QleanAir : Interim Report Q1 2024

Premium provider of solutions for cleaning indoor air

First quarter

2024

2

STABLE REVENUE AND OPERATING MARGIN

MSEK 119 Net revenue, -2%

MSEK 75 Recurring revenue, +1%

9.7% EBIT margin (15.9%)

"We had a stable financial performance in the first quarter, with currency-adjusted growth of almost 3%. The weakening of the Japanese yen affected our revenue negatively by 6 MSEK. Sequentially, we improved the operating margin to 9.7% compared to 7.8% in the fourth quarter 2023. We have not reached our goal yet, but we are on the right track.

We continue to see strong momentum for Air Cleaners, growing by 29% in the quarter. Cleanrooms grew by 51% and we have a stronger than ever pipeline in the US as a result of investments in additional sales resources in the region. Cabin Solutions is down 15%, a direct consequence of the weaker Japanese yen," CEO Sebastian Lindström notes.

January - March 2024 in brief

• Net revenue MSEK 119.1 (121.0), currency-adjusted net revenue amounted to MSEK 124.4
• Recurring revenue MSEK 75.2 (74.5)
• EBITDA MSEK 19.9 (24.8)
• EBITDA margin 16.7% (20.5%)
• Operating profit (EBIT) MSEK 11.6 (16.6)
• Operating margin 9.7% (13.7%)
• Operating profit (EBIT), adjusted MSEK 11.6 (19.2)
• Operating margin, adjusted 9.7% (15.9%)
• Earnings per share SEK 0.53 (0.68)
• Cash flow from current operations MSEK 0.2 (11.0)

Significant events during the first quarter

• QleanAir delivered 7.21 billion cubic meters of cleaned air per month at the end of the fourth quarter 2023
• Year-end report 2023

Significant events after the end of the period

• Notice of Annual General Meeting 2024 in QleanAir AB, including proposal for dividend of SEK 0.60 (0) per share
• Publication of the QleanAir Annual Report for 2023

FIRST QUARTER 2024

3

A WORD FROM THE CEO

We had a stable financial performance in the first quarter, with currency- adjusted growth of almost 3%. The weakening of the Japanese yen affected our revenue negatively by 6 MSEK. Sequentially, we improved the operating margin to 9.7% compared to 7.8% in the fourth quarter 2023. We have not reached our goal yet, but we are on the right track.

We continue to see strong momentum for Air Cleaners, growing by 29% in the quarter. Cleanrooms grew by 51% and we have a stronger than ever pipeline in the US as a result of investments in additional sales resources in the region. Cabin Solutions is down 15%, a direct consequence of the weaker Japanese yen.

CONTINUED INVESTMENTS IN EMEA

In Europe, we continue to see customer restraint due to the geopolitical situation and higher interest rates. Closing deals takes longer today. In addition, the geopolitical situation has been further aggravated by events in the Middle East. Nevertheless, we see growth in EMEA of 4% for the quarter and we expect our investments to contribute to further growth and strengthen our margins over time. Among other things, we have invested in additional sales resources in France. France is one of our focus markets and showed strong growth in the first quarter. Furthermore, we have strengthened the product and development side of our business to lay the foundation for additional application areas where we see strong demand. We continue our regional efforts to strengthen our proximity to customers.

CONTINUED FOCUS ON GROWTH IN APAC

Japan developed as planned in the first quarter. The Japanese yen has weakened by around 11% against the Swedish krona, which negatively impacted revenue and earnings in Swedish kronor. Cabin Solutions is in line with expectations and Air Cleaners had very strong growth in the quarter. We see a strong demand for air cleaners from the industrial sector and also in HEPA-14 related air cleaning. In Japan, we have positive expectations for 2024 with a clear strategy to broaden sales to SMEs in Cabin Solutions. To reach this wider customer group, we have developed a new cabin which will be launched shortly. So far, our investment in Air Cleaners in Japan has offered a return exceeding our expectations. During the first quarter, we have increased training efforts for the sales and service organization as a further strengthening in industrial air cleaning.

FOCUS ON GROWTH AND PROFITABILITY IN THE AMERICAS

In the US, we have initiated a number of actions that we expect to pay off in 2024 and beyond and we can see in the first quarter that the level of activity was high and that we are doing the right things. We are starting to see the effects of our cost reduction measures initiated in the fall of 2023. The numbers are starting to move in the right direction.

BUSINESS MODEL

The QleanAir business model is built on a combination of rental and sales, including service. Revenue amounted to MSEK 119.1 (121.0) for the quarter, a decrease of 1.6%, but an increase of 2.8% currency-adjusted. Our recurring revenue increased to MSEK 75.2 (74.5), a growth of 1%.

As a company, we know where we are heading. We have great opportunities to create value. Our business model is circular, our products have a long life with our customers through our strong service model and at the end of the contract we recondition the product to give it a new lease of life with the next customer.

We clean indoor air by reducing harmful particles. The working environment for people is improved. Furthermore, the quality of customers' products and the efficiency of their processes is improved. We work systematically to achieve growth combined with profitability.

FIRST QUARTER 2024

4

OUTLOOK

We need to further strengthen our profitability and continue our focus on our three priorities; Customer focus, Sales efficiency and Cost control. In parallel, we have started the more strategic work on developing our product range.

A number of measures have been initiated that we expect to yield results in 2024 and beyond, and we can see in the first quarter that the figures are starting to move in the right direction.

In conclusion, I would like to thank all our dedicated employees, our customers and partners for the good cooperation.

Solna, May 8, 2024

Sebastian Lindström, CEO QleanAir AB

FIRST QUARTER 2024

5

FINANCIAL DEVELOPMENT

KEY RATIOS

1Definition of key figures appears from page 21.2. Explanation for EBITDA and operating income can be found on page 9.

RECURRING REVENUE AND TYPES OF REVENUE

The group's revenue consists of three revenue streams; Rental of goods including service and other (recurring revenue), Sale of goods to finance companies and Sale of goods including sale and installation of cleanrooms. For direct sales to customers, QleanAir signs separate three-year service contracts.

Recurring revenue increased by 1% during the first quarter and amounted to MSEK 75.2 (74.5). The recurring revenue comes from rental of units owned by QleanAir, service, other and amounted to 63% (62) of total revenue in the first quarter 2024.

The number of terminations of installed units, often referred to as churn, relative to the total number of installed units, amounted to 9.8% (6.4%) for the period April 2023-March 2024. The increase is due to the cancellation of a few large orders from schools in Germany which is a result of the termination of subsidies for air cleaning in schools.

FIRST QUARTER 2024

6

Recurring revenue per year

FIRST QUARTER 2024

7

INSTALLED UNITS

The number of installed units increased by 5% from March 2023 to March 2024, with Air Cleaners in particular showing growth in Japan and Europe. The total number of installed units at the end of the period amounted to 12,739 (12,148), of which 5,235 (5,283) units are owned and rented out by QleanAir.

REVENUE

January-March 2024

Revenue for the first quarter amounted to MSEK 119.1 (121.0), a decrease of 1.6% compared to last year. Currency-adjusted, this is an increase of 2.8%. By geography, revenue for the first quarter amounted to MSEK 56.2 (53.9) for EMEA, MSEK 50.1 (58.5) for APAC and MSEK 12.8 (8.7) for the Americas. Revenue by product category amounted to MSEK 76.5 (89.6) for Cabin Solutions, MSEK 28.8 (22.3) for Air Cleaners and MSEK 13.8 (9.1) for Cleanrooms.

Revenue in EMEA increased by 4% in the first quarter. In APAC, revenue decreased by 14%, strongly affected by the weak Japanese yen. The Japanese yen has lost about 11% against the Swedish krona, which results in a currency loss of approx. MSEK 6. Another reason is that the number of contracts that expired in the quarter was relatively low. As a result, fewer contracts could be renewed in the quarter. In the Americas, revenue increased by 47%. Cabin Solutions decreased by 15% in the quarter. Air Cleaners increased by 29% and Cleanrooms by 51%.

In EMEA, we have a strong position in Cabin Solutions through our long-standing presence in eleven countries in Europe. In APAC, we continue to focus on the premium segment in Tokyo offices, but with an increasingly clear strategy to broaden the offering and reach more customers, including in the segment of small and medium-sized companies.

FIRST QUARTER 2024

8

Air Cleaners grew in EMEA in the first quarter. Growth is mainly coming from Germany, Sweden and France, but more and more countries in EMEA are starting to contribute to revenue. In Japan, air cleaners grew strongly in the quarter. Our systematic selection of customer segments continues to prove successful in Japan.

During the first quarter, the focus of Cleanrooms in EMEA continued to be on completing delayed Nordic customer projects. Two projects have yet to be completed. This had a negative impact on new sales as the delayed projects required more time to complete. In the Americas, several cleanroom projects are ongoing and revenue has increased by 47%.

Revenue for January-March 2024 was negatively affected by currency effects of MSEK -5.3 (2.8) and currency-adjusted organic revenue growth amounted to 2.8% (2.4).

Revenue by geography, TSEK

Revenue by product category, TSEK

SEASONAL VARIATIONS

Historical revenues and costs have not significantly been affected by seasonal variations for QleanAir. Thanks to the company's revenue model, of which a relatively large proportion is recurring revenue from rental of goods including service and others, QleanAir has historically shown relatively undramatic changes in both revenue and operating income between quarters.

GROSS PROFIT AND OPERATING INCOME

During the first quarter, gross profit amounted to MSEK 82.1 (86.4), corresponding to a gross margin of 68.9% (71.4). The lower gross margin is mainly attributable to the Americas where we have a lower gross margin so far. Furthermore, the decline in gross margin was due to fewer contracts coming up for renewal in Japan than in the first quarter of 2023.

The average gross margin is lower in Cleanrooms and Air Cleaners compared to Cabin Solutions. The share of revenue from Cleanrooms and Air Cleaners increased in the quarter, which meant a reduction in gross margin for the Group.

An important part of QleanAir's business model is that customers renew their rental contracts. We continue to see a high proportion of renewed contracts within our more mature product category Cabin Solutions. This contributes to our gross margins. In Air Cleaners, we are also renewing more and more leases as we have been established on the market for a longer time and as the population grows. In Cleanrooms, each contract is customer-specific. We have improvements to make in quoting, planning and implementing customer-specific projects. Focused and prioritized operational work is ongoing.

In the first quarter of 2024, operating profit amounted to MSEK 11.6 (19.2 adjusted). The operating margin amounted to 9.7% (15.9% adjusted). The deterioration in performance is due to a combination of causes. The gross margin is lower and entails a loss of operating profit of approximately MSEK 3. Furthermore, the relatively weak Japanese yen had an unfavorable exchange rate effect in the first quarter, which negatively impacted operating profit by approximately MSEK 2. Other external costs are higher mainly due to higher service costs in some EMEA markets. Furthermore, we have planned increases for external costs in Europe where regions will decide on local promotional activities. These are funded by a reduction in the number of staff at the corporate office.

FIRST QUARTER 2024

9

Net revenue in MSEK and adjusted EBIT margin, outcome 12 months

OTHER EXTERNAL COSTS

Other external costs are mainly attributable to marketing, external service costs, regional promotion costs, rental of premises, research and development, travel costs and consultancy costs. In the first quarter of 2024, other external costs amounted to MSEK 30.4 (25.1). As mentioned earlier, these are mainly increases in external service costs and higher local sales promotion costs in EMEA. Furthermore, consulting costs in the US have been higher in the first quarter.

PERSONNEL COSTS AND EMPLOYEES

In the first quarter of 2024, personnel costs amounted to MSEK 31.9 (36.5). Costs are lower as a result of organizational changes implemented in 2023.

The average number of employees in the Group was 112 (113). The breakdown between men and women in the Group was 74 (74) men and 38 (39) women. The number of employees at the end of the period was 111 (111).

NET FINANCIAL ITEMS

Net financial items for the first quarter of 2024 amounted to MSEK -1.4(-2.6). This improvement is due to positive exchange rate differences.

EARNINGS BEFORE TAX, NET PROFIT FOR THE PERIOD AND EARNINGS PER SHARE

Earnings before tax for the first quarter amounted to MSEK 10.2 (14.0). Reported tax for the period was MSEK -2.4(-4.0). The Group's tax expense as a percentage for January - March 2024 was 23.2% (28.5).

Net profit for the first quarter was MSEK 7.9 (10.0). The deterioration is attributable to lower revenue and higher costs as described earlier. Earnings per share for the quarter amounted to SEK 0.53 (0.68) and SEK 0.53 (0.68) on a fully diluted basis.

FIRST QUARTER 2024

10

CASH FLOW FROM CURRENT OPERATIONS AND INVESTMENTS

Cash flow from operating activities (operating cash flow) for the first quarter amounted to MSEK 0.2 (11.0). The deterioration in operating cash flow is mainly attributable to a reduced operating profit and working capital as a result of reduced trade payables.

Cash flow from investing activities during the first quarter amounted to MSEK -4.1(-7.7). The investments mainly relate to units that are owned by QleanAir and leased to customers.

CASH AND FINANCIAL POSITION

Cash at the end of the period, excluding available overdraft facilities, amounted to MSEK 52.6 (59.3). Interest-bearing net debt, i.e. liabilities to credit institutions less cash and cash equivalents, amounted to MSEK 166.2 (184.0). QleanAir continues to amortize quarterly according to plan. QleanAir's current credit facility matures in less than a year, which is why interest-bearing liabilities are re-classified as current liabilities March 31, 2024. QleanAir's assessment and intention is that the credit facility will be prolonged on similar or improved terms. The facility will then be classified as long-term liability again. QleanAir has covenants to be achieved in accordance with the Swedbank financing agreement. These covenants are interest coverage ratio (>3.0), and net debt/EBITDA (<2.5). The covenants were reached for the period April 2023-March 2024.

The Group's total assets amounted to MSEK 661.1 (665.3). Fixed assets amounted to MSEK 434.2 (419.7) and are mainly attributable to goodwill MSEK 343.7 (343.7). The book value of equipment and installed units amounted to MSEK 48.8 (54.8). Inventories amounted to MSEK 64.4 (64.8). In all material respects, stated values for financial assets and liabilities correspond to fair value.

PROPOSED DIVIDEND

The Board of Directors proposes a dividend of SEK 0.60 per share (0) for the financial year 2023, which corresponds to approximately 20% of the net profit for the financial year 2023. The Board's ambition is to return to a dividend of 30-50% of net profit, in line with the dividend policy.

FOLLOW-UP ON FINANCIAL OBJECTIVES

Change management is underway as planned to increase growth and profitability in the medium term. Revenue was stable during the quarter, and in currency-adjusted terms QleanAir grew 3 percent with an operating margin of 9.7%. The ambition of the Board of Directors and management is to grow revenue organically by an average of 10% in the medium term and to achieve an operating margin of 15-20%.

GOODWILL

Goodwill is attributable in its entirety to QleanAir AB's acquisition of operating subsidiary QleanAir Scandinavia AB, and can be derived from the change of ownership that took place in 2012. Goodwill is tested for impairment at least annually by comparing its value in use, based on the discounted value of future cash flows, with its book value. The impairment test, drafted as of December 2023, showed no need for impairment, despite the changed global situation. Thus, there is no indication of an impairment need as of March 31, 2024.

SUSTAINABILITY

QleanAir has been developing solutions that protect people from indoor air pollution for 30 years. Environmental issues, corporate social responsibility and working environment issues have been focus areas for QleanAir since its inception. Our air cleaning solutions create a healthy and safe working environment, ensure product quality and durability and contribute to more efficient processes and increased productivity by, for example, extending the life of mechanical equipment. QleanAir's operating subsidiary, QleanAir Scandinavia AB, has been ISO-certified to quality standard ISO 9001 and environmental standard ISO 14001. QleanAir's circular business model is based on renting out modular units with a performance guarantee. The equipment can be recycled and reused. Large parts of the business are based on subcontractors who undertake to comply with QleanAir's Code of Conduct. The Code of Conduct is linked to the sustainability policy, the quality and environmental policy, the marketing policy and the work environment policy. The group has been measuring the amount of air cleaned per month continuously since 2015. The amount of delivered, cleaned air continues to rise every quarter. For more information, see www.qleanair.com.

FIRST QUARTER 2024