<a id="bm-comp-df8a2be3-afac-4ad4-96a7-920c33930ff6" name="bm-comp-df8a2be3-afac-4ad4-96a7-920c33930ff6" class="BMCustomAnchor"></a><table><tr><td bm-component-id="df8a2be3-afac-4ad4-96a7-920c33930ff6" style="vertical-align: top; width:100.000000%;"><ul><li>Sales SEK 2.4m vs. cons. 13m due to incomplete eMELT-iD delivery</li><li>EBIT adj. SEK -13m vs. cons. -5m, expenses relating to e-MELT</li><li>Positive on partnerships and feasibility studies resulting in sales</li></ul></td></tr></table><a id="bm-comp-684aaca5-e181-43b7-b378-6df5361910cb" name="bm-comp-684aaca5-e181-43b7-b378-6df5361910cb" class="BMCustomAnchor"></a><table><tr><td bm-component-id="684aaca5-e181-43b7-b378-6df5361910cb" style="vertical-align: top; width:100.000000%;"><h3 class="bm-h3">Q2 results</h3><p>Sales came in at SEK 2.4m (-82% vs. ABGSCe 14m, -82% vs. cons. 13m), -56% y-o-y. The lower than anticipated sales were due to the expected eMELT-iD delivery not being completed in the quarter. Furthermore, the Freemelt ONE machine delivered to Mid Sweden University as part of the three-way collaboration with Sandvik, seems to have fetched less revenue than expected. EBIT was SEK -27m (+51% vs. ABGSCe -18m), for a margin of -1110% (ABGSCe -130%). EBIT adj. was SEK -13m (+129% vs. ABGSCe -5.8m, +165% vs. cons. -5.1m), for a margin of -556% (ABGSCe -43%, cons. -38%), where the adjustment pertains to regular goodwill amortisation. Operating expenses in the quarter were somewhat higher than anticipated as the company continued to incur expenses related to the e-MELT development project, and hired new commercial resources. EPS adj. came in at SEK -0.21 (+119% vs. ABGSCe -0.10), -7.6% y-o-y. FCF lease adj. came in at SEK -22m (+15% vs. ABGSCe -19m), +37% y-o-y.</p><h3 class="bm-h3">Estimates and outlook</h3><p>We expect cons. will reduce '24e-'26e sales by 8%, and EBIT adj. by SEK 5-10m. Management sounds positive on the several partnerships and feasibility studies Freemelt is involved in, and expresses that the typical 3-6 month long feasibility and application development studies, if successful, have a good chance of resulting in the sales of eMELT-iD machines, and later eMELT-iM machines.</p><h3 class="bm-h3">Valuation</h3><p>The share has returned +24% L3M (vs. peer median -50% and OMXSSMAC +2.6%), and is currently trading at 3.5x-1.4x '24e-'26e EV/Sales on our pre-report estimates vs. the peer median of 0.6x-2.3x.</p></td></tr></table><a id="bm-comp-eeb0ddc1-b098-4621-a4d5-6bd673723bfe" name="bm-comp-eeb0ddc1-b098-4621-a4d5-6bd673723bfe" class="BMCustomAnchor"></a><table><tr><td bm-component-id="eeb0ddc1-b098-4621-a4d5-6bd673723bfe" style="vertical-align: top; width:100.000000%;"><table id="bm-img-04be7ba0-63c9-4687-bca1-9638667dc785" class="bm-img-table xslt-img-empty xslt-img-include"><tr><td class="xslt-img-caption">Deviation table</td></tr><tr><td><img bm-img-encrypt="04be7ba0-63c9-4687-bca1-9638667dc785" bm-img-original-height="512" bm-img-original-width="656" bm-img-svg="image:image_upload/80781_31ab6b65-4f50-4819-8343-caa3a4ecd34a.svg" bm-img-width-hint="90.23%" id="bm-id-04be7ba0-63c9-4687-bca1-9638667dc785" src="https://abgsc.bluematrix.com/images/image_upload/80781_31ab6b65-4f50-4819-8343-caa3a4ecd34a_656.png" svg="/nas/web/clients/abgsc/images/image_upload/80781_31ab6b65-4f50-4819-8343-caa3a4ecd34a.svg" width="656" alt="" title="" /></td></tr><tr><td class="xslt-img-source">Source: ABG Sundal Collier Estimates, FactSet Estimates, Company Data</td></tr></table></td></tr></table>