• Q1e: one Freemelt ONE delivery, SEK 4.9m sales, SEK -8.8m EBIT
• First eMELT-iD sold, time to start converting partnerships to sales
• Demand high, according to management – especially for tungsten

Q1e: costs to remain elevated due to eMELT

We expect sales of SEK 4.9m, driven by one Freemelt ONE delivery in the quarter. Costs will likely remain elevated due to the launch of the eMELT-iD, and we thus expect adj. EBIT of SEK -8.8m (-12.2m), which will convert into adj. EPS of SEK -0.18 (-0.30). For FCF, we have SEK -22m, leaving the company with a cash balance of SEK 12m, but note that this does not include the proceeds from the SEK 60m share issue in Q2.

Tungsten demand high within energy and defence industries

We leave our sales estimates largely intact but reduce '25e-'26e EBIT by SEK 4-5m, as we anticipate slightly lower capitalised development expenditures. In Q2, Freemelt sold its first eMELT-iD machine, a big step for the company in its commercialisation journey. We expect to see ~4 more eMELT-iD orders this year, and that the company will sell its first eMELT-iM machine around Q2'25. Freemelt has announced several interesting development orders and collaborations in the past months, such as the order from Saab and the agreement with an undisclosed Fortune 500 company, and it is now crucial that the company starts converting these into machine sales in the coming 6-18 months. Demand is high, according to management, especially within tungsten applications for the energy and defence industries. As an example, 60 eMELT-iM systems would be needed to manufacture the 500,000 tungsten tiles required for the ITER fusion reactor in one year, while it would take 26 years with the currently available build speed.

2.1x-0.9x 24e.-26e EV/Sales

The share is down 56% L3M (vs. peers -24%, OMXSSMAC +9%), and is currently trading at 2.1-0.9x '24e-'26e EV/Sales.