Revenio Group Oyj

Good afternoon, everybody. My name is Jouni Toijala. I'm the Group CEO for Revenio. Welcome to Q4 earnings call. With me, we have here as well our Group CFO, Robin Pulkkinen. Agenda for today is following. So I'll start by going through the business highlights of the quarter. So Q4 plus for the full 2022. Then Robin is going to do a bit more deeper dive for numbers. So Robin is going to go through the BNL balance sheet, also the shareholder structure, and then we finish up with the financial guidance for this year, and of course with the Q&A. So let's move to the highlights of the year. So very, very strong finish for the year 22. So if you go back to Q4, so imaging devices selling extremely well, especially in the USA. And if you go back to the earlier calls, what we have said earlier is that if the fundus imaging market is roughly 500 million, especially in the USA, we have still plenty of room to grow, as we are part of 5% market share in the USA. So still plenty of room to grow, and the Q4 was extremely strong on the imaging side in the USA. That said, also the tonometers were growing in the USA as well in Europe, Middle East and Africa. region. Then good news from the iCare iLoom. So if you go back to the Q2 last year, so we launched the new iCare iLoom platform for the retinal screening. So that included the DRS plus, plus the iLoom plus third-party AI algorithm. So we have been now doing quite many pilots during the second half of 22. And we have managed to close now also the first clients during the Q4 and now the deliveries are ongoing. Then also if looking the December last year, so I'm especially happy about the operations team and our manufacturing partners and their ability actually to ship everything. So we got really a lot of orders still on December, even between the Christmas and the New Year, and we were actually able to deliver all orders last year, so that's really good. Then if going to the market conditions, so overall, not too many red flags currently related to overall IK market, but of course, some uncertainties related to geopolitical situation plus the cost inflation. But otherwise, I mean, if looking at the overall IK market, so that seems to be steady. If moving to the Q4 numbers, so Robin is going to go these ones through in more detail, but net sales totaled 28.3 million, so that's an increase of 18.8%. And if we take the currency adjusted growth, so that was 16%. point one percent. And if you go back to the earlier quarters, so we had a big tailwind from the US dollar euro exchange rate. So so the tailwind was five point four. So five point four million euros in the first three quarters. But that started to settle down a bit, so we got the tailwind from the FX only 600K during the Q4. Operating profit up 31.3%, so Euro terms 9.3 million. And then I have to remind you that 2021 Q4, we had the 600,000 impairment related to Kutica, so that's good to keep in mind. Epida grew 19.4%, good cash flow again during the Q4, and leading to the EPS of 21.4 euro cents. Then moving out from Q4 to the full year of 22, so... Net sales, 97 million, so 3 million shy of 100 million, increase of 23.1%. And if we take the currency adjusted number, so growth rate was 16.4%. Operating profit grew up 34.3%, leading to the 29.7 million euros. And here I have to remind you as well that if you take a full year, so 21, we had the Okulo non-recurring acquisition costs in plus the 600K Kutika impairment. So let's keep that one in mind. Epida grew 28.7%. Cash flow was up to 23.2 million out from 21.5 and EPS a bit more than 80 euro cents. So extremely good year for us. Recapping a couple of business highlights from the last year. So first, I really have to start from the sales. So if you look at the diagnostic device market in general, that's growing roughly less than 5%. So it's less than 5%. And if you look at our growth, we were growing roughly 4x compared to the market, so that's really good. And the reason for that one is that we are having a really competitive imaging portfolio. So here I'm referring to the ADON family, plus also DRS+. Then tonometers, growth was good also on the tonometer side. Then we launched the new home too, we got the FDA approval. earlier, about one year ago. Then also this year, or sorry, last year, November, so 20, 22 November, we actually got the IC200 registrations also for China. So tonometers have been growing well last year. Then we launched the IK Reloom solution, and now we are starting the first commercial deliveries as well. Then really the highlight, which I mentioned already on the Q4 side, but we have been able to deliver really well during the last year. And this is not really the self-evident thing. So the manufacturing partners, operations department, they have been doing the excellent work in order to be able to ship all the orders. Then we have been really active on the ESG side, doing the EcoVadis surveys, upright surveys, and now part of the 22 package, we are going to then launch the new ESG report as well. Then let's, before going to the numbers, so a couple of words related to organization change. So we changed the organization about a week ago, and the goal here was to build more product and customer led organization. And we did four changes. First change was that we decided to bring all product management activities, all marketing activities and brand activities in a one unit. Tomi Karvo is going to lead this unit. Then we had the R&D in two different places inside the organization. So we actually bought all the R&D resources under one unit. So we took the hardware embedded software plus all the cloud R&D under one unit. So that's a really good I think Giuliano Barbaro is still going to run that one until the end of June. Then the third change that we did, so we didn't have a strategy and business development function in a group level. So we established that unit and Kate Taylor is going to run that one. And then last, but definitely not least, John Floyd, John is going to lead the global sales. So John has been working for us already 13 years. So he was the first person in the USA. So he has been building from the scratch, roughly 50 million USD business for us in the USA. So John is now going to be part of the leadership team and bringing all the client insights, what he's having also into the group level, so that's extremely good news. But that's about the changes in general and the highlights for the Q4 and 2022. Over to you, Robin, so let's go through the financials next.

Thanks, Jouni. So, excellent year, excellent finish for the year. Like Jouni mentioned, Jouni went through the sales a bit here, so for the full year, 3 million shy of 100 million, 23% growth. Like Joni said, the FX had a really big playback win for us for the first three quarters, but now for the last quarter, like you can see, the reported and organic growth are not that far apart any longer. So that has been slowing down. Gross margin improvement also very positive. There has been price increases, but so there has been also component cost increases. Overall, our gross margin, almost 70 million for the year, improvement from 70.8 to almost 72%. And then if you look at the operating expense, it's roughly 1% lower from the revenue last year compared to the year before, but then if you take out the Oculo acquisition costs, From the comparable number, the operating cost share part from the revenue is pretty much the similar level that it was earlier. So the adjusted operating profit, if you look at that going up roughly a percentage, it's mostly driven by the gross margin going up. So we have also the EBITDA and the EBIT, actually looking at the adjusted EBIT here. So we did, just as a reminder, for 21, there's 0.7 million of Okulo transaction fees, as well as the 0.6 million for the Kutika right down for Q4 21, which we've adjusted here out in the adjusted EBIT line. So basically here, when you look for the full year, For last year, just as a reminder, there's no adjustment for last year numbers. Only 21 numbers are being adjusted. So the EBIT for the full year, almost 30 million, up 26.8%, and then 30.6% of revenue compared to just under 30% in 21. EPS 81.8 cents for the year. Net gearing also the balance sheet in a really strong condition. The net gearing has gone down to minus 13. equity ratio record high since the acquisition of Centerview, almost 67%. Cash flow very good for a year, and then the headcount has gone up over the year, and now we're average Q4 headcount 205 people. On the P&L, some of you have already been noticing that there's been the financial expenses are quite high. So there's roughly 700,000 of kind of dollar-based exchange loss from the balances that we have on the bank account. So if you look at Q3, the Euro-US dollar exchange rate was 0.97 roughly. And end of Q4, it's basically 10% higher, so 1.07. So out of revaluating those cash reserves in dollars, that's the reason behind the cost. Also, of course, the bank loan interest rates have gone up, and those interest rates have also increased during the quarter. Next. So the sales for a few years back, the trend is very similar to what we're used to seeing. The Q4 has been the best quarter for us, as long as I've been in the company, at least for the last seven years. It's kind of more US based, so the rest of the world is more flat, but especially in the US, there's quite a bit of seasonality. And here also just mentioning for the full year, there's roughly 6 million of FX gains that we have in the P&L or the top line. Just on the FX, as half of our business is in dollars, the 22 average euro USD was 1.05, and in 21 it was 1.18. So that kind of gives an idea why there's so much FX gains. And looking at where we are now, we finished, started last year in 1.13. So January 22, 1.13. And we're now moving around 1.07, 1.08. So looking at the revenue in dollars in this first quarter is probably going to be a little bit FX gain also there when starting this year. But then 22 came down pretty fast, so I think that if the exchange rate stays where it is now, it's probably going to go down the gains towards the end of the year. The operating profit, similar when you look at the revenue, the business model is very scalable for us. So when you have strong revenues, you have strong profits. Looking at the profitability level from the earlier years, just the 2020 with the COVID year, in the start of the COVID, OPEX and expenses and everybody was sitting home, no travel, no trade shows. The costs were pretty low, so the profitability levels back then were quite extraordinary. And nothing, something that you could be, should be too worried that why are we lower than there, because basically there was nothing much other cost than salaries and kind of R&D fees. Cash flow. Here also a very familiar trend. We always start the year off a bit softer. All our group-wide compensation systems are paid out in the first quarter, which always draws down the cash flow there. Also, it's typically the weakest quarter of the year in revenue and profitability. So we start off normally pretty soft and we end up with a strong finish for the year. For the whole year, the cash reserves increased by 7 million roughly. So we did pay out dividend last year, roughly 9 million. The dividend payout for what the board is most likely going to propose to the AGM is going to be the 36 cents, which means basically 9.6 million being paid out. So the cash balance at the end of the year, 32 million. And that's up by 7 million for a year back. Equity ratio, very strong, record high for last year. So if you recall, before the Centerville acquisition, it was higher. But the whole balance sheet looked very different back then. So since the 2019, it's the highest it's been. And the net gearing also highly negative. Our kind of cash reserves are Roughly 12 million, I think, higher than the interest-bearing debt that we have on the balance sheet. So very strong position. Shareholders, there actually hasn't been much change in Q3, small ones. So the foreign ownership is actually 53.41 now. It was 53.63, so just two decimals. lower actually now what the changes are the names on the top 10 list is exact same there's one change so Vanguard and Columbia no Vanguard and Capital Group switched places so Capital Group sold a little bit Vanguard and Demand have been increasing their ownership other than that it's pretty stable for the last three months In our guidance, revenue groups exchange rate adjusted net sales are estimated to grow strongly from the previous year and profitability excluding non-recurring items is estimated to remain at a good level. That's it for me.

Yeah, that's it. Thank you, Robin. So let's move for the Q&A.