Revenio Group Oyj

Good afternoon and welcome to Revenio Group Q3 earnings call. My name is Jouni Toijala and I'm the Group CEO of Revenio. And with me here today, we also have our CFO Robin Pulkkinen. Agenda for today, as always, let's go through the highlights of the quarter, financial and shareholder update. Then Robin is going to reiterate the guidance. Then let's be sure that we'll leave plenty of room for the questions. So let's start with the net sales. So net sales down 8.9%, up to 22 million, EBIT 6 million, down 21.4%. And I think here it's good to... Remember that if we go back to 22 Q3, so we had a significant one of order from the micro perimeters. So if we would normalize that one out, so this quarter would be growth quarter 20. And even though the operating profit was low, so if you look the profit margin, so that was in a good level, 27.4. And if you look adjusted EBIT, so that's roughly 28%. Coming back to the highlights of the quarter, so not too much change on the overall economic environment. But if you look at the kind of positives for us on this quarter, so fundus imaging device growth, so that was in good level, so we were growing. On the fundus imaging side, tonometers were flat. And if you look the whole first nine months, so we have been able to grow faster on the tonometer side, and then we have been able to grow faster also on the fundus imaging side. Then really good progress on the iCare iLoom side. So we have been able to expand the business in Central and Eastern Europe, and then many new geographies are also underway. Then last time we discussed shortly and still wanting to iterate that if we look for Q3, so Q3 we haven't delivered any longer order backlog. So all products which we delivered during the Q3, this applied already, of course, for Q2. So we have been delivering just new orders and not older backlog. Then what comes to the expectations related to economic environment. So our view is that it's going to remain challenging and we are going to reiterate exactly the same guidance. So Robin is going to cover that one. And then, like we said in the Q2 earnings release, so we see that the market normalization is going to take roughly six to nine months, so no change on that one either. And I'll hand over to Robin now, so Robin is going to go in more detail the financials through.

Thank you. So, like Jooni said, it's been a challenging couple of quarters for us, looking from a sales point of view, when taking into account that we don't have the micro-parameter in the portfolio. If you kind of take out that from the comparables, the Q3 was actually better from a sales point of view than Q2. In Q2, we had also a decline in sales. but the comparables didn't really have much of the parametric sales in the Q2 in the 22. So this quarter and the next quarter, Q4, we are going to have a tough comparable, but then still there's been a change for the better compared to Q2, now in Q3, what comes to the sales in tonometry and imaging. And like I said, we reiterated the guidance, so we're quite confident how the year will play out. Gross margin came down a little bit. Last year, we did have some big national account deals, which means that we didn't pay sales commission for all the revenue in the comparables. Also, the FX was quite favorable last year, and now we are kind of getting a bit more headwinds this year. We did incur some Some more of those non-recurring costs from one-time projects in Q3. So in Q2, we had 0.8 million, and now in Q3, 200,000 or 0.2 million. And if you look at the adjusted operating profit, 6.2 million, 28.1 percent of sales. which is a pretty good level for the corridor and for the sale level we have. I'll maybe go a bit more through the others in the next slide. So basically here on the left you can see the seasonal trend for the sales. You can also see clearly here that the Q2 and Q3 are below the kind of trend what we've seen in the past and also below the expectation. The last quarter of the year typically has been historically the best quarter for us. We're now year-to-date 1.3% growth compared to last year, FX adjusted. So the guidance saying that we're between one and five means that in order to keep that, we need to grow faster than the Q4 last year, which was 28.3 million now in Q4 this year. So if we reach that, we're confident that we're on the right path. It means that also the profitability on the right side will be going up in the last quarter and kind of the business is very scalable. So kind of whenever the top line goes up, also the bottom line follows. The profitability was a little bit better now in the third quarter than it was in the first two quarters of the year. Cash flow. Not much surprises here. The decline from last year is mostly due to the lower result for the quarter. Just as a reminder, which we went through also in the last earnings call, that the Q2 cash flow was significantly impacted by our Italian subsidiary income tax payments, which increased and also were partially related to the year earlier payments that were followed up in the second quarter. And looking at the bars here, you can also kind of see clear seasonality. So the last quarter typically has been a very good quarter for us from cash generation point of view. So at the end of the quarter, we have 19.3 million in the bank. It's up from 17.9 million. During the quarter, we also did make a down payment for our kind of a quarterly down payment for our bank loans for more than a million euros and also a minority investment, which I actually forgot to mention there earlier. So during the review period, we did make a minority investment And there is a commitment to acquire the remaining shares if certain criteria are met. And the final acquisition would then take place latest in Q3 next year. There's a contingent liability, so a liability to buy the shares, which is not shown on the balance sheet. And the maximum amount we would be paying is 8.1 million euros. But that's the maximum. It's not necessarily exactly that. The equity ratio, it's the best level it's been since the acquisition of Centriview. So prior to that, our balance sheet looked very different. The equity ratio was even above 80% at some points, but now since 2019, it's never been as good as it's now. And then the net gearing is now back to negative after it went up in the last quarter due to the dividend payments. So during the quarter, our interest-bearing debt went down more than a million, and the cash went up more than a million. So as a net of those, the cash in bank is now higher than the interest-bearing debt, putting the net carrying back to negative. Shareholders, so there's been some changes here. Demand has been buying more shares since the last earnings release. They were close to the 16%, so they've increased their ownership. Finnish ownership also up now, so it was roughly 3% lower in the end of Q2. Denmark is slightly up. Sweden and United States are basically pretty much the same than it was before. And then there's a couple of French investors who have sold some shares. So Grupa, my asset management, for example, was number five in the last quarter. And now Ilomarinen has taken their position as the fifth largest owner of Revenue Group. The guidance, just to read it through again. So Revenue Group's exchange rate adjusted net sales growth is estimated to be between one and five percent compared to the previous year. and profitability excluding non-recurring items is estimated to remain at a good level. There. And then I think we'll go to Q&A.

Thank you, Robin. I think we are ready for questions, please.