Betolar Oyj (BETOLAR) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to Betolar's Business Review Q3 2025. Happy to have you online. Firstly, disclaimer about forward-looking statements as usual. And then we move forward to the agenda. So my name is Tuija Kalpala. I'm the President and CEO of Betolar. And today, I'm here with Mikko Wirkkala, our CFO; and also Soila Soderstrom, our General Counsel and SVP. I will briefly talk about the Q3 highlights and how the business is going. And then Mikko Wirkkala will talk about our financial performance. And then lastly, we have the Q&A session hosted by Soila Soderstrom. So please use the chat box and please send us questions during the session. So we're happy to answer them at the end of this webcast. So main events and after the period happenings for Betolar in Q3. So what we have been doing in the past quarter, we have been really concentrated on this metal extraction proof of concept. So this is the new technology that we came out in the spring, and we have been working on this new technology that we have. And the last quarter, especially, we have been focusing on commercializing this technology and also advancing the development of our industrial scale proof of concept. So really thinking on how we can also do this ourselves and how we can demonstrate this in a proof-of-concept scale, industrial scale. Of course, we are also looking at other ways of commercializing this technology, but this is also one thing that we have been very heavily focusing on the past quarter. We also gained several new customer cases and just to highlight a couple. So we have one new customer in Australia, Mandalay Resources. So, for them, we are delivering low-carbon mining solutions. And really, we are expanding our footprint in Australia's leading mining market. Also, we gained a new partner, also in Australia, Jetcrete. So we signed MoU, so memorandum of understanding with them. And we're really partnering with Jetcrete to fast track this low-carbon shotcrete adoption in Australia. So this demonstrates now our capability and our innovation, how we can also commercialize this completely cement-free shotcrete solution in also other markets other than Finland. Also a new customer in Finland, Nordkalk. So we are partnering and collaborating with Nordkalk to really advance the development and commercialization of tailings-based circular calcite. So really seeing how we can commercialize and find new uses for this mine tailing, but I will talk about this a bit later in more detail. And then last night, so Monday evening, we got a great news. So we have a new order related to infrastructure. So we have received an order worth approximately EUR 1.4 million from 2 Finnish companies. And this is really based on Betolar's innovation, and we are very pleased about this new project that really demonstrates our innovation and our know-how in different technologies. So then highlights talking about the market in Q3. So what we can see that there is a strong demand for Betolar's circular solutions, especially in the mining sector, especially for our own metal extraction technology. Also, we see that there is a lot of demand globally. So we can see that in Australia and also in Canada, also in Finland for the cement-less paste backfill or rockfill, so for both solutions and then, of course, the shotcrete. And this was supported by new agreements and partnerships with, for example, Anglo American that we talked about in our last quarterly review and now the new customer, Nordkalk, which are based on mine tailings and our metal extraction technology. So these partnerships in Finland enable innovative use of this mining waste tailings. And, of course, now our partnerships and new customers in elsewhere in Europe, Canada and Australia that strengthens our global presence. So -- looking at the sales, so we had increase in sales in -- especially in the mining solutions. 1.5 years ago, we said that according to our new strategy is that we are focusing more on the mining side. And we can really see that that's taking us forward. And we have been gaining a lot of new customers on this area, especially, and we see that there's a lot of demand, as I mentioned. So -- an interesting thing, we have been talking about this ground granulated blast furnace slag, GGBFS and the sales in India. So we have a daughter company in India that has been mainly lately focusing on GGBFS sales. And we can see on month-on-month how we are increasing these sales activities in India. And we see that there's a lot of demand, and we have been able to broadening our customer base in India. And sales in that region is rising. We also marked a new key milestone in Finland. We were able to place our first order for GGBFS. So we are now opening also the Finnish market for this material and doing the sales ourselves. Orders also grew year-on-year, really reflecting customer interest in our sustainable solutions and also our know-how on -- and our innovations in this area. We also delivered our first project using this new optimized service that we launched already in the spring, achieving cost and emission reductions for our customer. On the innovation side, so our -- really R&D and innovation, we have been looking at further developing our metal extraction technology and we started planning on industrial scale proof of concept, as I mentioned in the beginning. So really looking at both avenues, how we can commercialize it. So we're looking for different customers. We already gained Anglo American as one of our first customer for this technology, but we're also looking at and negotiating with other customers. But at the same time, we are also looking at how we can do the proof of concept in industrial scale our own. We also continued developing our AI platform to assess side streams and also optimize recipes. We currently have 25 active patent families, 49 granted patents, and we have 60 pending applications. So we have a very, very large patent portfolio, which is increasing. So then talking about the mining and metals side and what we are doing there. So we did several customer pilots during the period, including we had pilots for shotcrete and also cement-less rockfill and base backfill. We had these projects in Canada and Australia. And we are really -- we see that we are really meeting the growing demand for these sustainable mining practices. And especially this mine tailing is something that is extremely interesting for a lot of our customers as it's considered as waste, and we have now a solution how we can treat the waste. We also started the Anglo American project, Sakatti mine in Sodankylä, the project to explore how our metal extraction technology and green cement production from the mine tailings, how we can do it for this project. We, of course, also continued the project with Outokumpu. So that's going forward as planned. And really, focus was during the period and continue being really on this metal extraction technology that we have and the proof of concept that we are currently doing. Then on the industrial side streams. So as I mentioned, the GGBFS sales in India. So that's a growing opportunity for us in India. Same in Finland as we were able to receive our first order in Finland for a larger quantity of GGBFS. And, of course, we continue doing side stream research projects, and we also launched the joint research project with Nordkalk, aiming to increase the utilization opportunities for this circular calcite in Lappeenranta. Construction side, talking about already the optimized service. So that's a very interesting new service line that we have and we are offering to our customers. We delivered the first concrete mix optimization project, one of our customers in Finland. And we were able to achieve 6% cost saving and 15% reduction in carbon footprint to our customer. And this is a great achievement by just optimizing the concrete recipes. And this is a great way to demonstrate that we don't always have to go and replace certain materials. We can also just use our expertise and knowledge to do these cost savings and reduction in carbon footprint, but -- yes. And also, we had a couple of customer pilots related to concrete products and element manufacturing in the Middle East and also in North America. So that was during the period. And also, we have been putting quite a lot of focus lately on this infrastructure side as we see that there is a growing demand driven by investments and need for sustainable solutions and the example of the announcement that we made last night, on Monday evening, regarding this infrastructure project, which is worth of EUR 1.4 million. So then a couple of customer cases that I would like to share with you. Firstly, Jetcrete in Australia. So we are really -- we signed a memorandum of understanding with Jetcrete to fast track the commercialization of low-carbon shotcrete solutions in the Australian market. What we are trying to do together with Jetcrete is to sell our 2 key innovations in the market. So one is the CEM III, so shotcrete mix, which replaces about 60% of the cement. So it's a mixture of having this like lower -- it has still cement but then it also has some other elements how we are able to lower the CO2 emissions. So it's not fully cement-free, but still achieves up to 60% replacement or lower CO2 emissions. Then we're also marketing our Geoprime shotcrete, which is cement-free binder technology that we have. Jetcrete will exclusively market and supply our shotcrete solutions in Australian market, and we continue developing the R&D and -- for these shotcretes and for the potential future customers in Australian market. The proof-of-concept rollout is planned for Q4 2025. So this is something that we're still doing this year. So then the case Nordkalk. So this is a very interesting partnership in Finland based on the mine tailings. So we are together with Nordkalk, we have launched a collaboration to develop and commercialize this tailing-based circular calcite from Nordkalk's Lappeenranta site in Finland. The goal of this research or collaboration is to transform the tailing-based circular calcite into sustainable materials for mining and construction applications. And the project has 2 phases. And right now, we are in the pre-commercial phase, which will be running until the end of the 2025. And we will use our SidePrime analysis service to assess the binder potential of the material and further develop tailored solutions for the use in concrete additives, aggregates, binders, geopolymers. And if these results are promising, which we definitely hope based on our knowledge on this area, we will move into commercial phase to bring circular calcite to the market and establish a long-term partnership with Nordkalk. Then back to Australia, Mandalay Resources. So we are developing a low-carbon mining solutions for Mandalay Resources. And we have signed a commercial agreement with them for the cement-less rockfill solution for the Costerfield gold-antimony mine in Australia, which is one of the world's top mining regions. The solution is based on our expertise. We are aiming at cutting the CO2 emissions by up to 80% compared to traditional cement use. So we are really -- with this, we are replacing the cement. The partnership supports Mandalay sustainability goals and, of course, marks our entry into the Australian market. The commercialization is targeted for early 2026 following piloting and techno-commercial study. So that's about the business update from my side. So now it's Mikko Wirkkala's turn, our CFO, to talk about the financial review.

Thank you, Tuija. Let's have then look at our financials and -- before I actually start here, so with the numbers. So the fantastic news what we got yesterday is pretty much the biggest thing what we have to tell about our numbers. So basically getting new order in magnitude of EUR 1.4 million is the biggest order in the company's history. But then when we are looking at our third quarter numbers, our revenue was EUR 218,000 and that was a little bit less what we had last year on third quarter. But then if we look at the whole year numbers, so we are seeing that we continue to be above last year's levels with the cumulative revenue of EUR 635,000. And also with the new order, and we had that included in our forecast when we are saying that we are going to exceed the revenues of last year in our guidance. Next, if we turn our attention to our EBITDA, we were slightly better than last year. And despite the lower revenue numbers, we also had lower other operating income and other operating income in our case is basically the public grants, what we are booking there. So the revenue and other operating income both were lower than last year, but due to our cost-saving actions, what we have been doing last year and also continued this year, our cost base has been lower. And therefore, that -- the lower costs have been the key enabler that our EBITDA was still better than last year, even though the revenue side was lower. And needless to say that with these revenue levels that we are not satisfied with this one, and we are constantly looking for bigger projects there. And the latest new order from yesterday was a good example of a bigger order what we got in. Then if we look at the order intake, that was increasing in the third quarter compared to last year as well. But again, the latest order is really, really totally on a different magnitude level. Number of new projects what we started, 3 pieces of those, and Tuija mentioned a few of those already in her presentation. And number of personnel, here, you can clearly see the effect of our cost-saving actions what we have been doing last year and throughout this year as well. So number of employees was, on average, 34 in the third quarter. And next, if we move then to the financial position and outlook part. So our cash balance, including cash and short-term investments, that was roughly EUR 7 million, EUR 7.4 million to be exact. On top of that one, we still have EUR 2.1 million remaining from different public grants. So the major part of that one is from Business Finland. And so counting these 2 together, so our liquidity and undrawn grants amount to EUR 9.6 million, and this is then combining everything what I just mentioned above. And finally, repeating our guidance that we keep our guidance for this year unchanged, and our net sales for 2025 is expected to increase compared to the previous year. And this was the last part of the financial section. And next, I would like to ask Tuija back on stage and also welcoming Soila Soderstrom on stage.

Thank you, Mikko. Now it's time for your questions. We have received a couple of questions about the new large order. Of course, that's very interesting news that we announced yesterday. So first of all, regarding the large order, the question was about what Betolar innovation is being addressed -- assessed here. Is it metal extraction, polymer concrete or some other? So this is for Tuija.

Yes. So as mentioned, our release yesterday, so the only thing we can mention about this is that it's really based on infrastructure and it's based on our own innovation. So that's the most that we can share at this point. Yes, so -- but a really good question based on Betolar's innovation and our know-how and related to infrastructure.

Thank you. Next one for Mikko. Do you expect the larger order to be recognized evenly between the 10 upcoming months of delivery?

We are only in the beginning of the project there and how we will exactly recognize the revenue there. So that is then depending on the more detailed planning, how are we then advancing with the project.

And then the last question, this is for Tuija. You have a lot of initiatives and different projects -- or no, this is for Mikko actually. Are these included in your reported order intake and/or sales in Q3, except the one announced yesterday, of course.

The projects what Tuija was presenting there, especially the new ones in there, so those are included in our order intake.

Okay. Thank you. Those were the questions today. So if we go to the last slide, so we would like to thank you for your interest. And here, you have our next events where we hope to see you next time. So in 5th of February, we have -- we are announcing our financial statements release for the year 2025. And then we have the business review Q1 in 23rd of April. So see you there. Thank you very much.

Thank you.

Thank you.