Revenio Group Oyj

Welcome to Revenue Group Q1 earnings call. My name is Jouni Toijala, and with me we also have here Robin Pulkkinen, our CFO. We are going to go through today the business highlights of the quarter, so I'm going to cover that one. Then Robin is going to go through the financials plus the shareholder development. and then Robin is going to finish for the financial guidance, and then we go for the QA at the end. So, if I start summarizing the Q1, so we saw growth in all regions, especially in the Europe and in the USA. APAC region was growing as well, but not as fast as the Europe and the USA. In Europe, we had a couple of highlights from the country-wise. So, Italy grew really very strongly. Same for United Kingdom, then Sweden, Netherlands as well. So, in a nutshell, a really good start for the 2022 for us. Then we have certain uncertainties in the air as well. So of course the Russian and the Ukrainian war, which is ongoing. So the Russian and Belarus business and the Ukraine business in total for us, that's roughly less than 2%. So we have stopped all the business with Russian and Belarus. Then, of course, we have had challenges related to the components. They haven't been impacted, the business as such, but we are still constantly having daily battles to get the components into the production with reasonable price. Then, of course, the COVID-19 situation, especially in China. that is going to cause, according to our thinking, also a bit more difficulties related to the component availability in the long run. But in a nutshell, from the component availability point of view, we didn't have any challenges. The only challenge was actually related to COVID-19 related sicknesses in our supply chain, so we were not able to deliver all the products where we had the orders, so roughly a bit more than half a million euros. So if you go actual numbers, so, Net sales totaled 20.2 million. So that's increase of 20.5%. And if we take the US dollar impact, so the currency adjusted growth in net sales during the Q1 was 17.1%. So the US dollar actually played for us during the Q1. Operating profit 5.6 million, 27.5% out from net sales. Growth was 20.6%. So Robin is going to cover a bit more detailed, the adjusted EBIT number, because we had in the last year Q1, we had the roughly 600K related acquisition costs from Okula transaction. But then on the other hand, now we also have a full on resource cost in this, or the last quarter, so the Q1. EBITDA grew 21%, so up to 6.4 million. And then Robin is going to go through the details on the cash side, and that was slightly weaker than the previous year. Earnings per share up, from 0.141 to 0.176. So good performance in the Q1. Then we have been communicating during our yearly release So when we last time had the conference call, so we said that we are moving forward and we are working on the solution side. So just to recap the logic here, why we decided to launch the new screening solution software. So really the reason is that there's going to be increasing amount of the patients who are having eye diseases and And that's because the people are aging, that's because of the lifestyle diseases. And exactly the same trend is going to happen also on the eye care side, which is already happening in normal healthcare side. So there's in normal healthcare side, there's not enough nurses, there's not enough doctors to treat the sick people. So it's going to be exactly the same thing on the eye care side. So there won't be enough eye care specialists to take care of the increasing amount of the patients if we don't start being able to use more efficiently digital solutions and services also on the eye care side. So from the solution portfolio point of view, we have three different buckets where we are currently working. So one is the capabilities to remotely monitor and see the patient, so there a good example is our iCare Home solution for monitoring, then also the Oculo platform gives us telehealth capabilities. Then the second bucket is that how we guarantee in a more better way that we don't break the patient care pathways and how actually the patient is refer to another eye care specialist through the digital channels. So that's where the Okulo clinical referral system is showing the benefits. And then the third bucket is actually how we are able to assist with the digital solutions and the software solutions, how we are able to assist that the iCare specialists are able to do better clinical decisions. And this is where the iCare iLoom actually then fits. So what we launched, so we launched a new features and functionality into a DRS Plus, so on the embedded software side. We're just pressing a single button. The image is transferred to the... iCare iLoom Cloud service, where the picture then is forwarded to the Tirona AI algorithm, and then we get the report back, which is then shown on the iCare branded and iCare-owned software asset. And you can see from the image, so that's a real working UI, which actually I was using about one hour ago to screen my eyes related to diabetic retinopathy. So this is, in a nutshell, what we launched after the review period. And we can cover, I'm sure there's going to be questions related to this as well, We cover those at the end. I think it's time for Robin to go through the financials in a bit more detail. So over to you, Robin.

Okay, thanks, Jouni. So here's a bit more detailed listing of some of the key numbers. Like Jouni said, 20.2 million in sales, and we actually were not able to deliver everything we had in the order book. So a bit more than half a million pushed out. So if those were to go out, our growth would have been Growth would have been closer to 25%, and the EBIT probably closer to 29%, even a little bit above that, if we were able to deliver all that out. Like Jooni mentioned, the cost side, we had the 600,000 Okolo M&A costs in the comparable numbers for Q1 2021. So, we have the adjusted line here. Basically, the reported Q1 2022 is the same. So, there are no adjustments for this year, but the last year number is adjusted for the M&A costs. So, our operating profit went up 6% year over year when you kind of add back those costs to the comparable numbers. Just important to keep in mind whether it's better, more or less comparable because last year Q1 we didn't have any of the Okula team in the house and there are no operating costs. So the cost for this year actually is more than what we were adjusting out for the M&A costs from last year. Gross margin was really good. We had a good product mix we sold. Exchange rates played really nicely for us like you can see from the FX adjusted sales growth. So those are kind of the biggest two drivers for the gross margin. Also in the US we had some nice sales from some of the national accounts where where we don't pay any commission for, so they're kind of run by our own people, not the sales representatives in the U.S. So obviously when we don't pay commission, that plays nicely into the gross margin. Do you want to jump to the next one? Some more quarterly view. You can kind of see a trend, some seasonality in our numbers when you go and look into the couple years back quarterly outlook, so kind of We normally start off with the lower sales in Q1 and end up with the strongest quarter at the end of the year. Our business model is really scalable. So you can see on the right hand side, the profitability tends to follow the top line. And that same actually goes through also the cash flow. But looking at how the Q1 performed, 20.5% growth. But if you look at last year, our growth last year was more than 40% for the first quarter. If you look at our Q1 in 2020, we're up basically 70%. So it's been a really good couple of years for us as a company. On the right-hand side, you can also see the EBIT, the kind of the EBIT and the EBIT percentage. So here also when the top line goes up, the profit goes up, also the profitability goes up. So the business model is really scalable. You can see that our manufacturing is fully outsourced. So it scales up and down with the costs scale up and down with the business. So our kind of fixed cost is higher. purely very fixed like it's supposed to be. So when the top line grows, our profitability grows nicely. Then the next one. Here you can see also the same quarterly view for the cash flow. So it tends to follow the similar kind of seasonality. We tend to finish quite strong for the second half. Q1 always not the best because we annually pay out our STIs or the short-term incentives for the whole group, as well as the long-term incentives are paid out in the Q1. So Q1 for operating cash flow tends to be not the best, at least. Well, last couple of years has been the worst quarter from the operating cash flow. Equity ratio, the balance sheet is still really strong. You can see it's quite stable for the equity ratio. If you look at the net gearing graph, the yellow line going up and down, if you wonder why it's kind of, there's a kind of, That's a good explanation for why it goes each direction. So in 2020, we paid our dividend in Q2, resulted in a net gearing going up. Then we build up the cash for the next couple of quarters. It goes down to minus 2.4. Last year, we paid our dividend in Q1. We paid for Okulo from the cash in Q2. we build up the cash again q3 q4 and then this year our dividend didn't make the q1 numbers yet but this was paid in april just a couple it was the last week i think yeah Some of the shareholders, there's been a big, not big change, but a change anyway. So William DeMont has increased their ownership again during the first quarter this year. So they're just under 15%. So we haven't flagged it in April. So they haven't gone above 15%. Foreign ownership is now more than 51 percent of the total company, so the Finland ownership 48.6, United States is number two. Denmark has grown now with the demand increasing their ownership and then followed by Sweden below seven and then France below three percent. And then next. In the guidance, we did not change our guidance, so the exchange rate adjusted net sales are estimated to grow strongly from the previous year and profitability excluding non-recurring items is stated to remain at a good level. So here on the right hand side, you can see some of the historical kind of sales growth and also the profitability. So we are historically always been able to provide and show profitable growth, and that's what we plan to do in the future as well.

Thank you, Robin. I think we are ready to have questions, so if you have any questions, we are really happy to answer.