Accsys Technologies PLC

Welcome everyone to Axis Technologies PLC preliminary results presentation for the financial year ended March 31st, 2025. Today's speakers are Dr. Jelena Arsic van Os, Chief Executive Officer of Axis Technologies and Samit Vora, the company's Chief Financial Officer. Jelena and Sam will take you through an overview of the business and financial performance for the years before we open the floor to questions. Please note that we will be prioritizing questions from analysts. With this, I would like to pass over to our speakers.

Good morning, everybody, and welcome to AXIS Financial Year 25 results call. I am very excited and pleased to report that AXIS has delivered a strong set of results this year, marking a pivotal moment in our transformation journey. This encouraging trajectory reflects the growing momentum we are building across our core markets against the challenging macroeconomic backdrop. As some of you may know, in January 2025, we launched our focus strategy, which is already delivering tangible results. Our EBTA improved by 125% year-on-year, underpinned by strong volume growth across all regions, empowered by cost and pricing discipline. Underlying EBITDA from group core operations, excluding the joint venture, increased by 8.3 million to 16.8 million euros, and 12.3% margin, demonstrating not only the absolute increase, but also significant improvement of quality of earnings in our core operations. Akoya demand was solid. Volumes grew 13% around the globe, with 16% growth in North America. The double-digit growth across all regions against relatively soft macroeconomic conditions demonstrates Akoya's share gains and continuing trajectory of resilient product demand. Group revenues of $136.6 million were in line with the previous year. Optically, this looks flat. However, we were able to fully replace the sales volume transfer to Akoya USA Joint Venture driven by strong growth in Europe and other regions. North America represented 16% of the total R&M sales volumes in FY24. A significant milestone this year was the successful international expansion of our operation with the commissioning of Accoya USA. This major capital project has been completed and with our strategic decision to discontinue HAL, we are actively de-risking our profile by reducing exposure to large-scale CapEx commitments. Our local presence in North America positions us well to navigate ongoing geopolitical and macroeconomic uncertainties while capturing growth in this critical market for Axis. Aggregated Akoya global revenues, including the joint venture, were at $147.4 million, showing an 8% increase. We also demonstrated slight improvement in gross margin in FY25, lending at 30.3%, coming from favorable sales mix, operational efficiencies, and continued discipline in pricing. In FY25, we reaped the benefits from our leaner and simplified operational model. In total, we delivered operational cost savings of 4.6 million, a raising from transformation program, and the Solid Roots Operational Efficiency Initiative in Arnhem, exceeding our target of 3 million communicated last year. We also saw a cash flow improvement to 8.8 million from 3.7 last year. Our balance sheet has strengthened, driven by improved profitability. While our net debt increased compared to the prior year, reflecting higher investment in joint venture and inventories to support robust demand for our products, a position of strength as we continue to grow. Leverage ratio improved from 4.4 times to 2.5 times, highlighting good progression in the leveraging the business. Last but not least, funding is in place to support future growth prospects. In March, the group signed an 18-month extension to its primary debt facilities with ABN AMROC, extending the maturity to 30th September, 2027. Our good performance this year is a clear signal that our disciplined approach and sharpened strategic focus are working, yielding early successes as we are delivering what we promised. Looking ahead, we remain confident in the long-term potential of our technology and strategy. We have a clear roadmap and a sharper, more resilient platform to accelerate growth and continue delivering sustainable value to our stakeholders. Before closing this slide, I wanted to take the opportunity to sincerely thank the entire team across AXIS and Akoya USA. This has been a transformational year. The engagement, commitment, and hard work of our people have been instrumental to our progress. To my team and all our employees, thank you for your dedication. Your efforts continue to drive our success and position as well for the future. With this, I will hand over to Sam to talk you through the financials in more detail.

Thank you, Jelena. Over the next few slides, I'm going to talk you through the financial results for the year in more detail. This slide summarizes the strong financial performance for the year. I'll go into more detail on a number of the financial metrics shown in the next couple of slides, but highlighting some of them now. Group sales volumes were up 1% to 57,104 cubic meters compared to the prior year, with a further 6,760 cubic meters coming from the Akoya USA joint venture following its commercial startup in September 2024. Hence, total sales volumes were up 13% year-on-year, reflecting the significant global market demand for Akoya. Group revenue was in line with the previous year, but this was more of a feature of the transfer of sales to the JV during the year. Hence, aggregated revenue, which includes 60% of the revenue of the JV, was up 8% to 147.4 million. The gross margin was 30 basis points higher than the prior year at 30.3%, which is above the target that we have set. Underlying operating costs, excluding costs associated with the whole plant, were down year-on-year by €4.6 million, reflecting the benefits from the Business Transformation Programme and Solid Roots Efficiency Initiative. Underlying EBITDA, which excludes the results of the joint venture, nearly doubled to €16.8 million from €8.5 million in the prior year, and a 610 basis points increase in the margin to 12.3%. Adjusted EBITDA, our main profitability performance measure, was up by 125% to 10.8 million euros and a 380 basis points increase in the margin to 7.3%. Net debt at the 31st of March 2025 stood at 42.6 million, reflecting a leverage ratio of two and a half times. I'll discuss the changes in revenue, profitability, and net debt in more detail in the coming slides. Total acquire sales volumes were up 13% against the backdrop of a challenging building materials market impacted by macroeconomic challenges. We saw a particularly strong performance in the UK and Ireland, our largest market by sales volume. We saw 27% growth and also North America, which was up 16%. North America's sales have fully transferred from Ireland to the US joint venture facility in Kingsport, following its commercial startup in September 2024, and we have fully replaced the sales volumes transferred from Ireland to Kingsport during the year. We also saw good growth in France and Northern Europe during the year, with the rest of Europe's sales up 16%. We also continue to see strong growth momentum for our Akoya colour product, with sales volumes up an impressive 34% year-on-year, and this makes up an increasing proportion of our sales volumes. This has a positive mix effect, given its premium price point. Akoya for Tricoya sales volumes were in line with the prior year of 17,344 cubic metres. This represents 27% of total sales volumes. and reinforces our belief in the long-term market potential for dracoia panel products, as we are able to use lower-grade wood and also use offcuts from the production process in both Arnhem and Kingsport, thereby reducing waste. Jelena will provide more details on our end markets later on in the presentation. Going into more detail on our revenue performance for the year, as I previously mentioned, group revenue increased by 1% to During FY24, group revenues in North America from Arnhem amounted to approximately €25 million, and in FY25, prior to the commencement of commercial operations of the joint venture, North America revenue from Arnhem was approximately €10 million. This change therefore represents a year-on-year reduction in revenue of €14.9 million, or 5,266 cubic metres, which is now fully transferred to the JV. Offsetting this reduction, volume and revenue growth from all other regions fully replaced the volumes transferred to North America, with growth of €16.7 million in revenue and 5,803 cubic metres in volume. Whilst the average sales price at the COE was 1.7% lower than the prior year, this reduction was a one-off feature, a as North American sales command a higher average selling price than the rest of the world. Based on sales of Akoya worldwide, the ASP increased by 1.2% and shows our continued focus on maintaining premium pricing. License fee and royalty income for the JV was 1.3 million euros higher than the prior year as the group received a royalty based on sales made by the JV. Acetic acid sales were slightly lower than the previous year, but this was a feature of better acetic and hydride usage in the production process, thereby leading to lower volumes of acetic acid for sale with a slightly lower market price. The growth margin improved by 30 basis points at 30.3%, which is above the target that we have set as part of our strategy. I mentioned the JV effect on price. But we also saw a benefit of €1 million in raw materials costs during the year with favourable wood purchase pricing, particularly on wood chip grade raw wood and lower acetic and hydride usage in the production process. The change in direct labour costs represents the annual pay rise that we give to our staff. and maintenance costs were lower following the CapEx investments made in prior years and an increase in the operational efficiency of the oil and plants. This slide shows the adjusted EBITDA progression during the year, reflecting the strong financial performance. The gross margin benefit to EBITDA amounted to €0.5 million, and we realised operating cost improvements of €4.6 million. Non-exceptional operating costs associated with Hull amounted to €2.1 million prior to the business being placed in voluntary liquidation in December 2024. This is lower than the €5.3 million of costs in the prior year, and hence there was a €3.2 million improvement in year-on-year profitability related to Hull. Going forward, we will see annualised cost savings of €3 million a year following the discontinuation of Hull. The share of EBITDA loss of the JV for the year was 6 million euros, 2.3 million euros higher than the prior year due to the pre-revenue phase and costs associated with the ramp-up of production. Overall, adjusted EBITDA increased by 125% from 4.8 million to 10.8 million euros, a particularly pleasing result with a margin improvement by 380 basis points to 7.3%. From a segmental perspective, EBITDA from our segment, our ACOIA segment, increased to 22.7 million euros, which is a very strong performance with a healthy margin of 16.6%. This growth is primarily due to the improvement in gross margin and lower operating costs arising from the business transformation program on Solid Roots Initiative. Corporate costs amounted to 3.8 million euros and were 0.9 million euros lower than the prior year. Therefore, underlying EBITDA, excluding the JV, increased by 99% from 8.5 million euros to 16.8 million euros. The margin improved by 610 basis points to 12.3%, reflecting the strong underlying profitability of the group. As I mentioned before, adjusted EBITDA increased by 125% from 4.8 million to 10.8 million euros. This slide shows the evolution of net debt during the year. Net debt at the end of March 2025 stood at 42.6 million euros, an increase of 5.5 million compared to the start of the financial year. And we saw a strong improvement in free cash flow to 8.8 million, up from 3.7 million in the previous year. We experienced an increase in net working capital of 7 million in the year, of which 5 million related to higher inventory levels This increase in inventory was planned to ensure product availability to support strong demand and customer service. Accordingly, operating cash flow conversion was 64% compared to 84% in the prior year, and tight working capital management remains a key area of focus for us. We made planned investments of 14.5 million euros into the AccorUSA joint venture as it completed its pre-operating activities and commenced commercial operations in September, 2024. Maintenance capex was 1.9 million euros during the year in line with phase one of our strategy and interest paid and accrued amounted to 4.3 million euros of which 2 million relates to interest on the convertible loan notes. The ABN AMRO primary debt facility was extended by 18 months to 30th of September, 2027 during the year, thereby securing financing for our strategy. Debt reduction and deleveraging the balance sheet remains a key priority area of focus for us, and leverage reduced from 4.4 times to 2.5 times at the end of March 2025. So in summary, we saw a strong financial performance in FY25. Total sales volume growth was 13%, against the backdrop of a challenging building materials market impacted by macroeconomic challenges. Adjusted EBITDA was up 125% to €10.8 million, with a 380 basis points improvement in margins of 7.3%. And we saw good growth in free cash flow generation, with a continued focus on deleveraging the balance sheet. I'd like to now hand you back to Jelena, who will take you through the business review.