still have the hustle with the U.S. dollars even now during the first part of this year, it decreased significantly even more. So where will the bottom be on the dollar, we really don't know. So that could be one part that counteracts. But as we said, organically, we're very -- looking very nice into the future.

So should we be prepared for stable sales or increase in costs? That's the question, I'm sorry, I will elaborate on the question. What level of growth should we expect in the SG&A in 2026? Do you think that we will see organic growth excluding FX currencies or should we be prepared for a year of stable sales but increasing costs?

I think we have guided enough at this time. We are not giving any forward-looking statements, really. But we have been talking about cost drivers for the coming year. And we can do -- we are talking about how we see on the market. And then I think you need to draw your own conclusions about that.

Let's talk about new hires then. When you're looking to recruit, what key sort of skills are you looking for and the focus areas?

So you could say the business development part is, you could say, driving a need for more capacity. But then you're right, I mean we also need additional skill sets. So one area we are looking into strengthening is, for instance, regulatory affairs, right? We have this ongoing case with the EU, but we also know that we have to stay proactive with the other regions. We are working on new things as well. So that's an area we need to strengthen. Of course, also the commercial side, we will look forward to strengthen going forward. So these are the main areas, really.

And when we're talking about the reapproval process, we also talked about that the European market is a rather small market. And there's another question here. Why spend the -- between SEK 8 million and SEK 9 million per year in legal cost and potential new studies when Europe is already a small addressable market?

Yes. I think we touched upon it a little bit. It's mainly to prevent tarnishing the brands, right? Of course, we want to have a technology that is seen as an environmental sound option, right? And what EU is sort of claiming now, it's claiming that it is an endocrine disruptor and therefore, should not be on the market. We need to challenge this more out of principle than out of direct commercial value and also to prevent that this would spread in the future, right? So we need to take this head on, right? That's the option for us, right?

And so far, has there been any spillover effect of the reapproval process in Asian markets?

Well, we talked about this earlier as well. There has been a spillover effect in terms of, you could say, new developments, not in the existing sales, so you could say what has already been launched in the market. But you could say some customers then, they look on the market very globally, and they want to launch, you could say, products that are available in all regions, right? We have had feedback that they have paused global developments. They have still continued with their Asian product developments, right? But sort of we have already seen it impacting these global products, right? But that is now sort of very much in the past, right? So yes, we do not see that affecting them, you could say, Asia to that extent.

In the start of this Q&A, you mentioned that you're not seeing yourselves losing any market shares. But if you were asked the following question, do you see any increased competition from silicone-based antifouling or new technologies?

Yes. I mean silicone technology is an alternative coating technology, right? So you could say that you could view then silicone maybe versus traditional antifouling coating, right? There, of course, is a competition here. And some silicones, they claim to be without biocides, right? But the most commercially successful silicones do contain biocides, right, today. And to -- actually, we see also, I mean, for the future to continue to have high performance, right? Biocides are really giving an edge also in silicone technology, right? So I think we view silicones more as a growth opportunity because to date, there are no silicone products with Selektope inside. So that is actually a growth opportunity for us, right?

Yes. We will ask the final question here from the chat and ask the following. Can you address the sales in the maintenance segment, are they ramping up?

Definitely. I think we see maintenance sales in China sort of be more predominant than new build for our sake, right? So the fact that we have grown significantly in China is also sort of a tick for us growing in the maintenance segment. So both of these things are sort of interconnected and a key strategic objective of us, right? So yes, definitely.

CEO, Markus Jonsson; and CFO, Magnus Henell, thank you very much for being here presenting and answering questions.

Thank you, Mikael.

Thank you.

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. [Operator Instructions] And 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, but let's get going then with the introduction part. So we will be brief here. I mean, most of you who are joining the call know about us, right? But I-Tech as such, a scalable business model, still low penetration. We calculate that we are 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 sector.

We are addressing key maritime challenges, which is 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. And this is what we are working within I-Tech. The solution is a pharmaceutical ingredient with a nonlethal 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. So you can formulate very innovative coating products also using Selektope.

Why are barnacles such a big challenge for global shipping? Well, 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 superglue 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. So really, the most efficient strategy is to prevent them from settling on the hull. So today, we included a few more slides from this study and survey that we did together with Safinah Group earlier this year, where we look then at the indocking conditions of around 700 ships. So Safinah is a coating adviser. They help the ship operators and shipowners to select the right coating for their particular ship and the trade route, et cetera, that it's on. So Safinah has a great database, you could say, of the conditions of ships when they come in after dry dock.

And 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 then giving the barnacle larvae ample opportunity to settle on the ships hull. But actually, what we showed here together with Safinah is that all type of vessels actually have issues with barnacles. So what you're seeing here on the Y-axis are various ship types like product tankers, LNG ships, cruise ships, container ships, et cetera, right? And the light green is actually showing how many of them actually have the presence of animal fouling. So you see really it's a majority of all the ship types. So 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. And actually, we were looking into that in our survey as well. And we are comparing 2 main technologies here, one being traditional self-polishing coating. That is the light green bar and then more, you could say, modern or silicone type FRC coatings, so foul release coatings. And foul release coatings, they are available on the market, both biocide-free and with biocides. But 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, right? So that's also the secret, I would say, in this industry to formulate the right product for the ship and the trade, et cetera.

But overall, silicones also have issues with barnacles. So with I-Tech's previous work, we have been able to improve in ship-to-ship case studies, the value of Selektope. So you can find that Selektope case on our website. Also in the Safinah study, we had the luck actually of finding then 12 ships in this data set that had been coated with Selektope. And here, we are comparing the 12 ships, you could say, to the general population. So that is what the graphs are showing here. But essentially 1/3 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 -- and of course, here, it's a limited data set with 12 ships. But most of them had none or very little barnacle fouling, right?

So it's clear also here again then proving the value in the market of Selektope, right, which we are very happy to have. Another key insight that was actually coming through now in September when we had our International Antifouling Conference, so -- which I-Tech is hosting and arranging here in Gothenburg every second year. So now this year was the third edition, and there was about 200 participants, you could say, 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. And what Safinah showed here is also -- it's a little bit worrying, but it's also sort of answering the question. So why -- if your technology is so efficient, why isn't the penetration going quicker? And of course, there are many caveats and layers to choosing the right coating product.

And what Safinah is showing here with the statistics they have that for these ships that come in and have severe macro fouling, actually, the owner end up choosing the same manufacturer and often the same product, right, despite sort of obvious proof that this was not the right coating, right? So it just signals, you could say, the challenge and the barriers we are up to in terms of inertia and of creating market awareness that there are better solutions there. Another example then that comes from the autumn here is a work we've done together with Coach Solutions. So Coach Solutions is a performance management company. They help shipowners then to monitor and track the performance of their hull. So essentially, they can see through measuring various analytical points of the ship performance, how severe, you could say, fouling has become on the ship.

So that is what the graph is showing to the right here. The gray color is indicating where the ship is inactive. And in this case, we've taken the case of an oil tanker trading on time charter. So essentially an owner that owns the ship, but is putting it up for hire, you could say, to transport goods. And the case here is really to prove that it always pays off for a premium antifouling coating, right? So 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? But -- and it's 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, but you spend less on cleaning, but the important part is the production or the productive time.

So you could actually bill more hours if you have a ship that is coated with a high-tier product, right? So the earnings potential in this example for this oil tanker, then is -- you could say it's 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 USD 1.2 million, right, over 5 years. And of course, if you have a fleet of 100 tankers, this starts to be massive, right? So it really sort of reflects the challenge we're up to also to convince the market, right, to go for more premium antifouling solutions.

Then we come to the market outlook. And as I was writing in the comments, you could say in the report, actually, the macro conditions have improved after the summer. So 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. So charter rates is how much a shipowner is being paid to rent out a 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%. And sort of that is, of course, ongoing, right?

These projects have been started about 2 years ago. So these ships will be delivered this year. So there's a really high activity in the shipyards. What we have seen then and what are worrying signals is that the contracting activity. So essentially, the fact that shipowners are placing orders for new ships. But these are like 3, 4 years out sort of in the -- from now, right? So the contracting activity now is for -- to start building before 2030, right? So 2028, 2029, right? And here, we have seen then a drop of 50% this year compared to last year, but sort of the activity and the contract level is still close to the 10-year average. So 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. And this is -- it has to do, you could say, with the sort of the average age of the total shipping fleet, right? So there were a lot of ships built between 2010 and 2015 that are now coming in sort of for major repair, but also upgrade work. So we see a lot of owners doing energy saving technology updates, right, so-called ESTs, right? And here, we want to highlight also that Europe still plays a very important role for repairs of ships.

So China has about 45% market share, but Europe also almost have 20% when it comes to ship repairs. So a little bit, you could say, a different situation. And the graph we show in the bottom right here is sort of the standard service. So that is when the ship goes in for inspection and also where you always typically then do a recoating of the antifouling, right? And sort of this varies year-to-year because of the age of the total fleet, but it's an upgoing trend as well, right? You have a lot of bulkers and tankers needing service on a regular basis. So this is, of course, what is creating stability, some cyclicality between the different ship types, right, over the years. But overall, there is a steady stream of ships that needs both repair and maintenance and recoating, right? So that is really the -- overall the noncyclical element of our business, right?

Now we come into the interim results, and so I hand over to you, Magnus.

2

Thank you very much. So we're coming into the main topic of this call today, and we're actually starting up with the same picture as we started up last quarter where we actually showed a very large dip towards the Q4 and Q1. And still, we -- Q4 and Q1 was very high and -- but we have a good uptake in Q3 now. And compared to them, of course, it's a little bit lower, but it's -- 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. And what we have discussed before as well is that we see a lot of variations. And it's hard to find the really seasonal pattern in these conditions. But of course, the trend is still upwards.

The market conditions for the shipping is still positive. So we're working on to it. And then 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%, but we shouldn't forget here as well then that we have -- 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, but this is a good and stable level.

Both EBITDA and EBIT are growing compared to last year, 14%, respectively, 18%. And I think it's really nice to show that we have a 32% EBITDA margin. And 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 later as well. And then the cash conversion, I think, it's almost the best cash conversion quarter we have had. Of course, this is really depending on ingoing and outgoing payments, but SEK 23 million in operating cash flow for the quarter and 121% increase from previous year is quite good. It gives us a strong cash balance in order to further develop the company.

And to conclude sort of the financial part, I think it's quite interesting to look on the geographical spread. And 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. But I think on the positive side, on the other hand, is that both Japan and China, which are really strong maintenance -- and new building for Japan, of course, but China is really strong on the maintenance side, have grown both in proportion of our sales and also in the total revenues. And I think 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.

So to sum up then, market conditions overall are still favorable and good, I would say, both in terms of new build and the service and maintenance activity, right? So there is no worry here. As we report and one of our customers have 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. And of course, as we grow the business, it's not going to be a straight line upwards for sure. So I think that's to say around 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?

Okay. So now we come to the outlook then. So we start with the regulatory or this ongoing saga that we have around the reregistration of Selektope, right, to be used in Europe. And as you saw in Magnus' previous slide, Europe has actually grown a little bit this year. So 2% of our sales is to Europe. But it is, of course, a strong symbolism, right, to have a product that is registered in all markets, right? So from that perspective, it's important. Right now, you could say we are in between 2 of these interactions with the standing committee on biocidal products. And 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 sort of what is the latest from the commission in terms of our application.

We note now also that we have got some attention, you could say, also in media for our case, right? The Financial Times then published a piece over the last weekend, which is a very nice piece and that we would recommend you to read, of course, where they talk about sort of 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 odds, right? So where we sort of illustrate a little bit of failure for European regulations, right? So 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. So we will definitely come back to that, you could say, during the last months of this year to you. So we also thought that we will speak a little bit more about the business development pipeline. As I stated also in the comments, we have several new partnerships, dialogues ongoing in parallel here, and we're really pushing forward and 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. So these are 2 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 sort of very much in the start-up 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 sort of circulating in the business opportunity pipeline. But also here, we hope to come back then more towards the later part of the year. So then we come to the outlook. So if we start with the market then, well, we see continued currency headwind. And of course, there is market turbulence relating to trade. But as we are stating then, the market has definitely turned out to be better after the summer than before, right? So it's actually less turbulence, I would say, right now, right? But this can, of course, change quite quickly.

So if we're looking at then in terms of the customer development, we, of course, would love to see some new product launches, and that would sort of be required, right, for the growth journey to really accelerate again is to come into more of our customers' products. And that is also what we're looking forward then, both with existing but also new customers in the near term. But it's difficult to say exactly, of course, when that comes because that transparency we do not have, right? And as we mentioned, we're also looking at closing then some of the new strategic partnerships in the coming period here. So as Magnus was alluding to, then the gross margin has improved quite nicely over this year, but we are looking at sort of 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.

And 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 sort of into next year for sure. So I think that is the outlook. And now we are happily awaiting and looking forward to your questions.

Thank you very much, Markus and Magnus for the presentation. And 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. But of course, we need to start by saying it really depends, of course, on the size of the vessels, but also on the strategy that you take for coating this, right? Is it the Selektope-containing coating that you apply both on the sides of the ships and underwater on the bottom side? Or -- and how many layers are you applying? Is this a ship that is going to traffic very hot warm water, so you need a thick layer of coating or sort of a little thinner? Is it acceptable? But I mean, it can range and vary from the value of the Selektope sales to one ship between $15,000 and maybe $100,000 per ship, right, depending on the size and sort of the thickness and layers, et cetera, of the coating. Typically, then we could say around maybe $25,000, if we are sort of to give an average value.

When a paint OEM will produce a batch containing Selektope, do they produce paint for 1, 3, 5 or 20 boats at the same time?

That's a good question. Again, it depends. But you could say -- I mean, 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? So of course, they try to minimize their stock levels as well. But let's say, there are maybe 3 ships being able to be coated at the same time, right, so then you have a sort of an indication, right, how much paint has to be ready on the shelf, 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? And how high would your growth figures have been, if they excluded the revenues -- if you exclude the revenues from this customer?

I mean -- sorry, we cannot go into that level of detail here, right? I think we also -- we cannot discuss, you could say, customer relationship in detail sort of on the call here. So we would refrain from answering that question, unfortunately.

And over the past few quarters, we've seen revenue move from about SEK 59 million to SEK 57 million and down to SEK 31 million last quarter, and now we're about roughly SEK 42 million. We're trying to get a clear 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?

Yes. I was hoping that we could understand the seasonal factors better, but we should understand that all of our deliveries are quite big deliveries. So it depends on in which quarter. You can have one quarter with a couple of deliveries coming late in the quarter and then coming in early in the quarter past the next one. But what we can see is that we have an upgoing trend on the volumes and on the organic, well, currency adjusted sales.

We have 10% up year-to-date this year, and we have 14% in the volumes, but 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 we actually have quite cool winters. But on the other hand, many of the shipyards are in areas where the weather doesn't really matter. So I was hoping we could answer that question more thorough, and we tried over the years, but it's hard to find the patterns.

Yes. There are no clear patterns that you can -- there are many patterns sort of crossing each other, right? So it's difficult to -- but 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 [indiscernible] they have grown their sales by 18% 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?

Yes. The cryptic answer will be both, right? Some of these projects are very associated with Selektope and some are sort of adjacent, right? And other products -- the projects are also sort of looking into new technology areas, right? So we have really a range of different ideas that we're pursuing in parallel here. And we have been able to mature several of them quite substantially during this year, which is great. And we would love to come out and talk more about them soon.

And 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. So I would say that is behind the growth, right? And I hope it's because it's performing well in the market.

And what would you say are your key takeaways following the antifouling conference?

Yes. 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? And 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 the socioeconomic impacts, the life cycle analysis of different technologies, right? So biocides, you could say, are under pressure, you could say, from an environmental point of view, and they should rightfully be, right? Because, of course, you should minimize sort of the release of chemicals in general to the ocean, right? But you also have to be sure that what you're comparing this against, right? Is the cleaning really better? What is the implications 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. And I think this conference creates really a foundation to collaborate across the value chain, but also with academia to increase the level of scientific drive, I would say, when comparing different technologies and different approaches to biofarming management. So the conference is in itself hugely valuable.

You reported a lower Q2 due to natural variations between quarters. What would you say was the main reason for the weaker organic growth this quarter compared to last year?

Yes, it is the mix effect, right? And we are talking about that one customer having challenges this year, right, and actually taking lower volume than last year. So I would say that is one of the main reasons.

And the next question is, if your product is so good, why isn't the market penetration better than it is today?

Yes. It's market inertia and risk avoidance, you could say. And 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 choose last time failed them, they have severe macrofouling, over half of them continue to choose the same manufacturer and the same product, right? And that is the type of behavior we need to change in the industry. And 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.

And 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, so 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 1 year. So the current approval for Selektope runs to the end of June 2026, right? So in theory, it could take up until June, but we hope for more clarity than that still this year.

And you said volume growth was ahead of FX adjusted sales growth. Can you share some more color here? And what pricing pressure are you seeing?

Yes. The only color we can say is that the mix of customer 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. So 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, but I don't think we have more cost pressure than any other actuary within this business. There is still a good business case with the Selektope included in the paints.

And 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. And what we can see is that the price pressure is higher on that side where they actually introduced it into the existing formulations. But in general, I think we are under the same price pressure as everyone else in the business.

Yes. I'm just saying, I mean, the foundation of the value proposition is very strong, right? So if the coating manufacturers reformulate around the effectiveness of Selektope, they could achieve a better performance at a reduced cost, right? And of course, it creates more value for the shipowners. So it is a win-win-win business case, right, and so on. So fundamentally, the value proposition is very strong, which helps us, right? And then -- yes.

And is it fair to assume that will not be possible to match the very strong Q4 2024 and Q1 2025 levels in the coming 2 quarters?

Well, as we have touched upon here, these were really great quarters, right? Q4 and Q1 were really high. So of course, it's a challenge, right, and especially then sort of with one customer buying less this year. But 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?

Yes. There is one customer as we have stated then with a little bit of troubles this year, and they have sort of confirmed now that they will be using less product this year than they did last year.

And how many new products are currently in development phase with customers? And how many are you expecting to introduce to the market over the next 2 years?

Yes. 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? And that is a challenge for us, right? So we know, of course, when we have technical breakthroughs, we have helped them to solve various challenges related to their technology, but that does not translate to that we actually know when and where and exactly in what form they will launch these products, right?

But -- I mean, I would say there are 4 or 5 projects, right, that can turn into new products on a fairly short notice, right? So that's, of course, what we are closely monitoring to see that this is happening going forward.

And 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. And of course, we are in discussion, but there is nothing we can sort of elaborate around in this call.

Understood. And could you give us an indication of this quarter's cost for the EU reregistration process?

Yes. I actually assume that, that question would come up. And actually, it's been a quarter with significant cost. And I would say it's roughly between SEK 2 million and SEK 2.5 million in external costs depending on some overlapping activities. So it's really not easy to say, is it truly the EU cost or is it another purpose?

Maybe it's significant.

Yes. And for those who have been with us, I think we have reported quite consistently that we are on around SEK 1.5 million run level on these type of costs. So this quarter has been a little bit more.

How is the pricing point compared to silicone coatings?

Yes, it's a little bit difficult to answer this question. So 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 silicones are quite costly, right? And the value proposition is, of course, that it would improve the performance even further. So yes, it's difficult for us to comment specifically on that, right? But now if you compare high-tier to high-tier, I would say silicones tend to be maybe even a little bit more pricing.

Can you make any comment on how the Q4 has started so far?

No.

Okay. And 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. There's no price reductions.

Did you say -- sorry, yes, 14% right? it's not 40%, Magnus.

Okay. Thank you for clarifying that. Yes. So has your major customer, CMP, showed improved revenue growth in Q3 versus Q2?

Excuse me, can you rephrase that question again?

Yes, absolutely. Has your major customer, CMP, shown improved revenue growth in Q3 versus Q2?

No, they are slightly lower. Q3 compared to Q2, is that...

Yes, correct.

Yes, they have improved...

Yes, they have improved.

Substantially.

Q2 was -- as we said, it was low because of quarterly variations.

How do you market Selektope when you sell through distributors?

Well, I mean, the marketing of Selektope is, you could say, mainly targeting ship operators, shipyards and sort of the broader value chain, right? We, of course, work together with partners, agents and distributors and try to make sort of material available in local languages, right? So that it also supports their efforts, right?

Have you thought about Selektope in silicones?

Absolutely. It was actually the reason that we included silicones to show that there is a barnacle problem as far as Safinah and we have sort of concluded, right, also for silicones. So we view silicones as a very nice growth opportunity because to our knowledge today, there are no silicone coatings that contains Selektope or any sort of specific barnacle protection technology. So that is, I would say, a potentially major innovation breakthrough that we are, of course, actively working on.

Thank you. And 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. So we are looking at strengthening the sales team in general, I would say, as well. But yes, the plan is really to recruit a new sales resource, right?

Correct.

Okay. Thank you very much, Markus and Magnus for your presentation here today and also answering all of our questions. And thank you, everyone, who tuned into this presentation with I-Tech, and I wish you all a great rest of the day. Thank you.

Thank you.

Thank you.