Betolar Oyj (BETOLAR) Earnings Call Transcript & Summary

Hello, everyone. Welcome to Betolar's First Quarter 2025 Business Review. Happy to have you listening our webcast. So I'm Tuija Kalpala. I'm the President and CEO of Betolar. And firstly, just briefly about the disclaimer about the forward-looking statements. Then about our agenda. So I will be briefly talking about the main events and the highlights in first quarter. And then we have the financial review. And last, we have the questions and answers. [Operator Instructions]. Then let's get started. So during the first quarter, our main events and after the period actions that have happened. So a couple of them are highlighted here. So firstly, we announced the hollow-core slabs production very early this year, so together with Consolis Parma. So we are entering now the production phase on the world's lowest emission hollow-core slabs. Then SidePrime service. SidePrime is the service that we launched at the end of last year. It's a new service where we are analyzing the potential of different kind of waste and side-stream materials. And we announced earlier this year that we have been doing some work together with Alva-yhtiöt, and we have been analyzing their side streams and their potential to be used as a substitute for cement for our Geoprime solutions. We also announced a new patent. We were granted a new patent on a climate cabinet that is standardizing the storage conditions for test samples, and this is something that we have developed primarily for our own use in our laboratory. But of course, thinking about that, this is something really useful that others could benefit also from. Then I would say that the biggest news and the biggest highlight during the period beginning of this year was this metal separation and production of green cement. And I will be spending some time today talking about this in more detail. But in short, so we have developed this new innovative method that is combining the separation of metal from waste materials and the production of green cement. Very interesting case. And this is also something that we will be also opening more during our Capital Markets Day that will take place in May. Then as another highlight, we have now officially entered the Canadian market. And we announced yesterday that we have a new cooperation with the Canadian Royalties Inc. in Canada, and we're developing a cementless rockfill solution for them. And I will talk about that also in a bit later. Our management team also is growing. So we have been -- so far, we have been 3 people in the management team. We're happy that Jyri Talja is now joining the management team in the company. He's been with us about 6 months, and he's our new Chief Growth Officer. Yes. Then the highlights. So the market situation, as we have discussed before, we see very strong interest in our low-carbon and waste-free solution, especially within the mining sector. And this is good. Of course, the development of this is taking some time. It's not very fast to enter to new deals in the mining sector. It takes some time to get this, but we are definitely getting some momentum in the mining sector with our solutions. As discussed earlier, we still see that the construction market is slow, and it's very limited in the momentum at the moment due to the market conditions. If we are looking at our sales in first quarter, it showed significant growth compared to the previous year but fell short of our own expectations. And this is mainly due to the challenging macroeconomic conditions. And to the extent, implementation time for mining solutions, as I just mentioned that a lot of these things, it takes time to get these mining solutions implemented and get these things going, but we are working very hard every day on getting more traction on the mining side. And to that point, we were able to get the first cementless rockfill project launched. Well, this is the first public announcement. We have a couple of projects related to cementless rockfill at the moment ongoing. And also, we have this fully cement-free shotcrete that we have been piloting. This is the Outokumpu case, and those things are also going as planned. And now, of course, the big thing also for us is that we were able to open the Canadian market with this cementless rockfill project that we announced yesterday. So we are really looking forward now the opportunities that we have in also Canadian market. Then the innovation side is this breakthrough in metal separation technology and green cement production. And for that, we have filed 7 new patent applications in addition to those that we have filed also earlier. So there's a lot of new patents that have been filed related to this metal separation. Then about this opportunity that we have now in Canada. So this is our first reference for developing this cementless rockfill solution. And this is a 100% customized solution that we're developing for Canadian Royalties and their Nunavik Nickel project. We are targeting to commercialize the solution in early 2026, and it will be based now on this techno-commercial study and the piloting that we are starting, doing right now. And this solution is very innovative. It replaces cement with industrial side streams in these rockfill applications and offers cost competitive and also very effective way of reducing CO2 emission in mining. And it's really a quite interesting opportunity for us because it's not only helping to reduce the CO2 emissions for the mines, but it's also a very cost-effective solution and reducing the cost. Then the hollow-core slabs that we have developed together with Consolis Parma. So we talked about this also last time, but this is something that happened in the first quarter. So we have now been working together with Consolis Parma for some time now to develop the world's lowest emission hollow-core slabs. And we have agreement with Parma for this to make it actually go into production phase. We have a 3-year contract that covers all Consolis countries, and we're really looking forward to it. And the situation for this is that we are right now looking for the first project where we can implement these hollow-core slabs. Then I would like to talk about a little bit this our new innovative method for recovering these critical and strategic metals and producing the green cement. And a little bit about the background of this new development, and why we have been developing something that is really related to critical and strategic metals. So as you know, we have been -- since the beginning, we have been really focusing on utilizing industrial side streams and developing low-carbon and cement-free technologies for construction, mining, and metal industries. And also, we have this AI-based data platform that we have been created to bring value from industrial side streams and to really accelerate our solution development. And we have been really focusing quite a lot on these Geoprime products. So how we can replace cement in different kind of concrete products and really bring down the CO2 emission and reduce the use of virgin resources. So this has been really the core and understanding the opportunity with different side streams and how the side stream can be utilized. And lately, we have put quite a lot of focus on thinking about these unutilized, so unused side streams. We know that there are side streams that are already commoditized like GGBFS, so the slack -- typical slack that is used as a replacement for cement. But we have been really put quite a lot of R&D effort on understanding can we use these kind of waste materials and can we turn them into value. And now we had the big breakthrough on this development. And we were able to identify these kind of side streams that are not utilized today and they are ending up in the landfill and how we can take the metals, the strategic and critical metals out of these waste materials and have value for those and at the same time, create this kind of binder material that is a green cement. And this is really the core, and what we have been wanting to do is to find the own kind of binder that we can use that lowers the CO2 emission, and it's also, at the same time, like a circular product. And this is really the background for that, why we are now talking about these critical and strategic metals and what it has to do with us. So for us, it's really that we are really interested ourselves in the green cement, and this metal side is something that will bring a lot of value to our customers. So in briefly, what does it mean? So it means that we will be utilizing these unutilized industrial side streams. So several -- or in this picture, you can see that we would be using 2 different side streams for this. And with this process, then we are able to extract the metals, the critical and strategic metals out of this kind of waste material, and there will be 2 different products as a result of this process. So one is, of course, the metals, and the other part is this green cement. We will be talking about more technical details about what is this actual method during our Capital Markets Day. So I'm inviting you to come and join that event. So we will tell more about these technical aspects, what does it mean, and of course, more about the opportunity for petrol -- what does it mean like money-wise, so what is it going to bring to our top line, this technology? But then as lastly, I want to talk a little bit about what is the impact and what is the benefit of this new innovation that we have, and we're now moving to a commercial phase of this technology as we have now filed all the patents and we have done excessive tests related to this and all the tests are looking extremely positive for this technology. So we will get out these critical and strategic metals out from this waste material. And based on our test a couple of weeks ago, so we can get up to 99% of these metals out, which is a very significant number. And it really improves the yield of the metal extraction for the metal companies. And of course, this is related to the security of supply locally because we are able to extract more of these materials out from the waste material that would otherwise end up in a landfill. Then as a result, we will get this green cement, which can be then utilized as a low-carbon green cement in our own projects that we have for this Geoprime product that we have been developing and selling over the several years. And this is really a cost-efficient alternative, and it can potentially also lower the cost of construction. And we are really excited about this opportunity and the possibilities that this will bring globally to our customers. Then the big thing is also a zero waste that as a result of us utilizing these different kind of unused waste and side stream materials, there will be no waste left after this process. So we are just converting these waste materials into valuable materials. And of course, reducing the fact that these materials doesn't have to be landfilled and we will reduce the cost of negative environmental impact as well. But again, as I said, we will be talking more about the monetary impact of this to Betolar and to our customers during our Capital Markets Day. But then let's move on to our next topic. So our CFO, Mikko Wirkkala, will talk about the financial review. So go ahead, Mikko.

Thank you, Tuija. Let's have a look then our financial figures and start from the net sales, and our net sales was EUR 164,000, and this was roughly EUR 100,000 more than last year. Despite the high growth numbers in percentages, so we are not satisfied with the levels so far internally that as Tuija mentioned already, but we are then looking for more growth. And as we have said in our guidance that we are expecting our full year net sales to exceed the level of 2024. Our EBITDA then was minus -- roughly minus EUR 1 million, and that's already EUR 1 million improvement from the previous year. And here, the main driver has been the cost-saving actions that we performed last year. And that's explaining the majority of the improvement. But also we have the grants that have been booked in other operating income, which is not visible here that is also affecting our EBITDA. Our cash and cash equivalents and short-term fund investments total at the end of the period was EUR 10 million, and we have also added a new financial indicator to the presentation, and that's called liquidity and undrawn grants. And that's typically what we have been presenting later on that where we combine our cash investments and undrawn loans and also undrawn grants. So we have added it here to reflect then the runway, how much we have cash and also the liquid funds available in our company. If we then move to our operational indicators, our order intake was EUR 90,000, and this is also a level that where we are not internally satisfied, and we are below the last year's numbers. And last year numbers that it's worth noting that there we had one big single project order what we got in during the first quarter there. And this is also reflecting our current situation, where we have projects, and one single order can be rather large, and then it's depending on that when one deal actually realizes or when the order is coming in. So that is also affecting our numbers there. And as it's clearly visible in the numbers, our order intake was only 90,000 in the first quarter. And one new research project or nonrecurring engineering project was initiated during the quarter. Our number of personnel 34 average during the quarter that compared to previous year. So it's much lower. And here, the cost-saving measures are clearly visible that what we have been achieving during the last year. Then moving on, looking at the more detailed cash balance and the liquidity. So as mentioned already earlier, our cash balance was roughly EUR 10 million at the end of quarter and actions what we have done during the quarter. So we were raising the last installment of the loan from Climate Fund, and the number was EUR 2.5 million and that was increasing our cash balance during the quarter. And then we have still EUR 2.1 million remaining from Business Finland and also other grants, what we have from other institutions. And combining all of these, so our new financial indicator liquidity and undrawn grants that amounts to EUR 12.4 million. And as I mentioned already earlier, our guidance for the full year remains unchanged. We are still expecting our net sales for 2025 to increase from the previous year levels. So these were the first quarter financial figures in a very nutshell. And next, we will move on then to questions and answers. And here, I also invite Soila on stage.

Thank you, Mikko. All right. We have received a lot of questions. So the first one is that what is the main business driving your growth in '25 and '26? Is it shotcrete, concrete-based backfilling, or metal extraction?

Very good question. 2025, 2026, so this year and next year. So we have just published this metal separation or extraction technology. That's something that we are now commercializing. So we're starting, and we're thinking and doing all the strategies and sales plans as we speak. So that's something that we are moving forward now right now. And then, of course, the base back filling that I mentioned about that we have now the first public reference in Canada for that. So that's something that we see growth opportunities definitely in that solution, because it's not only reducing the CO2 emissions, but it can potentially also reduce the cost for the mining company. So that's definitely another area. And then, of course, we have this shotcrete. And there's been a lot of interest in this kind of shotcrete that is low-emission and even cement-free. So we, of course, see that that's also something that is interesting in the market, and a lot of customers are asking about it. But I would say that definitely, those are the areas where we see growth. But of course, we're also working with the construction industry, and we have also other solutions to these industries or this industry. But typically, these are quite a little bit smaller. So typically, these are NREs and pilot of things. Of course, we have several customers who are already using our Geoprime solution. So that's, of course, an area that we are also working on and looking at growth. But as mentioned, the market situation in the construction side is a bit challenging right now, and there's not a lot of new projects ongoing. So that's, of course, affecting that market, and it's a little bit slower than we would like at the moment.

Then to the metal extraction, again, about the next steps, you described some of those just that we are starting to commercialize the metal extraction and the green cement, but are there some other concrete steps that we are taking?

#1 is now commercializing it. And we have done test in our own laboratory, and we have done pilots in external testing facility. And we will, of course, also continue as a parallel doing more tests and further developing, but it's really more about now commercializing this and finding the new customers for this.

And then have you seen any pickup in order activity in April after the period?

This is good. So we can't really give any forward statements. But what I can say that if we look at, for example, last year, quarter 1 and quarter 2, typically, at least in our side, we see that typically the first quarter is much slower than the rest of the months. And of course, the market situation is very tough right now because of quite many things ongoing. But we have seen that there's a lot of more discussions and things are picking up, so to say. So let's see how the market conditions will move forward. But we're very happy, for example, now that we announced yesterday about this Canadian Royalties, Inc., our first reference in Canada, and we can move. And we're really looking at also now growing our footprint in Canadian market.

And are you planning to recruit more people in the coming quarters?

That's also a very good question, and we have been recruiting, not a lot, but a few people. And now with this metal extraction that we have, we just announced Jyri Talja is joining the management team, and he is really taking a lead on commercializing this metal extraction side. So we see a lot of growth opportunities. So that's something that we are now doing the strategies, and really now thinking what do we need in order to move forward. And what I can also say that these recruitments that we have been doing and might be doing, they are really related more on the sales side and also the technical side of this technology. But in generally, also, we have been looking at improving our sales and sales personnel and our capabilities in increasing the sales because it's, of course, everything is about sales.

Thank you. That was it. That was all the questions that we have received. Thank you for listening. And hopefully, we will see you at our Capital Markets Day that is coming on 14th of May. So in a couple of weeks. See you there.