Strategy update September 26, 2018
With you today Torbjörn Sandberg, Peter Högfeldt, CEO VP Marketing & Customer Operations 2
Impact Coatings has strong fundamentals • Competent team • Leading PVD technology • Cutting-edge fuel cell product • Progress on commercial and industrial practices 3
Our ambition is to become a mid-cap listed industrial company Niche R&D Mid-cap industrial focused company company Commercial discipline Continued technical leadership Structured go-to-market processes World class manufacturing and quality 4
We aim to lead niches in Decorative, Metallization and Reflectors (DMR) Product Current situation Next steps Best track record • We offer customers a • Drive awareness among versatile machine with high-end eyewear and Highest willingness to pay unique coatings watchmakers Decorative for consumer products Most benefits from differentiation • We support a wide range of • Focus on existing applications with cost- customers and products, efficient PVD systems for take on select development plastic parts project with large-scale Metallization of automotive suppliers automotive parts • We have an innovative • Increase the capacity of our reflector coating system machine to earn premium that produces superior pricing Automotive quality products reflectors 5
We have built a solid customer base in DMR Installed base by end use, # Machines # Customers Sample customers D 10 5 Decorative M 5 Metallization 5 Internal use int. 3 n/a (Contract manufacturing) Reflectors R 3 3 R&D R&D 1 1 Total Total 22 14 We have close relationships and preferred supplier status with many of our customers 6
DMR is key to building a profitable core business today Bubble size indicative of identified revenue potential Impact Coatings’ proven competitiveness Decorative High Reflectors Metallization Low “Build stable core business in DMR today” <1 Year (2019) >2 Years (2020+) Time to achieve multi-unit orders 7
Fuel cells (FC) offer large potential upside in the medium term Bubble size indicative of identified revenue potential Impact Coatings’ proven competitiveness “Invest in fuel cells for the future” Decorative High Reflectors Metallization Low “Build stable core business in DMR today” <1 Year (2019) >2 Years (2020+) Time to achieve multi-unit orders 8
The FC segment will focus on industry leaders: OEM’s, industrials and select mature innovators Group #Accounts in portfolio Example applications Key automotive OEMs, T1- 2’s and ~5 other industrials Cars Busses Trucks Mature innovators with a proprietary ~5 technological edge Automotive Forklifts Backup power Impact Coatings’ fuel cell customer portfolio De-prioritized Startups in applications with relatively startups, subsidy- Bus/ truck startups 0 low potential FC volume (phone driven customers & without product volume chargers, consumer drones etc.) sub-scale industrials 9
We will be rigorous in prioritizing which mature innovators we work with All potential FC companies If the customer is not self-funding it is well capitalized (e.g. Significant 3+ years of runway) and has committed long-term owners capitalization Management is experienced in running companies of Iterative evaluation process Experienced relevant size in relevant industries management The customer has a credible plan to execute their Credible strategy and a history of delivering on their promises execution Meaningful size or The customer can become a large customer or provides strategic value other strategic value (e.g. technology) Among potential customers that meet our criteria we will Prioritization prioritize our resources based on our assessment of the lifetime value of each account IC’s long-term focus customers in fuel cells 10
We will focus on selling close to home, but also develop strategic customers in foreign markets “Close to home” “Foreign markets” Lower cost to sell and serve because of geographic Higher cost to sell and serve because of physical proximity and standardized business practices distance Established well-functioning IC organization, More challenging to organize technical support, efficient travel installations and customer service Standardized selling/ buying process and Less standardized selling/ buying process , requires commercial practices increased financial and commercial risk management We will focus on selling close to home We will develop strategic customers in foreign markets 11
We will keep assembly in-house to drive higher efficiency and lower cost Shorter lead time Faster assembly Reduced bill of materials (Immediate priority) (Medium-term initiative) (Long-term initiative) Contract to delivery lead time Project hours per machine Bill of materials -30% -50% -30% Today Target Today Target Today Target • Reduce vendor lead time • Develop a highly repeatable • Simplify, replace or eliminate parts manufacturing process • Keep key components in stock • Develop robust supplier base • Train and retain manufacturing staff 12 Note: Excludes the INLINECOATER™ P200/400, our smallest machines that are produced by a 3 rd party.
Our ambition is to develop Impact Coatings into a mid-cap industrial company • We have strong fundamentals • We aim to lead select DMR niches and work with fuel cell industry leaders • We will focus on selling close to home , but also develop strategic customers in foreign markets • We will keep assembly in-house to drive higher efficiency and lower cost. 13
Q&A Please call in to the telephone conference to ask a question 14
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