Revenio Group Oyj

Good afternoon and welcome to Revenue Group Q4 2023 earnings call. My name is Jouni Toijala, Group CEO, and with me here today, we also have our CFO, Robin Pulkkinen. Agenda for today is that I'll start by going through the highlights of Q4, including the short summary of financials, then also the same for 2023. So overall business highlights, uh, plus high level, uh, financial performance. Then Robin is going to do the deep dive, uh, to the numbers. And then we are going to go through the changes in shareholder structure, plus the financial guidance for 2024. So let's start with the Q4. Business highlights, so the quarter went exactly as we expected it to go. So if we first start from tonometer side of the business, so strong sales for IC200, including the probes. Imaging device sales, especially DRS Plus, ADON family. with the ultrawide field function, sales growth was strong for Q4. And then if you look at the overall progress on the screening side of the business, so referring to iCare iLoom, so also good take up on the iCare iLoom side. And if looking at the gross margin, looking at the EBIT, so good performance also. on profitability level. So if you look the numbers, so net sales up 3.5, sorry, 3.1%, up to the 29.1 million. Robin is going to cover the currency exchange rate part, but for the Q4, not major impact on that one. EBIT, 9.5 million euros, up 1.6%. And then cash flow slightly or quite significantly lower compared to the previous year. But we closed a couple of big deals. So this is due to the account receivables. So Robin is going to cover on that one. So nothing to be worried about. EPS up to two point, sorry, 27 cents up from 21 cents. So if moving back to full on 2023, So a couple of highlights here. So as you recall, we renewed the organizational structure February 1st, 2023. So that has been a good decision for us and everything is up and running really well. So if you remember, we structured the sales out from the product management and marketing, then we included all product management organization functions in one organization, same for the R&D. So that change has been going really well. Then on the screening side, we have been launching new disease modes to the ILWU. So now we have the AMD, we have also Glaucoma in, then we closed the AI partnership for the Illuum and then also new product releases couple of those. So I see 200 quick measure. Then we also launched new software version for the Compass perimeters and that the sales of the Compass picked up quite well also during the Q. Then on the positive note, end of last year, we also received the regulatory approval for DRS Plus in China. So we have been applying that one for a really, really long time. But finally, we got everything sorted out a bit before Christmas, so that's really good. good thing. Then a couple of big deals during the end of Q4, one in Germany and one in the USA related to the DRS plus, and also in the USA, also the IC200. And then as of end of November, we also kept the CMD and gave guidance for the long-term growth target, plus then we updated slightly the strategy. In terms of the numbers, so net sales for the full year, 96.6 million, slightly down. If we take the currency-adjusted numbers, so we had the growth 2.2%, and then EBIT down then from 29.7 to 26.3, so roughly 10% or a bit more than 10%. Robin is going to cover the cash flow part and the overall earnings per share, 0.7 euros down from 0.8. But with these words, over to you, Robin.

Thank you, Jooni. So a bit more details on the numbers. Like Jooni covered, 3.1% growth in the last quarter of the year. There was no FX impact on the last quarter, but for the whole year, looking at the whole year sales, almost at the same level as last year, reported sales is actually down by 0.4%. Also, the gross margin rather stable within the quarter and the whole year. Well, actually, the whole year is down 1.3%. But when you look at the FX impact during the last couple of years, there actually last year, The FX, there was a headwind for 1.6 million euros for us. Compared to 22, there's a tailwind for 6 million euros. So it's actually a quite big impact on our numbers. In the last quarter, we didn't have any non-recurring costs, but for the whole year, we incurred $1 million non-recurring costs for certain one-time projects. So when you look at the quarterly numbers, the reported and the adjusted are the same numbers. But for the whole year, the adjusted EBIT is actually $27.3 million. and 28.3% of sales. The EBIT percentage is down 2.3%. That if you look at the gross margin, it's down 1.3. So biggest part of that is actually the gross margin that has brought down the profitability. Also then the OPEX is impacting 41%. So the year end was extremely good, considering that, like we discussed earlier, we didn't have the microparameter products in our portfolio this year, so we ran out of stock, and we'd be kind of catching up that gap in Q3 and Q4, looking at the trend line. The Q1 and Q4 are pretty much on the trend line like we've seen in the earlier years, but like we know, the second and third quarter were below the trend, and that has been the challenge for us for the whole year. The Q4 sales performance actually quite good when you leave out the micro-parameters, so there was double-digit growth for the main products that we had in the portfolio that we could sell. It's double-digit, actually closer to 15 than 10, so a quite good finish for the year. Also, the profitability for the last quarter was the highest we've had so far, 9.5 million. Basically more than one third of the profitability for the whole year was generated in the last quarter. There's a few reasons, basically the sales mix, but also the operating costs increased during the whole year quite moderately. So for the whole year, our OPEX is up 3.3%. year over year. So there you can see the scalable business model going also the other direction, not only when we grow, but also when we have had a tougher time on the top line, we've also have been able to scale the costs. Most of that is actually, like we discussed earlier, the variable bonus payments are quite low for last year. So that is one driver for the higher profitability. Looking at this year, Maybe that's something that if we assume that we keep our guidance, the bonus pool is definitely going to be a lot bigger than last year. But also, like we've discussed earlier, the DRS Plus, Plus Illume, FDA clinical trials are ongoing. We have the new Maya coming out with the clinical trials, so we'll have We're going to have some more clinical trial costs in our P&L this year, which is something just to keep in mind going forward. So it's something that actually goes through the P&L and we don't put it on the balance sheet. So it's going to be impacting the profitability this year. But the good thing is it's one-time costs, so they will go away then the following year. Cash flow. So the Q4 wasn't as good as you would have assumed, but of course, it's maybe a good reason for that. So we did have a really good end of the year. The AR increased significantly. So due to these larger deals and overall, we have finished extremely well. And then, of course, the Q4 sales is significantly higher than the Q3 sales. So the AR did go up, and that's the main reason why the operating cash flow was lower on Q4. For the whole year, the working capital changes and then the certain tax payments in Q2 that were partly related to earlier years was the other reason why the operating cash flow didn't develop as favorably as we've seen before. But I'm sure Q1 hopefully will be then maybe a turn to the other direction when we collect the money that is outstanding. The balance sheet remains very strong. Equity ratio is again at its highest it's been, so 72.7%, net gearing minus 3.6, so we have 21.5 million in the bank at the end of the year, and then interest bearing debt of a little bit under 18 million, so the kind of net debt position is minus 3.6 million that we have at the end of the year. The board will propose to the AGM that we will pay a dividend of 38 cents per share. That roughly adds up to slightly above 10 million. On the shareholders, there's actually very little changes. Surprisingly, it's not often that it's so stable. Basically, the Finnish ownership has gone down 0.4%, and basically all the 10 names on the list are pretty much all the same, but maybe one or two have changed positions or places, so nothing much to report here. And then for the guidance, revenue groups exchange rate adjusted net sales are estimated to grow 5-10% from the previous year, and profitability excluding non-recurring items is estimated to remain at a good level. And then we're good for questions.

Yeah, thank you, Robin. Let's move to the question part.