Freemelt’s Q1 report came in below our expectations in terms of sales, which amounted to SEK0.8m compared to our estimate of SEK3.5m. The deviation was due to the lack of printer deliveries in the quarter, where we had expected a printer to be delivered to the University of Sheffield. Regarding profitability, Freemelt reported an EBITDA of SEK-10m and EBIT of SEK-23.4m, which was somewhat lower than our estimates of SEK-8.9m and SEK-21.6m, respectively. Adjusting for amortization related to Goodwill, the adjusted EBIT came in at SEK-11.5m compared to our estimate of SEK-9.7m. All in all, we deem the quarter to be undramatic, as all eyes are on the new orders, which are not reflected in Q1's P&L.

Since the last report, Freemelt has conducted a rights issue of SEK66m whereas the incoming proceeds will be allocated to the continued commercialization of the company. On that note, we have observed an increase in the number of orders (both for printers and application development) compared to H1 2023. In the current quarter, Q2, Freemelt has received orders for both the Freemelt ONE and eMelt, totaling SEK11.6m, with both printers expected to be delivered before the end of the quarter. After a challenging H1 2023, we believe the company has started to gain momentum again, and given the investments in the sales force, we expect this momentum to continue into H2 2024.

On the back of the report, we have revised our sales estimates downwards. Despite noting an uptick in order intake, the majority of orders are focused on applications and materials development rather than actual printers, resulting in lower order values. Additionally, we are adopting a more conservative outlook for the rollout of the industrial printer, impacting our sales estimates for 2025 and 2026. Overall, we have trimmed our 2024e sales estimate by 18% and our 2025e-2026e estimates by 14-17%. Our new base case stands at SEK5 (5.5) and fair value range at SEK1.5-15(2-15).