I-Tech AB (publ) Interim report Q1 2019

Summary of the period – Q1 2019

”Continued healthy growth and increased activity with potential new customers”

Net turnover for the period amounted to kSEK 6 170 (3 813), which corresponds to an increase in turnover of 62% (2 663%). Operating profit/loss amounted to kSEK -4 435 (-3 295).

January to March 2019

• No important events during the period.

Important events after the period

• The Swedbank Robur Teknik and Microcap funds have increased their shareholdings in I-Tech after buying the main part of the 850 000 shares that I-Tech’s second largest owner, Almi Invest, sold during April.
• After a 40-month trial, Team Tankers International signed up more ships to use Selektope®-powered hull coatings.

Financial summary

CEO comments

During the first quarter, turnover amounted to SEK 6.2 million (SEK 3.8 million) which corresponds to continued growth in line with that of 2018. The gross margin for the period amounted to 44% (30%) which is in line with the company’s plans. Furthermore, we are seeing increased activity among a couple of leading potential customers through a relatively larger order intake than normal during the development/validation phase.

The first quarter shows that the growth curve has not slowed down, even considering that the first quarter is usually somewhat weaker. It is also positive that the gross margin lands at a level that shows continuity in the efficiency program implemented during the latter part of 2018.

The sales volume comes mainly from Chugoku Marine Paints (CMP), which is ramping up its profiling efforts in the premium segment. The Selektope® brand is gaining more awareness across the industry, which is helping to attract new customers to CMP and Hempel. I-Tech continues its work to put the technology first and to educate and engage end users. In several cases, this has contributed to direct orders between shipowners and coating companies.

At the same time, the challenges from last year remain in the industry with a price-sensitive customer group and concern in the shipping industry about how fuel costs will develop with the introduction of new sulphur requirements. Poor margins and major uncertainties are hampering the pace of investment and this is probably the reason why order books for new construction continue to be at low levels.

Our production rate during the first quarter was significantly higher than demand. The purpose of this has been primarily to validate the capacity levels and the efficiency of the process, as well as to ensure delivery capacity on future orders. The supplier has taken ownership of this investment, but it will be adjusted during the second quarter as I-Tech will contribute to the joint investment in building inventories.

Despite the challenging market outlook being worse than expected, especially on the new construction side, we are keeping our goal to have a third global customer launch Selektope-based products during 2019. We see signs that there is a clear intensification of the development phase in several other places. In the latter part of the first quarter and at the beginning of the second quarter, I-Tech has received relatively large development orders from two global coating companies. This indicates they are now taking the step to test the Selektope-based coating on a broader fleet than we previously expected. Although several aspects remain in the customers’ development work, we see opportunities that this work can result in new product launches in the coming years.

Philip Chaabane, CEO

For more information, please contact

Philip Chaabane, CEO
M: +46 73 910 37 08
E:

ph*************@i-****.se

This information is information that I-Tech AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication through the agency of the contact person set out above, at 08:00 CET on May 10, 2019

Interim report Q1 2019