Revenio Group Oyj

Good afternoon and welcome to Revenio Group Q1 earnings call. My name is Jouni Toijala and I'm the Group CFO for Revenio. And today we have a bit more bigger set of team members here. So in addition to the normal Robin Pulkkinau CFO, we also have Erkki Tala vice president products in a call as well. And the reason for that one is that we are going to run today a bit more longer earnings call. So of course, we are going to start with the Q1 financials and the business highlights. Then we go through the guidance part, which we actually don't have. But then we have a pretty extensive part run by Erkki regarding to the VisionX transaction, especially related to the products and the product portfolio. But let's jump to the Q1. So reported net sales, 27.3 million. Increase on the reported side is 4.8%. Currency adjusted net sales growth 8.4. So I think it's a good number, especially if taking into account the extremely strong start in the USA. So in terms of the euros, of course, but especially in terms of the US dollar, the organic growth in the USA. was very, very strong. Then if you look the other countries, so Europe was growing really strong as well. So especially France, UK and Germany. So in terms of the sales, good performance in the USA and in European countries. And then we still had a pretty tough comparables in the APAC side. So the APAC was slightly down. And if you look now at the start for the Q2 in APAC, so we start to be extremely well on track also on APAC side, what comes to the Then operating profit reported 2.4 million, so significantly, of course, down. And, of course, the main bucket there is roughly 3.1 million, one of costs related to the VisionX transactions. But Robin is going to cover these ones in more detail today. So in adjusted operating profit perspective, good numbers of 21.3% from the sales, of course, slightly down from the last year. But let's move to the financial part. So Robin, over to you. Thank you.

So, this typical graph I think people are used to seeing. You only cover the top line parts, maybe also highlighting there that the comparable Q1, 25, FX adjusted growth there was already close to 15%. So we had a really tough comparison period ahead of us in Q1. So considering 8.4% FX adjusted growth, we feel it was a pretty good start in line with our plans for the year. The profitability did come down on the reported level, but there were 3.4 million. So the 3.1 of the transaction related costs and then also some additional costs related to certain organizational changes we did still in the first quarter. Overall, the profitability drop is 5%. largely driven also by the margin, which is a lot lower now compared to last year. We know that the tariffs are impacting that, but also the product mix. But we did now improve the gross margin from the last quarter of last year. So like we discussed, the price increases didn't go in At the end of the year, we have been now implementing those at the beginning of the year. So not fully effective for the whole quarter, but starting February, basically, the price increases have been in the U.S., Adjusted operating profits, so that's probably the better line to look at the profitability. So 21.3% and 5.8 million of the revenue. I'll come to the others in the coming slides. Basically, looking at the... quarterly trend line a bit on the sales. We did really well in the US and Europe. Basically, the FX was really giving a lot of headwind on the dollar versus euro. So basically, the change comparing to the comparable period, the euro is 11% stronger. So basically, That is pretty much the impact that we have on the consolidated level then when converting them to the Euro. So the U.S. growth along was actually very strong as well as the Europe. APAC, like Jooni said, we still continue to have some headwinds, but there were also some larger transactions in the comparable period, which are kind of impacting the growth that we were able to achieve there. So here are the profitability trend lines. So here also reflecting the one-off costs and then the organizational impacts that we had. On the cost side, there also was actually probably a bit less than we expected on the FDA costs related to the DRS Plus and Illum regulatory approvals in the U.S. So those costs didn't really incur yet in the first quarter, but we are now expecting then to start accumulating more in the second quarter, and we see that patients are now starting to come into the clinics where we are doing the studies. Balance sheet. remains unlevered for now. Everybody knows and has heard about the VisionX transaction, so the equity ratio was still strong at the end of the first quarter. This is, of course, going to change as the transaction closes. So like we've discussed earlier, the net debt to adjusted EBITDA is expected to decrease below 2.5 after the equity raise that we're planning to do in the fall. So basically, the leverage rates are going to be a lot higher Starting from the closing and then getting more to normalized levels once we do the rights issue in the fall. So basically equity ratio probably is going to be around 50 or slightly below 50% by the end of the year. But now at the end of Q2, when we come out with our Q2 numbers, the balance sheet is going to be quite levered. Cash flow was not very strong in the first quarter. There are basically a couple drivers. At the end of the year, you can see our Q4 was really strong. We did have quite a... We have, like in Italy, for our subcontracting or manufacturing, we have 90 days payment terms. We had quite big open invoices in accounts payable at the end of the year. Those have been actually now paid into the first quarter, and also the revenue... For the first quarter, it was very much March weighted, so well over 40% of the whole quarter sales was actually taking place in March, which kind of resulted in the AR to be quite abnormally high for this time of the year. Also, some tax payments were slightly higher than the previous year. And then the main shareholders. Not many changes here. The one that you can see is actually Danske, the number five, Danske Invest. They have appeared on the list now. As a Finnish fund, I assume the result is that the Finnish ownership actually also increased by roughly 1.5% during the quarter. For the guidance, we have now withdrawn the prior guidance. We are kind of looking to come out after the transaction closes with an adjusted outlook for the year. But for now, for the coming weeks at least, we don't have any official guidance for the investors. And then we have the AGM coming up. So if you remember, we canceled the original AGM, which was planned to be held around mid-April. Now the new date is May 12th. There's a couple changes to the original invitation that we sent out. So basically, in order to complete the transaction, we are asking the AGM to authorize the Board of Revenue to decide on a directed share issue for the sellers, which is part of the transaction payment. and also asking for an authorization for the board to decide on a issuance of shares in that planned 80 million post completion under written rights issue. Also, there are different from the original invitation, we have three new board members that are being proposed. So the board is proposing for the election of Charlesville Grain, Mark Abitbol, and Niklas Hansen to the Board of Directors of Revenue at the AGM on May 12th. And then also just to note here that we have transaction support from the largest shareholder, William Demant. So they have irrevocably undertaken to kind of subscribe or vote, sorry, vote in favor of the proposals to the AGM by the board, or, yeah, by the board. Good.

Hey, excellent. So before the Q&A, so let's switch the gears to the transaction which was signed April 13th. So a couple of... recap slides from me, and then we actually go... Oerki is going to go through in more detail the products, product portfolio, and the overall logic why this deal so very much is making a sense for revenue. But if we start from here, so as I said, so April 13th, we joined the forces... with VisionX and why this is remarkable. So we have been working in an addressable market, which represents roughly a one billion in terms of the US dollars. So we have been working on a fundus imaging perimetry, micro perimetry and tonometry. And by joining the forces with VisionX, we are going to get an extremely comprehensive product portfolio, and we are able to increase the addressable market now from 1 billion to 2.5 billion USDs. and and why this is uh crucial for us also in a long term is that now we have a full suite of of products for optometry optical retail and then of course enhanced coverage on on ophthalmology side as well but erki is going to come come back come back to this one and As a recap, so EV290, And our plan was really to finance the deal with the cash reserves, then issuing the revenue shares to current main shareholders of VisionX with the price 22.4 euros, so significantly higher. higher amount which we are currently trading and then we have a debt financing plus the vendor loan and then of course the righteous robin is going to come back to this one. And in addition to this one of course we are expecting to have significant synergies coming from the sales side and also from the cost side in the coming years. And a couple of words regarding to the VisionX. So roughly 150 million of the sales team is a global team. So even if it's here said that it's a French company, so less than 200 people in France. And then if people are wondering that – At Revenio, there's 250 people. At VisionX, there's a bit less than 600. So I think here we have to remember that VisionX operates directly, so sales directly in many countries. So it means more sales force than us. It means more customer service installations, et cetera. And, of course, also the... the assembly part of the business, which VisionX is partly having in-house. This is also a really, really good deal in terms of the sales coverage. So as everybody remembers, so we have roughly 50% sales coming from the USA, then a bit more than 30% from the Europe, Middle East, Africa, Latam, Canada, and then the remaining part from AIPAC. So this deal is nicely going to balance now the region. So the US sales comes proportionally down, then the EMEA increases and then we are getting more muscle also to APAC. But maybe we move to actual products now and the logic why this makes very much sense.