I-Tech AB

STO:ITECH

Earnings Call Transcript 2024-Q1

[Operator]

Hello, and welcome to today's webcast presentation, where I-Tech presenting the Q1 report for 2024. With us presenting, we have the CEO, Philip Chaabane; and CFO, Magnus Henell. [Operator Instructions]And with that said, please go ahead with your presentation.

[Philip Chaabane, executive]

Thank you, everyone, for tuning into I-Tech's quarterly report, the first one of the year 2024. It is with great pleasure, we will run through this presentation together with my CFO, our CFO, Magnus Henell; and myself, CEO. We will split the presentation and then we'll be ready for questions once we get through the last slide.So by that, let us bring us into the first slide. So for you who may be new into the game, I-Tech is interface technology company based on trying to make services smooth and efficient. And in this case, it's about marine ship hull surfaces, so those who are on contact with water and trying to avoid marine growth attachment to those surfaces. To keep that clean is essential for efficient transport through the sea and that is ingredient -- that's where our ingredient technology Selektope makes a difference.Our growth has been substantial over the years. We have now more than 20 available customer products using our ingredient technology Selektope. We are part of the product portfolio of 9 of the world's biggest -- sorry, of 6 of the world's 9 biggest paint companies. And to-date, we recognize that the technology is serving somewhere on the hull of more than 2,500 ships. That's still ways to go, knowing that there's 100,000 ships out there, but it's a strong indication that the technology is well-received on the market.The total opportunity for those 100 vessels and a whole bunch of small or medium-sized or bigger-sized yachting vessels are included. We could go to $350 million to $500 million as a total turnover figure on Selektope sales. That's the total maximum.We're listed, as you know, on Nasdaq First North. We are protected through patents, IPR assets, but also regulatory hurdles that needs to be overcome by others. So it's a very protected area. And we're quite few in this industry. We're only 7 other biocides if we categorize them of it that actually are available for the paint makers to use and biocides is part of almost all antifouling coatings sold in the industry today. So it's a small and very condensed industry group we're in.The purpose, as I mentioned, is to enhance the power of the coatings and make sure we lower emissions to air and sea by reducing the friction on ship hull. And in our case, that's all about avoiding barnacle attachments to the hull surface. And that's where our technology is significantly more powerful and sophisticated than many other approaches that's been tested and used in the past.So for this quarter itself, we are proud to present a growth on sales as amounting to SEK 38.3 million. That's compared to SEK 30.8 million the same quarter last year and certainly saw a quite big shift from the fourth quarter last year. So all that is really positive, indicating growth this year is here. We are on a steady pathway to a very interesting future.But it also comes with a positive aspect of strong earnings. We display here the EBIT margin being 24% compared to 27%. We'll go into the details of that a bit more later with the help of Magnus. And it all boils down a strong positive net result of SEK 8.6 million to compare to SEK 6.7 million. So it's nice to see how the net result is growing here as the sales are growing as well.And we conclude also that a group of 3 customers are now engaged in driving this top line. We did have commercial sales to 6 different customers over the period. But on the more magnitude of side things, it's really that we look out specifically and that's a welcome contribution.So what brings us to work in the morning? Well, first of all, it's product Selektope's correlation to make marine hull coatings much more efficient and higher performing than what they have been in the past. This is a technology that links into a puzzle of ingredients and other technologies that paint maker are producing and developing.And altogether, that brings forward an antifouling coating that's expected to sustain for the lifetime of the drydocking interval normally 5 years. If that works optimally 100 million tons of CO2 can be saved. And that's an industry that's responsible for quite a big part of the global CO2 emissions. So it's a high impact if we succeed and certainly, if our customers succeed to integrate our technology in the best possible way.But it's not also only that. If you dive down and understand the marine ecosystem, so you get quickly familiar with the risk of having invasive species or alien species being transported around these different ecosystems. And we have had, as most of you probably know, the issues on the ballast water side, which to a very large extent is fixed through technology innovation.Now the next focus is hulls, because if a hull is fouled with whatever organism, they are constituting a quite high risk to actually bring on transport species that in some cases may be invasive. So several ports around the world are requiring documentation on how well the hull is maintained, how to try to make a risk evaluation of the fouling condition.Of course, this drives the industry, meaning the shipping community into investing in high-performing and much more reliable antifouling coatings than maybe they had to do in the past. So a negative -- heavy fouling condition will likely then result in a non-accepted port call with a lot of extra work in cleaning somewhere out in the ocean.These are the 2 main factors driving the development of premium antifouling coatings and they are taking a bigger share of total markets than one could -- for these are the 2 driving forces.And the third one is trying to optimize materials used, how that goes for any industry in any condition, of course, right? Don't use excessive amounts of anything. And in our case, with our super small or minimal amounts of Selektope that's used per liter paint, it is a part -- it's actually a tool to see if the paint maker can optimize and reduce the amount of chemicals used or biocides in the paint itself without compromising performance.And there are a few examples of that. That's not the only way forward, but there are a few examples of that. So that's the third trend that may come along, trying to bring down the biocide loadings to a lower level than what's been used in the past without sacrificing performance in any shape or form.Three good reasons to go to work and 3 good reasons to speak to and hope for investors in I-Tech. Over the quarter, we have had very exciting news. For us, it's not every day that new customers come on board and certainly not in combination with a new very broad spectrum, premium antifouling coating. Here we are with PPG's new antifouling coating called Nexeon 810 that is containing Selektope and that's replacing the previous Nexeon products year-over-year here, although they will probably run in parallel for some time.It's a copper-free, low biocidal, self-polishing paint with very strong emphasis on vessel performance, emission reduction and sustainability, which all goes fully in line with what we hope that our customers will do when they take maximum use of our technology. Again, it's not the only way to use it, but it's one way.So this was a major event for us, although we've been working with PPG for more than 15 years, I think. Finally, things came into place. And here we are with the Nexeon 810. We're excited to see what that would bring for us and the industry in the many years that are ahead of this product.So that also brings us into the now almost famous customer chart. As you know, there are only 9 customers in this industry, we're focused on the shipping part of it that makes any difference. And if you're going to be really tough on these 9 numbers, it actually boils down to 6 that are controlling 80% of the global market.So we're expanding that list a bit beyond those 6 because there are a few that are really big on a local geographical level and there's one that are emerging that would probably take much more space moving forward.The interesting thing here is, again, the launch of PPG, which is a green checkmark and that is a drydocking product that can also be applied as a new building stage, but it's certainly designed for 5-year service.Then we also had adjusted the potential launch column a bit. One thing is that we were a bit optimistic in the test scheme on that final fine-tuning project that was to clarify and approve the product for launch. That was taking this longer time, which is not an indication of issues at all. It's just indication that things takes time in an industry like this, but there's no major changes other than a short delay in time.But on the other hand, there is a new customer showing up on the radar that we have engaged in licensing agreements and commercial discussions. None of that is complete, but it came much faster than we expected. So we added that as another second blue checkmark because it certainly appears like something is cooking, although I cannot really set further time frame on it. But we believe that within 10 to 18 months, which is quite broad window, there is a chance that these 2 materializes. Again, be a bit patient on those time lines, but at least it's in the right frame of the development process to believe in that.So both of those blue checkmarks are products that are either alone going to cover both the drydock and newbuilding or they're actually more than one product in pipeline, which will then cover either newbuilding and/or the drydock. So let's see how that plays out. But it's clearly interesting activity ongoing.So that's on the customer side. And we also have to show the strong position that Selektope has, in this case, Chugoku Marine Paints, who is a pioneering customer and also the largest contributor to the top line. When they display their -- some of the products should be said, at the Sea Japan Exhibition in Japan, in Tokyo, not too long and this is a picture of how that looks.And it's, of course, from an I-Tech perspective, extremely encouraging to see how well they are attached to the brand, how well they take you. So that's very specific mode of action in our molecule, which is a repellent technology in sharp contrast to all other technologies used in the market.So the small dosages, the biological effect that we have, the biotech approach that lies behind the research is now brought forward and used by one of the 3 biggest paint makers in the world, in this case, Chugoku Marine Paints. So of course, it's warming for our entrepreneurial team that has been working for this for 15 to 20 years. Let's see that this is now coming through in this way.The final push before I leave to Magnus here to present some financials is the overall industry ambitions pushed by IMO to reduce greenhouse gases. This is a slide you've seen many times before, but it's important to reiterate the fact that 2030 means a milestone, is associated with the milestone of reducing 40% CO2 per transport work. That's quite a big difference from where the industry is today. So ways to go and more premium antifouling and more other technologies need to come on the board of ships to achieve this.Looking forward, obviously, some sort of energy transition is needed. Fossil fuels will probably move out, at least if we believe the targets of IMO. And already which is quite near term if you think about it, 2050, the whole industry is supposed to be net zero, almost net zero greenhouse gas by 2050. And that's a significant undertaking to achieve that.Everybody knows that that's conversion to different fuels, which are much more expensive than today's fuels, meaning efficiency matters need to be fully in place and proven before that step can be taken. Again, that plays in favor for the marine coating industry and hopefully, Selektope continues to play a big part in that transition.But there's also other aspects coming in like the EU Emissions Trading System that's going to actually hit the cost side of energy transporter, I think, next year, starting or at least 2026. And though there are different indexes on the ships are also being measured that may have an impact on financing capabilities and/or charter rates.So many different things are now in place to step-by-step transform this very important industry for globalization into something that is probably the most sustainable transport sector per ton goods shipped that can be put in place. So that supply chain is important. We're really happy to be part of that.Now I leave to Magnus to review financials and some words on production because that also is part of Magnus' responsibilities. So go ahead, Magnus.

[Magnus Henell, executive]

Thank you, Philip. It's very nice of the encouraging talk about the customer development and all the traction we're gaining from customers to look a little bit more to the financials. And it's very nice to present after the hiccup in the last quarter to present a growth curve on the top line again where we should be and hopefully, it will continue to be moving forward.You can also see that on the profit level, the EBITDA level, we are growing a little bit. But of course, the quite weak quarter -- last quarter still has an effect that will have sold over the year when we're talking about the 12-month rolling. And also that we're keeping the operating cost levels somewhat in fact, where we'll come back to that later on as well concerning the cost and stuff like that. But overall, it's really nice to show you the growth uptake and we -- that we are also increasing the earnings.And a little bit more detail. As Philip said, where we had a strong growth on the sales side with 24%, giving us the best quarter ever on turnover. When we're looking into the operating profit, then we grew with 9% on the EBITDA level. And that should be said is compared to a very strong quarter last year. So that is very satisfying.But taking into the account the cost side as well. Of course, we are significantly burdened by the EU-related cost that amounts to roughly SEK 1.3 million this month -- or this quarter, I mean. We should also take into account that this is the first quarter where we had the full effects of our transferring to new premises, new laboratories, et cetera, where we set a cost base that is a little bit higher up than it used to be.But we did discuss the customers before. CMP continues with very strong growth with 30% up compared to last year. And as Philip said, PPG launched a new product in the quarter and it's already impacting on turnover. It's the third customer that shows some impact with 4% of actually turnover.And we had some interesting news during the quarter as well where we concluded that we now, with all the deliveries we made to customers over the time has exceeded over 20 metric tons of Selektope. And it should be said also that in every 1 liter of paint it's only 1 to 2 grams of Selektope. So it's quite a lot of liters of paints that has been out there.Taking this day also, I would like to go in a little bit to the balance sheet. It's not common that we discuss it, but as you all see, we have a very strong balance sheet. We have a good conversion, net conversion rate with a strong cash balance, very largely depending on that we have so far, a very low net working capital. It's only 7% on 12 months rolling.It should also be said that we will have to spend some money over the year. We will assume, maybe not this year, but certainly into next year, come into a tax payment position since our tax assets will be reduced down to 0 and then we start to pay tax, of course.We are debt-free. That's very important to say. And we also repaid over SEK 16 million that we borrowed from the Swedish Energy Agency [indiscernible] over the year of '13 to '18. We have the final royalty payment to the Energy Agency in Q3 of around SEK 800,000. So that's not really bearing us.So what will we use cash flow? Well, of course, we will need to increase working capital a bit because we are transitioning to a different supply set up where we would need to take a little bit higher responsibility of working capital. We also announced that we are on a dividend scheme with the company, which we intend to push -- move forward over the years.And then, as Philip has said in other quarterly reports and also in the annual report a little bit, we are assessing new growth plans and potential execution of those, of course. So we are strongly equipped with almost SEK 100 million in cash and we will hopefully find very good ways of putting this cash into work.So a little bit about production as well, which is my responsibility as well. Today, we have one main manufacturer continuously running industrial scale production if they are not on the full scale of their production, but almost. But in order to strengthen this, we're also on the verge to reopen our cooperation with a second supplier, which is a very interesting, also a large medical company, medical API company in India.But I think that the more interesting part here is that we -- late last year, what we did reveal that we are putting some investments into a new supplier, which is a specialized contracted research and manufacturing supplier where we have invested in the familiarization of their site and they are now investing in the facilities and we have the aim to start delivering from them in Q3, Q4 this year.So why are we broadening the suppliers? I think it's very important because, first of all, we need to secure the supply of [indiscernible]. Sitting on only one work to suppliers is not healthy for a company like us where we need to deliver timely to our customers.Of course, we also would like to increase the process yield. With every increase in the process yield, of course, reduce costs, but it also improves the production sustainability. And the focus is, of course, a lot of cost, but when, for example, if we succeed in establishing higher recycling of raw materials, et cetera, which will, of course, reduce our carbon footprint.And the third part is, we want to secure the most efficient production setup. And that's not talking only about the process. It's talk about everything around the production. It's process, it's the material handling, it's logistics, et cetera, where we want to achieve the highest possible customer satisfaction and, of course, the most attractive total production costs.So then I'll leave for you, Philip, after this short financial run-through. Finally, we had a view on balance sheet.

[Philip Chaabane, executive]

Anyway, this is our last slide. So we normally end by a short business outlook to give you some ideas on what we have in front of us and what maybe we spend the most time, at least would like to see happen as important steps.And one is obviously that we are really excited about new customer coming on that we've also been working with for some time, but not as long as for the others. So the quick, not to say turnaround from idea to actually entering some sort of commercial discussions is highly encouraging, although we know that they know what they're doing, of course, it's just a different leadership in place and a different way to look on innovation, which we were interested to follow and see where that goes. So that's important.And we have our previous acknowledgement of licensing with [indiscernible] hopefully also plays out well moving forward. And that would combined give us a commercial footprint within -- with the 8 of the 9 largest in the world and you can say that's way beyond 90% of the total market that we captured by that because the lines is quite small. So that will be a wonderful position for I-Tech. So looking forward to that.And as Magnus said, the operational improvement project is underway. And we also have technical milestones within reach finally that can help to overcome some tricky challenges in certain coat -- certain coating types that we believe can accelerate the work -- sorry, the uptake into the drydocking scheme of products. And that's, as you may know from before, is where the volumes is. We're talking about 15,000, maybe even 20,000 drydocking opportunities per year as opposed to 1,500 newbuildings. So it's very important to get into that.Some of it is already flowing in, like the PPG product and a few of Chugoku's products. So there is some small technical hurdle that maybe if we come through that can help others to move in as well. So we're excited about that. And maybe we can come back to that later, but still some time needed before we prove what we have found.On the challenge side, it's no secret that the [ ED ]process is continuing. It's a pathway forward. We have invested everything we can, taking every angle we can to the issue. And in this first phase, which is on the chemical agency scientific review where we're trying to put our interpretation and that's then supported by mining external experts to the table and hopefully making members pay attention to this very delicate situation where a difficult parameter is introduced into the industry into a very difficult and different biocide Selektope.And if details are not understood, it's a big risk that the general thoughts are overruling the nitty-gritty details, and then there might be unfavorable outcome of this first process. But let's see and I emphasize that's only one out of many steps ahead.So we're doing everything we can, and we are -- we will come back once there is anything meaningful to say in that industry on that process. As you've seen from the financial report, there's a lot of money going into that, which obviously is showing our ambition and are willing to defend.Now we have a cost that is also jumped up on a little bit different level for good reasons because we invest in strategic search with invest in development, manufacturing, as we discussed, but also regulatory affairs. Obviously, regulatory affairs maybe not a pleasant strategic expenditure when it comes to the ED, but in many other aspects, it is a U.S. process, which we will hopefully restart here after summer. And we have other countries where we do have a very positive momentum around the need of Selektope and the dialogue with the authorities.And then as mentioned, right, we have the suffering of delays in EPA. Let's hope that staff at EPA is not completely changed after the presidential election because then everyone is back to square one again. But if not, we do see a pathway forward now obviously have aligned the resources finally after 3 years of recovery from COVID backlogs, a lot of turnaround of key people, I would say.But I also want to have this opportunity to say this is my final public presentation of a quarter report for I-Tech. It's been 10 exciting years as CEO. It's been enormously ups, how to say, interesting events that we have gone through together in the team and also with you as shareholders the last 6 years.And it's with great pride I leave with these good results, of course, and in good hands of a very strong team who is everything to this product and it will be headed by a very stable and robust experienced person next to me here, Magnus Henell, who will be the interim until the full CEO process is completed.And that process is ongoing. And I hope that somewhere in June, we have the conclusion of that. And we choose to do it thoroughly. We twist and bend and check the alternatives at hand and then we'll make a decision. And maybe you would be seeing me in the presentation of the next CEO as our next opportunity to meet.But in between that, it's all in good hands. And I wish Magnus all the best in his interim position here. Hopefully, I can help him as a Chairman if the election goes, we hope in after AGM on May 16.By that, I say thank you and look forward to your questions.

[Unknown Executive]

[Operator Instructions] You're right in the Q1 report that the EU re-registration process costs are expected to continue over the coming quarters. Does this mean that you think that it's unlikely that there will be a positive outcome from the working group stage that was scheduled for Q2? And what is the current time line of the process?

[Philip Chaabane, executive]

We have to live under the assumption that it will continue beyond that that there will be a bumpy ride, which we said before. That doesn't mean that we don't have a good momentum right now in the funding for the second quarter meeting, the [ PPC ] meeting. But we have to count on a continued process of a longer time frame, of course, because it takes time to change minds. Therefore, we make the statement that it likely will come out post the next few quarters.Nothing is done until it's done. And also this first PPC meeting is only an opinion again, although it's little bit more important than last time, but it still is far from a decision. So -- but either way, we will probably need to spend the efforts in concluding the whole dossier and communicating around it. But you're right, we do always tend to look on the cautious side when it comes to this plan for the next quarters as if we do not have success because it's too late to plan it if we started that part already before adding those plannings just in case.

[Unknown Executive]

Other external costs were around SEK 3 million more in the quarter compared to the previous Q1. Besides SEK 1.3 million related costs, what else has driven the increase? And should we expect this level of cost going forward?

[Philip Chaabane, executive]

Well, to a certain part, we should expect this level of cost except the ED process, as I mentioned before, we have moved into new premises. We have had -- we are taking external services costs for support, et cetera, around the laboratory equipment, which we didn't need to do before.We have taken, as you know, we have the CEO search. We're also taking some costs related to that. But at latest, we also have been traveling more and been able to see our customers on-site in Asia to a much larger and greater extent than the previous years. And that will, of course, go up and down between the quarters. But I think we should count on a cost level that are close to what we see today, except for the ED cost there.

[Unknown Executive]

You have stated that Chugoku has grown by 30% in your report. Could you comment anything about how your smaller customers are growing at the moment compared to how Chugoku group when it was smaller, would you say that development is similar or is there a difference there?

[Philip Chaabane, executive]

That's a good question. We see an exciting uptake on the PPG accounts to start with. But it's only a few months into the game, it was too early to answer that question. For the second biggest customer, it was a really strong growth last year, which was probably faster than what Chugoku had at that time.We will see after this year, how they grow, if it's comparable to Chugoku uptake. Remember, for those who've been with us for quite some time without the years in 2017, '18, where nothing grew -- we had no growth at all, right, and that was also the COVID year. So there will be plateaus in every customer's uptake, but we're quite positive that would be growth on all those accounts. And as I said, in PPG case may be in line where Chugoku were at the time. For the other smaller ones, we are not seeing any significant movements right now.

[Unknown Executive]

Okay. And can you tell us a little bit more about the PPG launch?

[Philip Chaabane, executive]

Well, yes, it's been something they've been working on for quite some time. They are very familiar with this Nexeon technology that they have, which is a very high-performing system, but is now made even better through the addition of Selektope.Our relation with PPG goes way, way, way back, right? I think it's 15 years or even more, maybe that's been some sort of dialogue and there was ups and downs in test results and the routes were changed. So we're very familiar with PPG, PPG is very familiar with our products. So in that sense, it's feel safe and good, reliable that we're really thinking of doing the testing correctly.On a global perspective, it's interesting to see that PPG's 2 main products is a silicon-based biocide-free product and this is this one, Nexeon 810, which is on a low biocidal version of self-polishing. So they're clearly moving into that direction very strategically because the premium uptake is obvious.They want to be part of that and they want to do it with their angles, so they go forward 2 different products, one is on the biocide -- silicon and the other one is this one. There are other products as well, it should be said, right? But on the new side of the coin, of the release side of the -- the trend side of the -- this is what you can see. We're really excited to see how big a portion of this would take on the total portfolio.

[Unknown Executive]

And your annual reports a few years ago stated that your formulation pattern expires in 2026 and your product pattern expires in 2030. However, last year report says that your patents run until 2034. Did you renew this patent last year? And could you please explain the difference between these 2 statements?

[Philip Chaabane, executive]

Yes. First of all, it's correct that one of the most important patents for I-Tech expires 2026. The one has already expired in 2020, which was the original patent. 2034 is a co-shared patent that is very important for us and that's in place, as I said, until 2034. That gives some sort of protection that we obviously want give us to our customers who use the product, but that's protecting from others to access Selektope formulation types into -- well, more than 10 years from now, right? So those are the differences.But I would also say that we are constantly trying to renew -- we can't renew old patent, but you can renew the patent portfolio by new innovations and finding solutions to problems that you learn about much later in the game. We're trying to be active on that and there's a new patent that may be useful for us. It was made public not too long ago and there's 1 or 2 more in the pipeline that we hope can help that.I need to emphasize every time we go to this discussion, though, that regulatory approvals is important, the manufacturing patents are also important. Those go also to 2034, right? The approvals are for long term. So all in all, the hurdles are quite high to engage in this. But yes, if you want to play it that way, you could probably find a way through somewhere 10 years from now with a quite simple way.

[Unknown Executive]

And how is the allocation in sales between drydock and the newbuild today?

[Philip Chaabane, executive]

We have no other indication, as I say, last quarter, which I think we said is 60 newbuild, 40 drydock. The launch of the PPG product and the potential uptake, bear in mind, everything takes time in this industry. But if you look a few years ahead, we hope that will definitely contribute to the drydocking because it's clearly specified as a 5-year system for drydocking. Of course, they sell it also as a newbuilding, but that is for the 5-year system. So that will help us and help the whole momentum into the drydocking industry.

[Unknown Executive]

Would you say that your customers now are at a normalized inventory levels?

[Philip Chaabane, executive]

We see that there is a sharp demand with short notice or at least pushing dates on deliveries. So we do not see any levels of inventory buildup. But you maybe also check this with Magnus if you see difference from your perspective?

[Magnus Henell, executive]

No, I have exactly the same view. And as Philip said, there are no dragging in the deliveries. It's just the opposite. They would like to push the delivery dates forward or closer to us. So I would say that they are on a normal level for them. And normal level for them are normally actually quite [ level ] since they demand quite fast delivery dates.

[Unknown Executive]

What are your expectations for additional regulatory costs for the remainder of 2024?

[Philip Chaabane, executive]

It's very hard to say, of course, how long is a line, so to speak. But of course, we are in a level today on a little bit over SEK 1 million in the quarter. And one case could be that we stay on that level. Of course, we aim to spend as little as possible. But we need to bear in mind that we will do whatever we need to do in order to have a positive outcome of the process. And if that means that we need to spend a little bit more, then we will do that. We have the strength to do it.

[Unknown Executive]

You have made some reinforcements on the personnel side. In which areas have you made these reinforcements?

[Philip Chaabane, executive]

On the quarter, we haven't made any firm reinforcements. We have engaged Babcock's review help us walk through some sort of initial strategy work to see what options we have at hand. We did have last year some reinforcements on the R&D side and that's what's known as of today. Of course, we're looking into some areas, depending on where the strategy work comes in and depending on what a new CEO will have in his or her mind, of course. But that's the only thing we know for now.

[Unknown Executive]

Could you please elaborate on the strategic decision to spend a significant amount on the EU regulation issue considering that the EU market is such a small part of the global market?

[Philip Chaabane, executive]

That's an interesting question that is asked many times in different forms. But we've been in the industry a long time, which we fortunately have to understand that the EU approval has a few different important aspects. One, it is the entry barrier for any paint maker to work with the technology. If they don't have the approval, normally they are reluctant. Of course, that onetime approval is what they need to see, right?But when the product has been used many years as ours, the approvals is more of a market challenge thing. But it's also such that if we don't have any approval, it makes their life more complicated, products need to be registered in a certain way outside of Europe, we cannot really apply it on ships that are flagged in EU. So it makes -- it comes with some unease so to say, right, which is not favorable.The third thing is the brand reputation, of course and I've been talking on this topic before. If we -- Selektope will be the only biocide being phased out, which we obviously don't hope and don't believe in, but if it would happen as a worst case and it will be the only one, obviously, that said, it's very difficult brand building, brand recognition situation to manage, although we have a lot of evidence that the decision may be wrong, it is a big industry to convince differently.Now we don't think any of this will happen. If it happens, we won't be alone. That is almost for granted as we see it. But again, we don't see that coming as a negative scenario. So reason to invest is because we want to make our customer lives as easy as possible. We want to keep the brand recognition being approved in the most rigorous maybe over-conservative market there is. But as you say, business is elsewhere. This just happens to be the key you need to access some of that.

[Unknown Executive]

And as a future chairman, what opportunities do you foresee for the Selektope business and the company as a whole? And how will you support its continued growth and innovation?

[Philip Chaabane, executive]

First of all, we foresee a very strong future and it's a very good time to shift leadership in the company where, as you've seen from the report, we have a very strong financial position. We have a very strong momentum in the industry.It's a very good time for someone new to come in and not only continue to develop Selektope story, but take use of this -- the tailwinds we have to broaden I-Tech as a company if we find suitable things to go into, which are not obviously endangering Selektope business in any way or endangering the nice financial metrics that we have.So from a general position and obviously, with great excitement I want to see how we step-by-step can build I-Tech to an even bigger and more attractive company. And that's the key focus, of course, right? And the timing is perfect. We have a good runway to make a difference somewhere else if we want to find opportunity.For that, you need new energy, you need a time frame of multi-years, of course, to make a change. So I'm really excited as the chairman to follow the earnings from Selektope and then you see what new angle we can put to I-Tech, if any, without compromising our current performance.

[Unknown Executive]

And we'll take one final question here. As acting CEO, how does Magnus Henell plan to steer the company during the interim period? And what are his key priorities in maintaining momentum until a new CEO is appointed?

[Magnus Henell, executive]

Well, of course, we will not make any major changes in the company during the interim period, but that comes per se. And of course, me and Philip will continue to work closely together in order to continue the good customer development, continue the strategic work until we have the final solution in place. So I don't foresee any major changes. Just foresee to see that me and the entire team will continue the great work that Philip has been carrying out for 10 years.

[Unknown Executive]

Okay. That's a wrap of the Q&A section here. Thank you very much, Philip and Magnus, for presenting and answering all our questions. And also thank you very much to everyone who follow along for this presentation with I-Tech. And until next time, thank you very much and goodbye.

[Philip Chaabane, executive]

Thank you. Bye-bye.