Vantiva S.A.

Ladies and gentlemen, welcome to Vomtiva First Quarter 24 Revenue Conference Call, chaired by Luis Martinez-Amago, CEO, and Lars-Helen, CFO. At this time, all participants are in a listen mode only. Later, we'll conduct a question and answer session. If you'd like to register a question, please press star 1 on your telephone keypad. Just to remind you, all this conference is being recorded. We would like to inform you that this event is also available live on the Bontivard website with synchronized slideshow. During this conference call, statements would be made that constitute forward-looking statements based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the future results expressed, forecasted, or implied by such forward-looking statements. For a more complete list and description of such risks and uncertainties, refer to Vonstiva filing with the French Autorité des Marchés Financiers. I would like now to hand over the call to Luis. Please go ahead.

Thank you, Thierry, and thank you, all of you, to be on the line. So I'm going to – we can move to the first slide. I'm going to share with you the performance on quarter one. My first comment is to say that what you are going to hear is no surprise for us. I think it's part of the plan and part of the guidance that we communicated to you in January. So everything is based on the plan that we are executing. As you will see in a minute, we had a significant decline of quarter one revenues. And this is due to what I'm commenting already in several calls is a decline on the demand from customers related to the consumer expense to start with and the limited investment of customers that they are still depleting inventory that they have in their hands. We know that already for several quarters because, as you know, we have forecasts from all our customers that covers a significant amount of time, several quarters. So we knew already that quarter one is going to be pretty weak, but it's part of our plan for this year and is completely incorporated in the guidance that we provided to you. In addition, there is a certain challenging comparison basis with quarter one last year. Quarter one last year was stronger than normal because we were at the tail of the cheap crisis and the demand was still high. and several customers, the most important ones, were still taking significant amount of product that is part of the inventory that they are depleting and made quarter one last year stronger than a normal quarter one, which is pretty seasonal. Okay, the next comment I would like to make is we have already some wins in the connected home diversification activities that I presented to you in previous occasions. We have two main tracks today, one in what we call IoT for enterprises, and this we call now Smart Spaces. We are already in field trials with a number of important leaders of the targeted industry that we are doing with this. And we are very confident that that will start getting materiality in the quarters and years to come. So we're pretty happy to share that with you. And the second thing is there is a new initiative, which is called Homesite, which is a solution for remote home care. And we have just recently signed, and you have a press release in our site, a very significant contract with the leader of this market, this industry in the United States, that they are going to start. start deploying the solution on the American market very soon. So we are very happy and very encouraged by this because, as you know, core business is one of the pillars, but diversification is another one, and we start to see significant traction on this front. Concerning SCS, it's resisting pretty well. The optical, this market keeps the normal decline, but it has been... in line with our expectation, no surprise there. But the diversification activities among them, the vinyl is showing quite significant activity, and this division has performed a bit better than what we expected in quarter one. It's still declining year on year, but the contribution of the diversification has been a good surprise with the strength of the vinyl market. One important thing, I promised to you in our call in January that in this call we are going to share a bit more about the synergies that we are executing and is part of the plan. As you remember, we told you when we announced the acquisition of Conscope that we are expecting synergies net of cost of neutral for this year, that means zero, and in the range of more than 100 million for 2026. What we are communicating today is that from zero, we are at 40 million in 2024, and we will be over 200 million in 2026. This is proving that the acquisition is delivering more than we were expecting in terms of synergies, and we are accelerating the execution of them that will position the company in a path. which is giving a bit more insight in our guidance that we gave you not only for 24, but for 26 in our previous guidance. Concerning the market, my last comment is that we expect the situation to start recovering in quarter two, and we will see also the second half a bit. We will see the market recovery gradually moving forward. Okay, with this, if we move to the next slide, you see the figures there. So we have, you have in the Vantiva group total, and you have the two main divisions there, and you see the declines, the 20% decline in the Vantiva global scope, a bit more than that for the connected home, and a bit less than this from the supply chain services. Okay, you have the figures there, and nothing more to comment on this. And then the last one is the confirmation of the guidance. This is the guidance we provided during the last call. We keep targeting more than 140 million of adjusted VDA and a free cash flow which will be positive. Okay. And as we told you in 2026, we will have a healthy and sustainable free cash flow generation after finance, tax and restructuring. And with this, we will open the call for your questions.

Thank you, Luis. And ladies and gentlemen, if you wish to ask questions, please press star 1 on your telephone keypad.