Revenio Group Oyj

2020 earnings release call. My name is Robin Pulkin, and I'm the CFO for Revenue Group. I'm joined by Jouni Tojola, our CEO. We plan to run you through the presentation where Jouni will go through the business summary, followed by my section where we run through the numbers. And after this, you will have a chance for any questions you may have. With these opening remarks, I will hand it over to Jouni.

Hey, welcome. Good afternoon, everybody. My name is Jouni Toijala, and I'm the CEO of Revenio Group. So, let's start by going through the effects of the COVID-19 pandemic for the Revenio Group during 2020. So we could divide last year in three different sections. So the first section is the time before the lockdown, and then the lockdown period, and then the life after the lockdown and the recovery period for us. So if we go for the early 2020, so January, February, our biggest concern was, is the supply chain going to be impacted by the COVID-19? That went really well. So we didn't have any disruptions to supply chain, no electronics, no plastics part coming from the China and so forth. So the supply chain was in really good shape and it has been in good shape for the whole time. Then if we go to March, we go to April, we go to the May time frame. So that was the hardest phase period for us. And in a way that was double-sided. So the tonometers were selling actually really well because of the COVID-19 and the hygienic requirements. But then we had really difficulties on the imaging product side because of the lockdowns and sales team was not able to see the clients. We were not able to deliver or install the devices. And then if we go for the Q3, Q4, so we saw bit by bit then recovery also in terms of the imaging devices. But let's jump in more detail to the Q4 performance. So net sales... strong growth there, so we ended up to 19.7 million euros, with roughly 32% year-on-year growth, and the EBITDA was 8.3 million euros, and the growth was quite significant, so plus 43.7%. And during the Q4, we also issued a positive profit warning concerning the July and December. And the big reason for that was was that we were expecting much more kind of a modest growth, especially in the USA for the second half, but it turned out to be that the actually US business was growing really fast for us in terms of the tonometers plus the probes. And we also saw on the imaging side that the Q4 was stronger than the Q5. And then the overall, we could say that the second half was a way stronger also in an imaging side compared to the first half 2020. And because of the growth, we were also scaling up the production also on the probe side. So these were the highlights for the queue. uh for the q4 and if you are looking at the overall performance of the year 2020 so really the hardest time for us was the april may time frame and especially on the imaging device side and then gradually we have been seeing that the q3 strong pull from clients in the tonometer and the probe side. Same for the Q4. And also, increasingly, we have seen that the imaging product sales is rebounding in the levels of the pre-COVID during the Q4 2020. So that's where do we stand today. And I let now Robin to go through in more detail the key financials for year 2020.

Thank you, Jooni. So like Jooni mentioned, our sales performance was in these conditions extremely good, especially the second half and the Q4, closing with 31.7% growth, and that's the reported number, of course. So the FX was giving us some headwind. So the currency adjusted growth was almost 36% for the fourth quarter. In this table, you can see there's some adjustment lines for the EBIT and EBITDA. Those are actually helping us to adjust the numbers to more a level where we can really compare apples to apples. So there's some one-time items in the reported numbers, which kind of mix the picture a little bit. So what we've adjusted for the comparing, so the reference period, meaning 2019, is that we've taken out the one-time kind of Centerville-related transaction costs. And for this year, we've adjusted the Kutika write-down. And then when you look at this adjusted EBIT line, for example, for the whole year, we've actually been able to grow over 24% the EBIT level. And then also the profitability has grown. And the same thing goes for the EBITDA line, 24.8% growth and also 35.5% out of the revenues. And also the profitability has increased during the COVID year. What we've done here is we have not let any people go. We have cut no running legs in the company. Actually, we have continued hiring some more people during the year. We continued all the R&D development project we had planned originally. So we haven't cut anything from the day-to-day business and the future investments we have been doing. The area where our spending has been a bit lower is the travel, trade shows, and marketing-rated cost for some part. And of course, maybe there's some people that we planned originally to hire more, which we didn't feel. So we did hire, but necessarily not all the positions that we originally thought. If you look at the Q4 numbers, I noticed that many of the analysts have already picked that there also was some one-time revenue or other income from the Centerville transaction related. So actually, we had a similar 1 million item also in last year Q4. So last year, there was a 1 million adjustment to the original purchase price of Centerville. And this year, there was some contingent considerations which we had accrued in the balance sheet which never took place. So we're able to release that accrual and now it's also sitting in the other income. So basically, in both years, we had that same 1 million impact. What's quite extraordinary is that when you look at the full first half versus the second half, and especially the growth. So if you remember, we acquired Centerview in the end of April 2019. So for the first half of this year, we had four months of unorganized growth from the Centerville business. And our currency adjusted growth for the first half was 25.5%. It's actually a little bit less than the reported growth. When you compare that to the second half, where we truly had Centerville in both year numbers for the full year, The second half reported growth 21.4%, with currency adjustment 26.6% is actually stronger. So we are able to grow on the second half, currency adjusted over 1% more than on the first half. And even in the first half, we still had the four extra months from the unorganic growth compared to Centerville acquisition. So a very, very strong second half for the year. Here's some of the key figures in their development. Of course, COVID caused uncertainty during the year, and it actually still continues to do so when we go into the new year. Our balance sheet has remained very strong. Also, our cash position has been improving, so our operating cash flow grew by 23%. It was over 15 million. Basically, we have more cash on the balance sheet than we have interest-bearing debt, so our net gearing is actually back to negative after one positive year after the Centerview acquisitions. so basically we're we're in a very strong strong financial position also from the balance sheet point of view and it's a important item that we'd like to keep it that way because we like mentioned earlier we also continue to consider uh unorganic growth opportunities if they emerge when we move forward Shareholders and share, our ownership table. Basically, there's been actually a lot of turnover over the year. So the revenue share liquidity has been really high. There's almost half a billion of turnover over the year, comparing to 125 million in 2019. So the turnover actually went up 260% year over year. And actually, the number of shares even. So, we have 54 percent of the shares traded during the year compared to prior years when it has been a lot lower. So, in 2019, 22.5 percent of our shares were traded. Some of the big owners. So, William de Munt has become the largest owner. They flagged that they went above 10 percent ownership in June. Also, another flagging on the ownership list is the Capital Group, which fell below 5% in October. Some of the new larger investors on the list, you can see Columbia Threadnail, number three, Tin Funds, number nine, BlackRock, and Artisan Partners, 14 and 16. Our nominee registered owners count to approximately a little bit over 42% at the moment, and the private individuals still hold about 40%. Our number of shareholders went up significantly during the year. So last year we had about 12,400 shareholders. Today, at the end of the last year, we had 20,200. So there's a big growth in the number of owners we have. Share price development, I'm sure everyone on this call knows how it's been performing. We started the year at 26.25, closed at 50.3. For the full year, 91.6% increase in the share price. If you look at the drop in March for the COVID pandemic hit really hard. There was a drop from the opening year. opening kind of share price of 26, 25. It actually dropped 30% to be lowest point at 18.48. From that low point, it's gone up about 175% to where it closed the year. And the market cap for the year end was 1.34 billion euros. financial guidance. So though the COVID pandemic continues to cause uncertainty related to the markets, revenue groups exchange rate adjusted net sales are estimated to grow strongly from the previous year and profitability is to remain at a good level without non recurring items. The board has proposed that dividend of 32 cents to be paid to the shareholders. That represents a 63% payout ratio. So also Kind of going back to the comment earlier on maintaining a strong balance sheet, also for the future opportunities that they may lay. But that's it from the numbers point. Thank you. If there are any questions, we would be happy to answer.