Polygiene Group (Stockholm:POLYG) Q2 2026 Earnings Call

0:00 Hello and a very warm welcome to PolyGene Group's second quarter 2026 webinar. Today's presentation will be divided into three sections. Our CFO, Nicolas, will start with the financial update, after which I will provide an overview of the business and then we will conclude the session with question and answer. With that, Nicolas, over to you. Yeah, during the quarter, we did see an increase of sales with around 1%, and with a negative effect of around 2%, the actual increase was 3%. So it's 32.1 versus 31.9. We also have an improvement in margin, 71% versus 63%.

0:45 That includes a positive impact of 2% due to the effects. We also had a positive price impact. We've been a little bit ahead of the curve when it comes to the increased cost of the silver, and we have managed, mainly in Admaster, to increase the price to the customers before we actually have had the actual cost increase. And we also had repricing at the distributors at Polygiene, which had a one-time effect of around 1 to 1.5 million SEK on the merchant. We had lower operating cost, 18.9 versus 19.8, lower cost in travels, tests, legal and IR.

1:32 And all of that generated a positive EBITDA of 3.0 million SEK versus minus 1.2 and a positive EBITDA 1.6 versus minus 2.6. Looking at the cash flow, we also had the positive cash flow with 6.1 million versus last year with negative 12.6 million. We had a really good AR collection during the quarters. We had some late inventory build-up, but that was then offset by the accounts payable. Last year, we had the dividends paid out for the first part of the dividends in late, maybe in June. And then we had a bit of earlier inventory build-up that wasn't offset by the accounts payable.

2:17 And then at the end that resulted that we have at the time end of the period we had a cash situation of 50.3 million SEK versus 47.4 million SEK last year. Going into a little bit more details on the sales overall, we could see an increase in both EMEA and America, while the region Asia was flat versus last year. We saw a drop in the global. and the global then impacted the oligine, which was down 10% versus last year, now representing 58% of the total versus 65% last year. We saw the sales of 18.5 this year versus 20.9. But as we said, the difference is in the global sales or the distributors, which is then inventory adjustments of around 4 million cents. All regions are in line or above, and we saw actually quite big growth in America versus last year with almost 40%.

3:19 Looking at that master, we had an increase with 24% going from 11 to 13.6 in the quarter and was then representing 42% of the total versus 35% last year. And the growth was mainly driven by sales in EMEA. Thank you, Nicolas. Before I move into the business update, I would like to take a moment to thank Nicolas personally for his dedication and contribution to Polygiene Group over the past years. It's been a real pleasure working alongside him and I would like to thank him for the support and professionalism he has shown throughout the leadership transition in the last seven months. Today's presentation was his final investor webinar before he leaves the company at the end of August. And on behalf of everyone at PolyGene Group, I would like to wish him every success for the future.

4:16 Looking ahead, I'm also pleased to welcome Anders Nordgren, who joins us as a new CFO on the 17th of August. And the planned overlap with Nicolas will ensure a smooth handover and continuity for the business. Now looking beyond the quarterly financial, the key takeaway from Q2 is that we have made tangible progress against the strategy we introduced at the beginning of the year. Market conditions remain challenging, but we have strengthened the business in the areas where we can control. If you recall, at the beginning of the year, I introduced four strategic priorities for the Group.

5:05 Six months later, those priorities remain unchanged. And more importantly, during the second quarter, we continued to turn strategy into execution. So while the financial results reflect the current market environment, the progress we've made against these priorities reflect the business that we are building for the future. The pricing transition is now complete. Our innovation pipeline is building commercial momentum. We have taken further steps to simplify our organization in the Americas, and we continue to strengthen and reposition AdMaster as a trusted technical solution provider.

5:50 The remainder of today's update will show how each of these priorities is progressing. So our first strategic priority this year was to manage the impact of higher silver price. And I'm pleased to say that this transition is now complete. While silver price have stabilized, they do remain at around twice the average level seen during 2025. which makes it essential that we continue our adjusted pricing model. During Q2, we completed the final transition across both Freshness and AdMaster businesses. And that included, as Nicolas mentioned earlier, the repricing of the remaining distributor inventories.

6:39 So from Q3 onwards, all the sales will now reflect the new pricing structure. but also the new cost of silver. So it allows us to move beyond the transition phase. And just as a reminder, the objective has never been to expand margin. It has been to recover the higher cost of silver while preserving the gross profits we generate for each cell. and as we communicated previously, because selling prices are now higher, the reported gross margin percentage will naturally be lower. This is simply an accounting consequence of the pricing mechanism. This is not a deterioration in the underlying economics of the business.

7:28 And on the positive side also, with the pricing transition now behind us, we can devote more of our attention to the strategic initiatives that will drive future growth. And on this topic, innovation remains one of the key drivers for our long-term growth strategy. We continue to build a balanced innovation pipeline with technologies at different stages of commercial development. Shedguard is now focused on supply chain optimization, following successful customer validation, and we are preparing for a broader commercial relaunch of the technology later this year.

8:15 OdorCrunch 2.0, which was launched only in March this year, continues to generate very strong customer interest Extensive meal trials are underway, and that provides us with very valuable feedback as we look to optimize the technology ahead of a wider commercial rollout. And Stay Cool, which was launched last year, has now progressed into commercial adoption. We're seeing increasing order volumes, new programs with global brands, and growing interest from customers looking to combine freshness and thermal comfort. So the balance is important here because it creates multiple opportunity for future growth rather than relying on just any single product.

9:07 And of course, innovation only creates value if customer adopted, and that's exactly what we are seeing across a growing number of customers and market sector. During the quarter, we continue to strengthen relationships with existing partners, while also expanding into new customer segments. These examples on these slides demonstrate that we're not simply winning customers, we are broadening where and how our technologies are used. So starting on the left, Kingsland is a leading equestrian brand, and this demonstrates how we are deepening a longstanding partnership through joint marketing, sales support, training, and expanded product collaboration, helping to drive the brand's long-term growth.

10:00 As a result, selected line within Kingsland Spring and Summer 2027 collection will become the first in EMEA to feature the full combination of polygenes Stay Fresh, Eau de Crunch and Stay Cool, all together in one garment. Chassin, in the middle, illustrates how our technologies continue to expand beyond sports and outdoor into premium lifestyle apparel, opening new customer segments and further diversifying our customer base. And finally, on the right hand side, Orbit International demonstrates growing adoption within professional workwear. another important adjacent market where we see significant long-term growth potential.

10:53 So together, these examples show that diversification isn't just a strategic ambition. It is being delivered through customer adoption and across a broad range of markets and application. Executing our strategy also requires the right organization, capabilities and culture. During the second quarter, we have continued to strengthen each of these areas. In May, we brought colleagues from across the group together for our annual company meeting in Berlin. It was an important opportunity to align the organization around our strategic priorities, strengthen collaboration across teams and reinforce a shared direction as we continue to build the business.

11:46 We've also taken further steps to integrate a solid surface business in the Americas into AdMaster. This creates a simpler operating model. It brings technical and commercial expertise together within one organization. And most importantly, it's improved profitability through a more efficient cost structure. Finally, we've enhanced AdMaster with two important appointment. Adrian Davenport has returned to the business as technical manager, bringing extensive experience and a deep understanding of both AdMaster product and our customers. And Dr. Kurt Demeyer will be joining us early August as head of commercial growth, bringing more than 20 years of experience and specialist expertise in antimicrobial technologies.

12:42 Together, they further strengthen both the technical and commercial capability which we need to support AdMasters' next development phase. And taken together, these initiatives across these slides ensure that we have the right people, the right structure, and the right capabilities to execute our strategy and support sustainable, profitable growth. And continuing on AdMaster, the fourth strategic priority is to strengthen that side of the business by building on what has always been one of AdMaster's greatest strengths, technical expertise. For more than 25 years, AdMaster has helped customers solve complex technical challenges across a wide range of industry.

13:34 And whilst in recent years, following the COVID pandemic, the business became increasingly associated with antimicrobial and consumer facing application. Today, we are returning to the broader technical heritage. We are expanding our presence in industrial and technical application. And for this, scientific and regulatory leadership remains at the heart of this strategy. We need to give customers confidence in both our expertise and our technologies. How we do that? We do that through close collaboration with customers and active engagement across industry trade association. And we are expanding our solution into a really wide range of application from water and construction to automotive packaging and healthcare.

14:29 The key message here is that this isn't about changing what AdMaster is. It's about returning to its technical roots, while expanding the market and applications we serve. So to conclude, if I was to leave you with one key message today, it is this. The market conditions remain challenging and recovery is likely to take time. However, over the past six months, we have consistently executed the strategy we committed to. We've completed the pricing transition, we are building a stronger innovation pipeline. We are expanding into new market and customer segments. We are strengthening the organization and we are restoring AdMaster's position as a leading technical solution provider.

15:20 So those actions won't transform the business in one single quarter, but together they are building a stronger, more resilient company that is better positioned for sustainable, profitable growth. Thank you. And are we now happy to take on your questions? We had some questions prior to this presentation. I will guess some of them we have already answered in the presentation, but I will go through them and see if there's anything that hasn't been touched upon. I think the first one we have is a little bit that we haven't touched upon is around the stock. the stock market, how we can create more interest around it and what we're doing?

16:07 Yeah, actually, we did attend some IR events this year. I was in Stockholm twice in March with Red Eye and then in June with Axie Garner. We will look into the second half of the year to also do some events similarly. And also, I would say prior to that, we were focusing a little bit on the retail part. So we've been out visiting 10 to 15 small access bar communities and presenting the company. We also got some questions about Shed Guard, Stay Cool and Order Crunch 2.0. I think we already answered that one. A little bit on the business development at Edmaster. I think we talked about that.

16:54 Any clear actions going forward? Yeah, I think we've been going through that. The ones that you presented when you started then both in I would say last quarter and also this quarter, following up and showing the progress on that one. So I think we touched upon that one as well. And there's another one here. We probably had some talk talked about and that's the. A lot of brands are talking about phasing out silver. What timeline do we see for for facing out Apolligine Stay Fresh and how big part is the Stay Fresh of our total sales? So Stay Fresh today is the majority of our sales on the textile side. However, what's important to understand, and we did a team, marketing and regulatory team together, put a very good document that is available on our website, both the Admaster and Apolligine website, about making sure we don't put all the silver into one bag. Not all the silver are being banned in Europe. It is certain type of silver and the one we are currently working with are still being supported and we are working very closely with the silver supplier to make sure those remain available for the European market.

18:14 Having said that, Yes, there is a market demand for non-silver based biocides and we are working on that. So we are, for example, working with a technology called Stay Fresh Bio. It is still in its early days, the technology. We have been running some milk trials. At the moment, we are just waiting for the final push on the regulatory side from the supplier before we can roll that technology out more broadly. And of course, with OdorCrunch 2.0, switching from antimicrobial to more odor control technology is also part of the strategy to diversify a portfolio and be able to answer the brands who are looking for non-biocide technology.

19:01 So we are actively pursuing both avenues, but it is also very important to remember that not all silvers are being removed from the market. And then it was a question about the increased silver price, what impact it has had during the quarter. And I think as we said, and as you also presented in the details, Sandrine, we're a little bit ahead of the curve. We've been able to put in the new pricing structure for Q3. So in Q2, there's actually obviously more positive impacts as we've been a little bit ahead of it. And we have the new pricing structure in place for the second half when we will see the cost increase in the material as well. And then the work question about the strong cash flow.

19:48 If we can expect the cash flow court, positive cash flow quarter to quarter going forward. I would say that the main reason for having a positive cash flow in Polygiene is that we have a profiting business. We are a very asset light company. So if we are profitable over time, we will, of course, have a positive cash flow over time as well. And it can depend on quarter by quarter. But if you are profitable over time, then we will generate a positive cash flow. And then let's see if there are any questions coming in during the meeting. No questions during the meeting. But it was a couple of really good, a lot of good questions, I would say. OK, thank you. Then the next quarterly report is scheduled for the 22nd of October 2026.

20:39 And with that we wish you a good summer and look forward to speaking with you again in three months time.