Medios AG

Hello, ladies and gentlemen, and welcome to the conference call of Medias AG. At our customer's request, this content will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions via the telephone conference. If any participant has difficulty hearing the conference, please press 0 followed by the hash key for operator assistance. May I now hand over to Claudia Nicodels, Head of Investor and Public Relations and ESG Communications at Meteos.

Welcome everybody to our earnings call for the first quarter 2024. As always, all relevant documents can also be downloaded from our Investor Relations website. Additionally, this presentation can be followed in parallel via the internet link provided to you in the invitation. Today with me is our CEO Matthias Gärtner and our CFO Falk Neukirch. Matthias will start with an executive summary, followed by Falk, who will then provide details on the financials for the first quarter 2024, the guidance for 2024 and the outlook for 2025. Finally, Matthias will comment on Indra's growth story. After the presentations, we will begin with the Q&A session. I would now like to hand over to Matthias.

Thank you, Claudia. Ladies and gentlemen, welcome to our conference call for the first quarter of 2024. Overall, we started with a solid business performance into the year with a strong operating cash flow. The main highlights of the first quarter of 2024 are shown on slide 3. Let's start with the financials on group levels. We recorded an almost 6% rise of revenue to €456 million, with a slightly increased EBITDA-free of €15 million. We posted a very strong operation cash flow of €43 million compared to €-25 million last year. On the basis of these solid figures, we confirm our guidance 24. 5 will provide more insight on the financials later. Our main highlight of Q1-24 is the acquisition of Feban, an outstanding event for Meteos, a milestone on our mission to create a European specialty pharma platform. This brings me to the new publish yesterday. We are proud and very blessed to have Konstantin from Eutroden on board. Since about a year now and on May 1st, He was appointed as further member to the executive board. Our new chief international market, in short CIM, will drive the international activities of METEOS and develop them further. As a renowned expert for the various international markets. Furthermore, in Q1, the Executive Board contracts of Chief Operating Officer Myung-Mila and Chief Innovation Officer Christoph Brutheis were extended ahead of schedule. Regarding our ESG activities, we continue to work on the implementation of the CSRD and EU taxonomy requirements. Consequently, our non-financial reporting 24 will be fully in line with these new standards. And finally, a few words on our most recent and first acquisition outside of Germany. Seban Pharmaceuticals is the Dutch market leader and also has activities in Belgium and Spain. We see this as an outstanding milestone in implementing the METO's internationalization and growth strategy. On slide 4, you can see an executive summary of this transformative and value-enhancing acquisition. This acquisition is the first milestone in our journey and vision to build the leading European specialty pharma platform. In addition, we get immediate market access to three European countries, the Netherlands, Belgium and Spain. The new makers group will have a leading position in compounding of specialty pharma in Northwestern Europe. With this acquisition, we will significantly diversify our product portfolio and value chain in specialty pharma. We will run a network of 23 owned pharmacies in the Netherlands and will be adding the API business. API stands for Active Pharmaceutical Ingredients and the high-margin non-sterile business as well. The good cultural fit of the two groups strongly supports the cross-selling of potentials and synergies. I would like to stress that the transaction is immediately EBITDA-accretive and will increase our earnings margin from the very beginning. We expect the closing of the transaction to take place during May. Now let's move to slide 5. Our German-wide network of around 800 specialized pharmacies will be enlarged by Saban's network of around 3,300 pharmacies and more than 200 hospitals, as well as the 23 owned pharmacies. This is an excellent basis for our further European expansion and the realization of synergies and cross-selling opportunities. This also means that the number of the currently around 400,000 individualized operations in 2023 will substantially increase. More information on the SEPAN transaction is provided in the appendix of this presentation. We expect to significantly exceed the 100 million euro mark in EBITDA pre already in 2025 with an EBITDA pre-margin of over 5%. I will provide more insight on the financing later. Now some comments on the financials for the first quarter of 24 as illustrated on slides 6 and 7. Slide 6 shows the quarter-on-quarter development of our two KPIs, revenue and EBITDA-free. Revenue, EBITDA-free. and the respective margins for the first quarter were above the level of Q4-23, despite the already described regulatory price adjustment still impacting our PST business. Moreover, Q1-23 revenue included €3 million coming from CulturePista that was sold in June-23. Revenue in Q124 increased by around 6%, and EBDA3 was slightly ahead of the first quarter of 2023, as shown on slide 7. All of this growth was attributable to organic growth. This is all from my side for the moment. I now hand over to Falk to provide more details on the financials for the first quarter 24, the guidance 24, as well as our targets for 25.

Thank you, Matthias. Also welcome from my side. I will give you an overview on the financials for the first quarter of 24. A full financial statement can be found on our website. Let's start with slide 9. As already mentioned, we had a solid first quarter of 2024. Revenues increased by 5.8% to 456.2 million euros, driven by the operational segment from a three-figure supply. Growth profit was almost less, amounting to 27.6 million euros with a lower growth profit margin of 6.1% compared to 6.5%. In the previous year, the growth of the PR segment was absorbed by the lower growth profit of PST due to the already mentioned deconsolidation of Kölsch & Lister, regulatory headwinds and higher performance-based payments for additional compounding orders. The decrease of personnel costs by 4.2% to €8.6 million results from deconsolidation of Kölsch & Lister end of May 2023. Mainly due to increased legal and consulting costs largely attributable to the acquisition process of FEMA, other operating expenses increased by €1.7 million to €7.3 million. Thank you. An almost flat EBITDA fee of €15.1 million compared to €15 million resulted in a slightly lower EBITDA fee margin of 3.3% compared to 3.5% last year. As previously stated, the margin was burdened by regulatory price adjustments as well as increased contribution of the PS segment, resulting in lower EBITDA margins. The EBITDA fee was adjusted by extraordinary expenses in the amount of €3.3 million compared to €1.7 million last year. This consists of €4.3 million expenses for stock options, €1.6 million for M&A transaction costs, €1.4 million for performance-based payments for the acquisition of compounding volumes and €0.04 million for ERP system implementation. Depreciation and amortization amounted to €5.2 million and remained almost unchanged compared to Q23. The financial result of €-0.7 million is slightly below previous year's level of minus €0.4 million and mainly includes interest payments for the utilization of the RCS and provision fees for the secure bridge financing relating to the C-Ban acquisition. We generated a strong operating capital of €43.4 million compared to minus €25.4 million in the first quarter of 2023. This development mainly resulted from the positive operating results and actively managed working capital as a reporting data. As highlighted already in our last earnings call end of March, in future, media will focus even stronger on cash flow by pursuing an active work in capital management, especially in the PA segment. The goal is to generate quarterly a perpetual positive operating cash flow in the group and thus increase the annual operating cash flow compared to the previous year significantly. For the first quarter, we delivered on what we were aiming for, even so supported by a few cash flow tailwinds on the reporting days. Investing cash flow of minus 0.4 million euros reflects primarily investments in equipment, whereas Q1-23 was dominated by the cash component for the BBW acquisition of 19.2 million euros less acquired funds. Financing cash flow of minus 1.3 million euros reflects interest payments, repayments of financial liabilities, as well as payments for long-term finance lease contracts. Free cash flow before M&A amounted to almost 43 million euros following the operating cash flow in the first quarter of 2024. Cash and cash equivalents amount to roughly 113 million euros compared to 70 million euros at year end 2023. The equity ratio decreased from 78.8% by end of 2023 to 75% by the end of the first quarter of 2024. Let's now switch to slide type. The 5.8% increase of group revenue is thoroughly driven by the PS segment. The external revenue of the PS segment rose by 8.9% to around 401 million euros. External revenue generated by the PC segment decreased by 12.5% to 55 million euros, a decline of almost 8 million euros. Around 3.5 million on this decline are attributable to the sale of Persia Blister. In addition, as already mentioned, regulatory price adjustment as well as higher performance-related payments for the acquisition of compounding organs had also negative impact on revenue in the first quarter. EBITDA 3.4 PS segment amounted to 11 million. a plus of €0.9 million or 9%. The EBITDA-3 for the PST segment declined by €0.7 million to €5.9 million, 9.4% below previous year mainly due to the already described regulatory advent. The sale of Pershing's Lister had no significant impact on EBITDA-3 year-over-year. The margin in relation to external revenue in PST was stable at 2.8%, where the PEC margin increased from 10.4% to 10.8%. On group level, the EBITDA pre-margin of 3.3% is slightly below the margin of the previous year. Let's now go to slide 12. Providing our guidance for the full year 24 for the NEGIUS group, including CERN and an outlaw for 25. We confirm our guidance for 2024. We expect revenues to reach the range of €1.9 billion to €2.1 billion, reflecting a growth of 11.1% considering the middle of the corridor. EBITDA-3 is expected to be in the range of €82 million to €91 million, a disproportionate rise of 43% at the middle of the guidance corridor. The guidance of 24 is subject to the assumption that CBAN acquisition will be closed still in May, and we are able to fully consolidate CBAN as of beginning of May 24. The EBITDA-free guidance includes integration costs, but it is adjusted for extraordinary expenses like M&A transaction costs, expenses for stock option programs, performance-based payments for compounding volume, and implementation costs for an ERP system. For 2025, not as a guidance, the further integration of FIBA is expected to lead to revenues of approximately €2.15 billion. The reason for the slightly lower revenue increase is a focus on increasing margins and cash flow, which to a certain extent also means that we would accept waiving revenues with lower profitability. Also as an ambition, but not to be understood as a guidance, we expect in 2025 for the first to cross the 100 million euro mark in EBITDA-3 by a targeted EBITDA-3 of around 110 million euro and the corresponding EBITDA-3 margin of around 5.1%. This shows very clearly that if acquisition of C1 is EBITDA-3 margin accretive, we will significantly increase our profitability with a potential EBITDA-3 margin above 5%. The summary of our strategic priorities is outlined on slide 13. For this, I hand back to Matthias.

Thank you, Paul. Our core strategy is strongly advanced with Stepan. Its three pillars are outlined on this slide. In addition to strengthening our core business in Germany, Stepan will enable us to expand our operations into other European countries. And we plan to further diversify our business model by entering the production of advanced therapies, meaning medicines based on genes, tissues or cells. all expensive and complex therapies. This is also a very good fit for Meteos, as we are already a trusted partner for high-value drugs in Germany, and we will be one in our new European markets as well. As said at our last call in March, the Vice President being responsible for the new field advanced therapies started on April 2. We are very pleased to have Dr. Andreas Schmiede on board. Andreas holds a PhD in biochemistry and has more than 25 years of professional experience in the field of diagnostics at PeerGame, biotechnology, and biopharma, among others at Baxter, Shire, and Lonza. Andreas has had various senior leadership positions in R&D, strategic and technical operations, business development, M&A, and sales, and has several years of experience abroad. e.g. USA, Brazil, and Switzerland. In his last position, Andreas worked for more than seven years in the fields of cell and gene therapy in several companies. Before he joined METEOS, he was Senior Director of Strategic Business Development and Account Management at Lonza. I am sure we will report regularly on progress in the area of advanced therapies in the future. As a result of Stefan's integration and the implementation of our growth story, we defined financial targets for 2025, replacing and exceeding our previously mentioned mid-term targets, as just presented by Falk. We remain excited and confident that we will achieve these targets. In a nutshell, our growth story is well on track. Thank you very much for your attention. Falk and I are now available for to answer.