Eagle Filters - a market-leader in air filtration solutions for Gas Turbines

Stocks
, , ,
439

The articles in Arvopaperi are no longer visible, but I have broken down the most essential points for this forum myself. The same points that were in the AP (Arvopaperi) article can be found in the financial statements, so for those who have read them closely, there is practically nothing particularly new, other than management’s perspective on things, which supports this narrative of it being a turnaround company.

The first key message is that old customers are reordering. This same point is also in the financial statements, but there it is presented more indirectly through the order backlog and the continuity of customer relationships. In the gas turbine business, this is a very significant signal because suppliers are not changed lightly. Once a filter has been approved for use, the commitment is practically long-term. Repeat orders mean the product works and the customer trusts it. The slick-haired types are obsessing over how many new customers are coming in, but in this business, a new order from an old customer is what indicates the product is performing as expected.

The second key point is that demand is not the problem; rather, delivery capacity has been the bottleneck. In the AP article, this is stated directly, whereas in the financial statements, it appears as growth in the order backlog and delivery delays. This suggests that the market is pulling, but the company hasn’t yet been fully able to meet the demand. The role of automation investments is precisely to solve this problem.

The third important message relates to financing. The company reports that it has received waivers from its creditors and believes it will continue to receive them in the future. This same issue is presented more formally in the financial statements as notes related to continuity and the company’s belief that these concessions will be obtained moving forward. In practice, this means that the financiers trust the company’s future cash flow and have been able to justify why the loan covenants have not been met.

Waivers are not granted unless there is a realistic possibility of the situation improving; otherwise, creditors seek to salvage what can be salvaged—meaning they call in the receivables and drive the company into bankruptcy because they want to stop burning money before it runs out. In this case, the creditors do not see it that way.

The fourth point is that the weakness in revenue is not due to a lack of demand but rather timing. The AP article highlights delivery delays caused by customers. The same explanation is found in the financial statements, which state that significant deliveries were not recorded as revenue within the planned schedule. This is typical in the project business, where the timing of individual deliveries can swing the figures significantly when they don’t hit the expected quarter.

The fifth observation relates to communication and timing. The same facts already exist in the financial statements, but the AP article presents them as a clear overall picture. The fact that management wants to bring this forward right now suggests that, in their view, the operational foundation is in order and the next phase is the realization of growth in the numbers.

Overall, the message is quite consistent with the financial statements. Nothing strictly new emerged, but things were said more directly. In the gas turbine filter business, this means that once customer relationships are established and products are approved for use, the business gradually becomes recurring. In this case, the primary risk is not a lack of demand, but the ability to deliver products efficiently and profitably so that they are on the customer’s site when maintenance begins.

As a final note, it can be observed that although an order of about half a million was received from the fabric side last summer and this has been mentioned in previous reviews, it has not yet been reflected in revenue during 2025. This reflects the company’s current situation well: there is demand and there are orders, but revenue recognition occurs with a delay.

During the earn-out period (2023–2025), revenue has clearly been affected by the timing of deliveries, delays, and the nature of the projects. Consequently, part of the order backlog will likely not be realized until 2026. In practice, this means that if delivery capacity is sorted out, the company has the prerequisites to move into the so-called harvest phase, and the news flow could turn significantly more positive, even if individual challenges still arise.

7 Likes
440

Now there’s more information about Puttonen’s movements.

However, one must wonder how an investor of this level got caught up in the narrative, even though one would assume that investment decisions are based on some facts. Perhaps this alleviated some uncertainty, as there was already a slight upward pressure on the stock price a little earlier, and now more clearly.

4 Likes
441

Oops, the schedule moved up a bit:

So we get to celebrate May Day and drink some depression mead (?) with fresh information :wink:

7 Likes
442

The schedule change is interesting in itself. At an AGM, discussions would normally be largely based on the previous financial year, but if there has been significant development in the business during the early part of the year, or revenue recognition that changes the picture quickly, it is then natural to bring the Q1 figures to the table before the meeting.

From management’s perspective, a situation where Q1 is practically “wrapped up” but cannot be commented on is not very comfortable. Therefore, publishing the report before the meeting clarifies the situation: the discussion can be held based on up-to-date data rather than just looking in the rearview mirror.

The fact that the results are released on the same day just before the meeting limits the audience to those who have already committed to attending. This is a fairly typical way to ensure that the discussion takes place in an informed but controlled environment.

However, one should still be cautious with the interpretation. Bringing the reporting forward doesn’t automatically mean “good numbers,” but in practice, companies rarely front-load reporting when the message would be clearly negative without a compelling reason. More often, the goal is to anchor market and shareholder expectations to recent developments. Management hardly wants to take a beating at the meeting, especially if some participants have a lot at stake.

5 Likes
443

The Q1 report is out. This was clearly stronger than what the market has priced in so far.

All key operational metrics are moving in the right direction at the same time. Order intake +190%, revenue +113%, and order backlog to 7.7 million euros (+384%). That backlog alone is already over 2x the entire previous year’s revenue, which is a pretty strong signal for future visibility.

On the profitability side, perhaps the most important change: EBITDA is practically at the “head above water” stage (-0.1 M vs. -0.9 M). This is no longer an “eternal money pit,” but a clear scaling phase where volume is starting to show. Additionally, fixed costs have actually been cut (-32%), meaning the improvement isn’t coming solely from revenue growth.

Revenue growth didn’t come from inventory clearing yet, but from “normal” delivery volume. At the same time, it is stated directly that ready-to-deliver inventory is still high. This strongly supports the idea that there is more revenue recognition ahead as the backlog is cleared.

The most surprising news seems to be that Business Finland forgave a 708k€ loan and the interest. This is a direct strengthening of the balance sheet and practically “free capital,” which significantly reduces financial risk.

Then the part that’s depressing for investors: the company states directly that more funding is needed during Q2 for scaling. So the dilution risk hasn’t disappeared. On the other hand, it is now happening in a situation where demand is strong and the backlog is high, meaning we are moving forward in a different position than before.

11 Likes
444

If anyone attended the annual general meeting, it would be nice to hear what the atmosphere was like there?

1 Like
445

On the way from Kotka to Pyhtää, I went through the matters discussed at the AGM with someone who was there and asked for as much detail as they could remember and share. I also showed the report to them, and they noted that I had put the related matters together quite accurately. They mentioned that a few things were left out, but nothing essential that would have significant meaning. No particularly new information was disclosed (other than perhaps some clarification on the Business Finland loan) that hadn’t already been in the public eye or in reports to some extent. The BF loan is also a Q2 matter.

Here you go:

Eagle Filters Group’s Annual General Meeting was held in a good and confident atmosphere. Although the past year was clearly difficult for the company, the tone of the discussion was forward-looking. A key explanation for the difficulties was a change in the plans of one large customer, which is a truly significant risk for an operator of this size. When practically all sales are exports and individual deliveries can be large relative to revenue, the postponement or change of a single project is directly reflected in both revenue and cash flow. For a small company, the impact is immediate and often emphasized in reporting. However, the company’s management saw it such that once volumes are increased this year and production lines are run at full capacity, these types of timing issues will begin to fade into the background and will no longer affect revenue in the same way in the future.

The meeting left a clear impression that demand itself is not an issue. The company has for some time been in a situation where the bottleneck is specifically production. They are trying to resolve this by running existing machines at full capacity while simultaneously investing in new capacity. Between the lines, it could be read that production and delivery capability have been more of a limiting factor than sales, which makes the planned investments in new production lines logical. The goal is to increase volume and improve cost-efficiency, which is key to turning profitability around.

One key operational reality that emerged in the meeting relates to the production model. In practice, filters are not made for stock; instead, production is order-driven. The reason is the large number of product variations: dozens of options are created just from the combinations of different equipment models and filtration properties. In practice, this means that in manufacturing, they must know in advance what is being made, and manufacturing for stock is not sensible or economical.

This makes operations more sensitive to the schedule changes of individual customers. When a large customer begins to postpone their deliveries, the impact is not limited to the timing of revenue; it is immediately reflected in the production load. Resources can suddenly become underutilized, and at the same time, material orders must be postponed or even canceled. In a small factory, this reflects directly on shift planning: shifts have to be readjusted, and at times there may be too much capacity relative to the work at hand.

The situation is also complicated by normal fluctuations related to personnel. For example, during flu seasons, absences can become significant – if five out of about twenty employees are absent, the impact on production is already felt. Furthermore, not all employees master all stages of production, which further limits flexibility. For these very reasons, the company has invested in automation: as more of the production is mechanized, processes can be run more steadily and with a smaller crew, and the distribution of expertise among individual persons is not as critical.

Regarding financing, a credit of approximately one million euros received in early 2025 was brought up, which was clarified as an export credit. It is understood that this is currently the only arrangement of this type, but its significance is all the greater: Finnvera’s involvement shows that the company’s export trade has passed the financier’s screening and may enable similar support in the future as well.

Additionally, the meeting touched on the Business Finland loan, which related to the period before the current management, specifically Jarkko Joki-Tokola, took charge. It concerned a project that ultimately did not generate any business. No detailed description of the project was given, but it was stated that based on this, Business Finland has seen fit to forgive both the loan principal and interest. This lightens the company’s financial structure without having an operational impact on the current business.

When discussing the competitiveness of the technology, an interesting detail emerged. Through a question from a shareholder, reference was made to comparisons with the filter materials of leading manufacturers in the industry, in which Eagle Filters’ fabric was claimed to be about two percent better in performance. This was not confirmed by the company’s management, but it was not denied either. In the same context, it was also asked whether competitors have been interested in the company for acquisition purposes. This was met with a smile and a statement that the matter cannot be commented on, but between the lines, the impression was left that there has been interest.

While discussing share issue authorizations, the acquisition of the remaining part of the factory business was also raised, the final price of which is determined based on the revenue and results for the years 2023–2025. Jarkko Joki-Tokola stated that the majority of this deal will be paid in shares later. This has a clear impact on the company: it eases cash pressure and simultaneously improves the balance sheet structure as the debt-like consideration turns into equity.

After the meeting ended, the discussion moved to the already published Q1 report and through that to the near-term outlook. Regarding these, the communication remained cautious, but the overall picture was clearly positive. No direct promises were made, but several comments gave the impression that the order book and operational development support a better direction than what last year’s figures suggest. In the same context, it was hinted that profitability will turn positive as volumes grow, meaning that economies of scale will begin to show in the results as capacity is better utilized.

As a whole, the meeting and subsequent discussions left the image of a company that has gone through a heavy investment and development phase, taken some hits through changes from individual export customers, but is now moving into a phase where capacity, delivery capability, and demand are starting to align better. The atmosphere was clearly better than what historical figures alone would suggest.

9 Likes
446

A friend of mine was also present at the Annual General Meeting. It was held at a cabinet in Villageworks. Only about half a dozen shareholders were present. The company was represented by the CEO and major shareholder Jarkko, as well as the company’s Group Controller. The meeting was chaired by a partner from a law firm. The best time to buy a small-cap company is when nobody is interested. The CEO stated that next year, they won’t fit into a space like this at all.

A strong belief in the future radiated from the CEO. This year is the year to prove it; last year was spent on production hassles and building automation, which are now in order. The interim report was released that same morning, and the order backlog keeps growing. The CEO confirmed that only actual orders are recorded there, nothing else.

This is a small publicly listed company, like a private equity investment in a small firm, but listed. It has the potential to be this year’s top gainer on the Helsinki Stock Exchange. The share price has now risen to the 10-cent level, with a market cap of 23 million euros now. Profitability on a quarterly level is already approaching in Q2, and the run rate at the end of the year could already be 5 million euros in EBITDA on an annual basis. At that point, with a 10x multiple, the share price would double from current levels. But with such high growth, a 20x multiple could well be justified, which would mean 4x the current share price. That would put it among the top performers in “Hesuli” (Helsinki Stock Exchange).

10 Likes
447

Did they say anything there about Heikka becoming the new CFO? My source mentioned there was some talk that the selection would be made soon, but they couldn’t remember what was ultimately said about it, other than that the process is still ongoing.

1 Like
448

The news that Heikka might be joining as CFO sounds good to my ears, at least in the sense that he is also heavily invested in the company with his own money. It’s a bit unfortunate that the share price started rising too early relative to my own buying plan, but perhaps I just have to accept the fact that lowering my average price through further purchases might no longer be possible.. :wink:

1 Like
449

I have personally been wondering about this rise in the share price; the company is in dire need of money and quickly. A rights issue may be coming in the near future, and as we have noticed from recent share issues of penny stocks (Eezy and Bioretec), what can happen to the share price. Why would I buy and take a massive risk before that financing arrangement has been resolved?

450

My friend thinks there was no mention of such a thing at all, and that the CEO couldn’t have said that anyway, because wouldn’t the appointment of a CFO require a stock exchange release? Perhaps it would, at least it usually is in most companies.

Instead of Heikka, it might be worth hiring a young talent as CFO—for example, an experienced Group Controller who was present at the meeting. If such a person has proven their capabilities and is incentivized with an option package, the fit might be better than hiring a highly experienced person with a massive monthly salary. It is a small firm, after all, and there is a lot of operational work even on the finance side.

This was a concern of mine, since there is no CFO, but what my friend said eased this concern for me at least.

2 Likes
451

I am not concerned about this offering at all; the CEO has a large ownership stake and reportedly expressed strong confidence in the future at the general meeting. I expect there will be a directed offering from the main owners’ pockets at market price and with only minor dilution. Financing packages have been arranged continuously, but in small installments and, in my view, in a manner favorable to minority shareholders. I don’t believe the need for capital is very large right now—likely around 1-1.5 million euros, which at current market value would result in a dilution of less than 5%.

3 Likes
452

I also believe in a directed issue, because last time automation was purchased to automate most of the production chain, and now additional capacity is needed—meaning likely more machines alongside to manufacture the same products. That €1.0–1.5 million sounds like the right order of magnitude. And the higher the share price is, the lower the dilution will be, so because of this, it doesn’t really make sense to wait.

It is also possible that there won’t even be an issue if someone like Finnvera or a similar party grants more credit for that purpose. The company has only spoken about the need for financing, and from the perspective of the main owners, a share issue is certainly not the primary method. After all, the company now has completely different figures to show on paper compared to what they were, say, a couple of years ago.

2 Likes
453

There isn’t that much to show yet, at least in terms of the bottom line, but rather more development happening under the surface that will only be reflected in the results soon. 75% of the ownership is concentrated among management / the board / key investors. That’s where the money is; a public offering would take unnecessary time, effort, and costs. The CEO is also a wealthy individual—it will be a directed issue and that’s best for everyone.

3 Likes
454

Did they say anything there about Heikka becoming the CFO?

I mean Kairento (Harri), not Heikka (Jukka). I double-checked the name from the list of board members ( Management Ownership – Eagle Filters ) and just automatically grabbed the one who holds more shares… I had actually written earlier that Kairento would likely become the CFO from within the company.

I’ll probably soon need that AI assistant to read my own texts, even though I read them through a couple of times when writing here to avoid having to edit afterwards (though it ends up happening anyway when I spot yet another small error).

Kairento is an excellent guy for those tasks, and they haven’t had that position publicly open, so it’s hard to see anyone else taking the spot. Heikka, on the other hand, is a representative of the largest owner and invested his own money into the company in the latest share issue. Heikka’s purchases are interesting in the sense that, as a board member, he sees much more than the doomsday predictors on discussion forums, who think this will drop back to seven cents anyway “…because there is no justification for the rise,” so now is (once again) the completely wrong time to buy.

If things really looked hopeless from inside the company, it would be quite strange to increase one’s stake with personal funds when there is a large investment firm in the background whose money could be used instead of one’s own.

1 Like
455

Harri Kairento is not coming in as CFO; based on what a friend who was at the Annual General Meeting said, and my own view on the CFO requirements for the company’s current situation, I would be willing to bet a few shares on it.

1 Like
456

We will see when the company makes an announcement regarding the matter. After I pressed them to recall the details, my source remembered that this was asked at the Annual General Meeting, and it was stated that information would be provided in the near future—meaning they didn’t actually disclose anything, just that information is coming at some point.

457

A friend observed that no formal announcement was made at the annual general meeting, nor was anything explicitly said, but the situation could be read between the lines. This is why, in these small companies, it is beneficial to be present yourself or through a friend to get a feel for the atmosphere. In any case, it seems clear at this point that we had different friends in attendance, as our views on this differ :slight_smile:

1 Like