Medios AG

Ladies and gentlemen, welcome to the conference call of Medias AG. At our customer's request, this conference 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. If any participant has difficulties hearing the conference, please press 0 followed by the hash key for operator assistance. May I now hand over to Claudia Nikolaos, Head of Investor and Public Relations and ESG Communications at Medios.

Welcome everybody to our earnings call for the first nine months 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 invitations. Today, with me is our CEO, Matthias Gärtner, our CFO, Frank Nolkirch, and our CIM, Konstantin van Rietschoten. Matthias will start with an executive summary, followed by Frank, who will then provide details on the finances for the first nine months of 2024 and the guidance for 2024. Finally, Matthias will comment on the status of Midas' growth strategy. After the presentation, We will begin 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 nine months of 2024. Overall, we posted strong nine-month figures and an excellent third quarter 24, the best quarter ever. The main highlights of the third quarter 24 are shown on slide three. Let's start with the financials of group level. Earnings were up significantly in Q3. For the first time, we reached the 5% mark for our EBITDA-free margin, mainly driven by PST and C-Band. And worth to mention, PST has achieved the turnaround in earnings with an EBITDA-free growth of more than 10% compared to Q3-23. Now some comments to the financials for the first nine months. We achieved a revenue growth of more than 4% to 1.4 billion euros and a disproportionate EBITDA green increase of more than 20% to 55.8 million euros. Our segment in the national business is included for four months from June to September and we are very happy with the performance of Saban in these first months of consolidations. We are also happy that our strategy to trade in lower margin revenues for higher margin revenues is working, especially in the pharmaceutical supply. This helps to improve our margins as well. We posted a strong operational cash flow of 27.6 million euros, a plus of more than 100% compared to the same period last year. And we confirm our guidance 24. I will provide more insights on the financials later. The integration of Stepan is well on track and progressing very smoothly and quickly. When we look at synergies, we are mostly focusing on the cross-selling opportunities and best practices and knowledge sharing. Plus, of course, the economies of scale that the combination will benefit from. First tests have been taken here and we clearly see the potential benefits, but it is too soon to already see them reflected in the Q3 results. Briefly on slide 4 you can see the status of our European platform, which gives us a leading position in the specialty pharma compounding in Europe. This European network is an excellent basis for our further European expansion and the realization of synergies and cross-selling opportunities. Furthermore, it will support the development of our activities in the field of advanced therapies, the future of individualized medicine. In August, shareholders approved an expansion of the supervisory board from four to five members at our AGM. Following the AGM, an ESG committee was implemented by the supervisory board, which is headed by its chairman. And, as already outlined at our H1 earnings call, we are proud that Mateos was re-included in the STAX index on July 15. Now some further comments on the financials for Q3 and the first nine months of 2024. Slide 5 shows the quarter-on-quarter development of our two KPIs, Revenue and EBITDA streams. In Q3 of this year, EBITDA free and the respective margin grew disproportionately. We reached the 5% EBITDA free mark for the first time. This was mainly a result of the contribution of our segment international business, in short IB, the earnings growth in the PST business in Germany and overall higher margins in the PS business. This very positive development is also reflected on slide 6, illustrating the disproportionate EBITDA pre-growth of more than 40%. Now the same illustration for the first 9 months, shown on slide 7. Whereas revenue for the first 9 months 24 remained almost flat, EBITDA pre-growth strongly grew by more than 20% compared to the first 9 months of 23. As already mentioned, this is fully in line with our strategy to further focus on margin improvement. 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, the first nine months of 2024, and the guidance for 2024.

Thank you, Matthias. Also welcome from my side. I will give you a more detailed overview on the financials for the first nine months of 2024, including the third quarter. The full financial statements can be found on our website. Nine months and two, three financials are characterized by C1 strong country, with fusion for four months shown in our new segment, International Business. Let's start with slide nine. All in all, we had a good first nine months. 2024 was a strong and disproportionate EBITDA-free growth. Revenues increased by 4.3% to 1.4 billion euros, mainly driven by the operations segment, pharmaceutical supply and international business. Growth profit increased to 107.3 million euros with a higher growth profit margin of 7.7% compared to 6.2% in the previous year. The increase in growth profit was mainly contributed by PS and IE segments. GST gross profit decreased due to the deconsolidation of Kirchhoff Lister in June 2023, regulatory headwinds, and higher performance-based payments for additional compounding orders. The increase of personnel costs by €9.7 million to €35.8 million results from the consolidation of CBAN, a plus of €9 million, as well as the provisions for bonuses for the successful completion of the CBAN acquisitions. Other operating expenses increased from €16.1 million to €27.4 million. Of this increase, €6.3 million were caused by CBAN. The remaining amount was mainly due to the higher legal and consulting costs largely attributable to the acquisition of CBAN, €2.6 million, and ERP implementation costs, €1.5 million, both extraordinary expenses which were adjusted under EBITDA 3. The disproportionately higher EBITDA fee of 55.8 million euros compared to 46.3 million euros resided in a strong EBITDA fee margin of 4.0%, mainly impacted by the very good EBITDA fee margin of the segment ID, and our continuous efforts to improve the margins of the existing business. EBITDA 3 was adjusted by extraordinary expenses in the amount of €11.7 million compared to €4.8 million last year. This consists of €1.1 million expenses for stock options, €4.3 million for M&A-related costs mainly due to the C-Bahn acquisition, €4.8 million performance-based payments for increased compounding volumes and 1.6 million euros for ERP system implementation. Depreciation and amortization rose to 21.8 million euros. The increase compared to previous year period is attributable to the second growth. The financial result of minus 5.9 million euros is 4.4 million euros. below previous year level and mainly includes accrued interest and costs for the financing of the C-Line acquisition. Consequently, undiluted ETFs for 9 months 24 degrees from €0.69 to €0.43 because of raise depreciation and amortization higher interest payments due to the acquisition of CBAR, and furthermore, due to the adjusted extraordinary expenses, which mainly increased because of significantly higher M&A-related expenses and ERP implementation costs. In the first nine months, we generated a strong operating cash flow of €27.6 million, that more than doubled compared to previous year's period. This mainly resulted from the higher operating results, plus 2.6 million euros, and a lower net working capital increase compared to the beginning of the year, minus 11.9 million euros, mainly because of inventory levels and trade receivables have been actively managed in 2024. Lower tax payments and the reporting period compared to the previous year had a further positive impact on operational cash flow. Consequently, we posted a strong free cash flow before M&A 24.0 million euros. Investing cash flow of around minus 221.3 million euros reflects primarily payments made for the acquisition of CBAN Group, approximately minus 100 million euros, and the repayment of CBAN loans, approximately 127 million euros, less acquired cash of 6.2 million euros. The share contribution, which was part of the consideration transfer, is not included here. Balancing cash flow of 190.3 million euros reflects a drawing of the 200 million euro bid loan for the C-Line acquisition in June 2024, less interest payments of 4.9 million euros for commitment fees and loan drawings in the report in Elgin. payments for rental agreements minus 3 million euro and the repayment of working capital line of 1 million euro. Cash and cash equivalents of roughly 68 million euro consisted mainly of unrestricted bank deposits. The equity ratio decreased from 78.8% by end of 23 to 55.6% by the end of the first nine months, 24. Decrease of raised debt amounts for the acquisition of C1 and the replacement of C1 loans. On slide 10 and 11, we provide a breakdown of the organic and inorganic growth by segment for the first nine months, 24. Inorganic growth reflects the contribution of C1 for four months, fully allocated to the operational segment ID. Let's go to slide 10. Revenue grew organically by 9.8 million euro or plus 0.7%. Inorganic revenue growth amounted to €47.3 million or plus 3.5% due to the exposition of demand. Slide 11 shows the organic and inorganic EBITDA-3 breakdown by segment for the first nine months of 2024. EBITDA-3 increased inorganically by €9.8 million or 21.1% fully dedicated to the segment IB. The slight decline of organic growth was compensated by the strong contribution of ID. Increased personnel and other operating costs for central functions are reflected in the segment services. Let's go to slide 12, providing an overview on the segments. The 4.2% increase of group revenue is mainly driven by ID for four months and to a lower extent by pharmaceutical supplies. The external revenue of the PR segment rose by 2% to around €1.2 billion. External revenue generated by the PC segment decreased by 7.7% to €161.6 million, a decline of €13.4 million. Around €6 million of this decline are attributed to the sale of Crescent Vista in June 2023. In addition, as already mentioned, regulatory price adjustments as well as higher performance-related payments for the acquisition of compounding volumes had also a negative impact on revenue in the reporting period. The IB segment contributed 47.3 million euros. Please keep in mind that it is too soon to already see any synergies deriving from the CBAN acquisition reflected in the nine-month results. EBITDA V for the PST segment amounted to 37.0 million euro, a plus of 3.3 million or 10%. The EBITDA V for the PST segment declined by around 1.1 million to 16.7 million euro, 6.1% below the previous year, mainly due to the described effects I already mentioned. 13% EBITDA pre-close increased 3.24 compared to the previous quarter and more than 10% close compared to the previous year's quarter. This is the turnaround. Ceylon contributed with a very strong EBITDA pre of 9.8 million euro for the period June through October 24 and a margin of 20.7%. Size 13 provides the status information on the debt finance. We financed the main part of the cash component of the C1 acquisition by a bridge facility of €200 million. The bridge facility has common market interest rates. Adding other debt items and considering the cash of around €68 million, the net debt amounts to approximately €156 million on September 30, 2014. The syndicate loan was not formed on September 30, 2014. As said, at our six-month earnings score, we shortly intend to replace the bridge facility by the following financing facility with a total amount of €225 million, consisting of two facilities. Facility A will be a term loan of €125 million with a term of five years. Repayment will start in March 2025. Facility B, a revolving credit facility of €100 million with a term of five years, and the option to extend two times for one further year. Furthermore, it has a step-up option of 15 million euros. Facility B will be available to finance future growth. The bank syndicate for the financing facilities will comprise nine banks. Based on an estimated future free cash flow, less interest payment, an annual amount of 30 to 40 million euros would be available for repayment of flexibility A starting as of March 25. Let's go to slide 15, providing our guidance for the full year 24 for the Medius Group, including CETAN. We confirm our guidance for 24. For 24, we expect revenues to reach the range of 1.9 to 2.1 billion euro, and EBITDA RE is expected to be in the range of 82 million to 91 million euro. The EBITDA pre-forecast is negatively impacted by the one month later change of control of Seabank Group than originally planned. And regulatory price adjustments in Germany. We expect EBITDA pre-cost to be at least 35%, with a substantially higher EBITDA re-margin of around 4.3%. The EBITDA re-guidance includes integration costs, but it is adjusted for extraordinary expenses like M&A-related costs expenses for stock option programs, performance-based payments for compounding volumes, and implementation costs for an ERP system. The summary of our strategic priorities is outlined on slide 16. For this, I hand back to Matthias.

Thank you, Falk. Our growth strategy strongly advanced with Stefan. Its three pillars are outlined on this slide. In addition to strengthening our core business in Germany, Saban will enable us to further expand our operations into other European countries. And we believe Saban positions us strongly to benefit from the very positive compounding dynamics in certain European countries, also driven by an evolving, more favorable regulatory environment. Also, we intend 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, the future of individualized medicine. This is a very good fit for Mateos, 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. We just aim to exploit the enormous potential of cutting-edge healthcare technologies in the field of advanced therapies and thus generate additional added value for society. We will use our state-of-the-art gene pillars in Germany and Europe as well as our expertise in compounding to make highly high-quality personalized therapies available to all patients. This shows that there is a lot of potential ahead for Meteos. Our growth story is well on track. Thank you for your attention. Falk, Konstantin and I are now available to answer your questions. Operator, could you please read out the instructions?