Atossa Therapeutics, Inc.

Good morning, everybody. Thank you for joining us this morning for 24 financial results. I'm with Jacques François, the group CFO. So on page three, of course, you have the normal, I would say, disclaimer. There is nothing new on this one. So on page four on the agenda, today I will share with you some key messages. Then I will go on the business highlights. On 2024, Jacques François then will take the lead for the 24 financial results. And then I will come back with key takeaways. And of course, we're going to take some Q&A after that. So with the allies first, so let's start on the page, which is number six. So I would say first on Q4, I think the good news is the I would say, commercial activity on Q4. As you can see, the Q4 book-to-bill, in fact, is very strong, above 110%, and stronger, in fact, than Q4 2023. We signed, in fact, a lot of multi-year contracts. It's both renewals in terms of contracts and wins. In the second point, We have a 2024 revenue organic evolution operating margin and free cash flow is roughly in line with the outlook that we have communicated in October, which I think is very important in terms of, I would say, confidence. In terms of M&A update, we finalized the sale of World Grid. It has been done in the year of 2024 and we received the cash, in fact, before the end of the year. As you know, in November, we received a non-binding offer from the French state for the potential acquisition of what we call the advanced computing activities. And we have launched the self-process of the mission critical system. In fact, this month in March, if we have, I would say, the right level, I would say, of price, we will probably sign something during the summer. for a closing probably at the end of the year or beginning of next year. Finally, I would say on the right column on the slide, I think it's very important to understand that we are now opening a new chapter. First, we have successfully, I would say, closed the financial restructuring. It was done on December the 18th. Then we had, I would say, a credit rating of B- with a stable outlook on our corporate bonds. And then, of course, there is now, I would say, a transformation plan that is underway. So, in fact, when I joined the company, I launched in December a strategic review plus a transformation plan. And, in fact, I will convey a capital market day with Jacques Francois and the top management in May. It will be on the 14th, where we're going to, I would say, reveal exactly, I would say, the strategy, 25-28, and, of course, a business plan for the next four years for 25 of course and then the next four years if we go uh on the page uh seven on the 2024 uh financial performance so first in terms of sales we are at 9.6 billion it's roughly organically down by five percent uh we can say roughly that the market was around minus two so it means that we have suffered a little bit more than the market around three points And of course, this is, I would say, a normal situation with the instability, of course, that was with Atos during the year of 2024. If we did die, I would say, between the two business units that we have, so Eviden is roughly at minus 7%, and the tech foundation around the minus 4%. In terms of operating margin, around $200 million, which is roughly 2.1% of sales. It's, of course, I would say, probably the bottom for us. Surely, I would say the bottom. I think we're going to rebound already in 2025. If you compare, I would say, versus 2023, first, there were some costs, in fact, in 2023 that were put under the OM for the separation that is, of course, no longer an option. And it was roughly 100 million. And also, we make some provisions. In fact, in 2024, what we call on the red or black accounts, around 40 million. The group free cash flow is minus 2.2 billion. You have to understand that we completely stop what we call the working capital optimization. And it has an impact roughly of 1.5 billion, I would say, on the cash. And we have also higher capex coming from the HPC. that's a one-off i would say it's not going to be repeated in fact in 2025 and it was around i would say a 200 million plus that was cool of course i would say as affected i would say the cash flow of 23. if i go now on page 8 for the i would say the the order entry and the commercial performance so it's roughly 8 billion and as i said 2.7 billion in q4 i think we have been we have been able i would say to see A good rebound, I would say, on the Q4 activity and also because most of the clients were waiting, I would say, the end of the financial restructuring. In fact, we signed a lot of contracts in December. You have, after that, of course, by business line, evident as a book to build. So in Q4 at 111% and roughly at 88% during the year of 2024. And Tech Foundation, the Q4 was at 122%, which is quite a good, I would say, performance, and a book to be around a little bit below 80% also for the year 24. I put, I would say, some examples of what we have been able, I would say, to negotiate during the Q4 in banks, in public sector, car rental company, and health insurance. If we go on the page 9, So the revenues, I would say, by regions. As you can see, we are quite balanced, finally, I would say, between North America, UK, Benelux, what we call Central Europe, includes Germany, Southern Europe, and what we call also growing markets, which is, of course, Latin America, Africa, Middle East, and Asia. Let's deep dive, I would say, let's say region by region, and let's start with North America. So, in fact, in North America, the revenue was minus 12%. It has been quite, I would say, a difficult environment. Probably, I would say, for me, I was in the U.S. last week. I think that a lot of, let's say, U.S. corporations were more sensitive, I would say, to the financial situation of Atos. And that's why we lost some of the, I would say, some contracts in this area. in this area but the good thing, the good sign that we have in fact some of them are restarting I would say to renegotiate some contracts with us which I think it's a good sign I would say for 2025. On page 11 in the UK also it has been quite tough but we also decided I would say to stop some contracts and remember also that we have the BPO activities mainly located in the UK And this one, in fact, was a double-digit decline. Benelux and Nordics on page 12, quite a healthy, I would say, growth at around 5%. It's also, I would say, done with a good performance with Eviden and, of course, an HPC that was sold in Denmark. And the tech foundation was slightly declining with some contracts completion. Central Europe, which includes, I would say, Germany, it's roughly minus 2%. We had roughly a small decline for both Eviden and tech foundations. And we have also a scope reduction, in fact, in some sectors. And you know that, for example, Germany, of course, in the automotive sector is, I would say, suffering quite heavily. On page 14, Southern Europe, which is many fronts, and in fact, Spain, we have, I would say, a slight decrease, I would say, compared to, I would say, competitors. Nothing I would say to say, I would say, particularly, I would say, in this region. And finally, on the growing markets, it, of course, it has been, so it's on page 15, it has been also driven, I would say, by the Olympics, because the Olympic contracts, I would say, is in this region. So we have, I would say, a strong growth, I would say, on tech foundation because of the Olympics. And evident, we had, I would say, some declines, but it's also because, I would say, the base is not really comparable with the HPC, as we have done, I would say, quite a good year in 2023. Now, to finalize, before I give the floor to Jacques-Francois, I think the good news is the attrition rate on page 16. As you can see, it's around the 15%. So it's, I would say, compared, I would say, to the normal year for us. So there was not a leakage, I would say, of firm price in the company. And, of course, I think it's a good sign to see that finally, I would say, most of our workforce has been able, I would say, to stay with the company. And, of course, we are now, I would say, aiming to probably decrease this attrition rate in the future. The retention of the key employees also is very important at 92%, which, of course, is important as it is the workforce, of course, that is driving the group going forward. With now, I give the floor to Jacques-François to give you the, I would say, the highlights, of course, of the financial results.

Thank you very much, Philippe, and good morning to you all. So, our consolidated financial statements have been established, as usual, on a going concern basis. All the numbers I will comment upon today are in euros, and I will give you, of course, a snapshot of our key financial numbers for 2024. So, as Philippe just commented, the group revenue was 9.6 billion euros in 2024, down 5.4 organically compared with 2023, with Eviden down 6.7%, and tech foundations declining by 4.1%. Group operating margin was 199 million, representing 2.1% of revenue, down 200 basis points organically compared with fiscal year 23. Free cash flow was minus 2.2 billion euro for the full year, largely explained by the end of one of working capital optimization actions, which resulted in a 1.5 billion euro decrease compared with December 23, as well as by higher capex linked to HPC contracts. The nominal value of our debt, the net debt post-financial restructuring, was 1.2 billion. As you can see in our accounts, the book value of our debt in IFRS was actually 0.3 billion euro because it included an IFRS 9 debt fair value treatment, which reduced its value by nearly a billion, 963 million euro, in order to reflect the mark-to-market. This 963 million will be amortized in subsequent years. Net loss group share was 0.2 billion euro, primarily reflecting a 2.7 billion euro financial gain related to the financial restructuring of the group, a 1 billion euro income from the IFRS debt fair value treatment, and a goodwill and other current asset impairment charge of 2.4 billion euro. Let me guide you through our revenue evolution in 2024. Our revenue evolution is explained by two main drivers. Firstly, the organic revenue decrease of minus 5.4%, as Philippe just said, driven by previously established contract terminations or scope reductions, as well as market softness in key geographies. Secondly, of course, the scope changes over the past years with the divestitures in 23 of UCC, Eco Act, State Street Joint Venture, and to a lesser extent, World Grid at the end of 2024. The organic revenue evolution percentage is in line with the business outlook we provided in October. This leads to a full year revenue of 9.7 billion euros. Regarding our profitability, the group operating margin was 199 million euros. representing 2.1% of revenue, down 210 basis points compared to 23. As a general comment, the margin decrease comes mainly from two one-off items. Firstly, the allocation to the business of 103 million euros additional SG&A. In 23, these internal costs, because they were unusual, abnormal, and infrequent, because they related to the separation project that was conducted at that time, that were classified below the operating margin in the other operating income and expense line of our P&L. And secondly, circa 40 million euros of provision for underperforming contracts following negotiations with customers. So now per business line. Evidence operating margin was 90 million euros, representing 2% of revenue down 350 basis points. Beyond the allocation of SG&A costs representing 48 million euros, Profitability was also impacted by revenue decrease and lower utilization of resources. TEC Foundation's operating margin was €109 million, representing 2.2% of revenue, down by 70 basis points. The business benefited from the positive impacts from the continued execution of the transformation program and the accelerated reduction of underperforming contracts. That was offset by higher allocation of SG&A costs to the business, for 55 million euros for tech foundations. I will now walk you through the rest of the P&L. Non-recurring items were a net expense of 2.9 billion euros. And I will comment upon the key elements there. Firstly, reorganization costs amounted to 119 million euros, a strong reduction compared with the 696 million incurred last year. Reorganization costs. include notably the workforce adaptation measures for 56 million euro compared with 343 million in 23 as the group limited restructuring expenses in order to manage its cash position during 24. it also includes separation and transformation costs for 42 million related to the last cost of the legal carve-out which was launched in 22 as part of the separation project as a reminder These covered costs amounted to 353 million in 23, about one third being internal costs and the rest being mostly external consulting and legal costs. Secondly, rationalization and associated costs amounted to 37 million euros and corresponded to the continuation of the data center's consolidation program. Thirdly, Goodwill and other non-current asset impairment charges amounted to 2.4 billion euros. I'm sure you all know, but just to make things clear, I remind you that this charge is a non-cash item. Impairment amounted to 1.5 billion euros for the first half of the year and 0.8 billion euros in the second semester, reflecting the decrease of the group's enterprise value, which takes into account a lower fair value of the financial debts and a lower market capitalization. remaining goodwill on the balance sheet at the end of the year amounted to circa 600 million euro. Finally, in 24, other items were a net expense of 288 million euros. It included 74 million euro of net capital gain related to the sale of WorldGrid, offset by additional losses recognized on past transactions. It also included the reassessment of onerous contracts, that were accounted for in OOI in previous years for 160 million euro, settlements and legal fees related to major litigations for 96 million euro, current asset write-off for 78 million euro, and net cost of pension and early retirement programs in Germany. Net financial income amounted to 3.1 billion euro in 24 compared with the net charge of 227 million euro in 23. This increase results from higher interest rates increased drawings on our SCF, as well as interest paid on the interim financing and on the new debt structure. Secondly, net financial gain amounted to 3.5 billion euros in 2024. This topic is so important, we have added a page on the next page to elaborate and explain the financial impact of the debt restructuring. Let's go through that. As you can see on the screen, the 3.5 billion euros is made of four main elements. The largest one to the left is again recognized for 2.8 billion euros upon the conversion of the debt into equity. Then there is a 965 million euro income which was recognized following the fair value treatment applied on our debt according to IFRS 9. This amount will be amortized in subsequent years. An expense of 45 million euros related to the issuance of the warrants was recognized as well as the cost and fees of the financial restructuring amounting to €165 million. Thirdly, in 2024, other financial expenses amounted to €221 million. It included €78 million of exit fees on interim financing loans, a lease liability interest of €36 million, higher than in 2023 due to higher discount rates, pension-related financial expense of €30 million, The net foreign exchange loss, including hedges of 29 million and prior year transaction costs, which were fully amortized in 24 in the context of the financial restructuring of the group for 15 million euros. The tax charge for 24 was 214 million euros, increasing by 102 million euros compared with 23. This increase was primarily driven by a 59 million euro valuation allowance on DTA recognized in past years. reflecting the latest business plan of the group and reduced taxable income perspective. And on top of that, 37 million euros of non-recoverable withholding tax paid on dividend distributions. Turning now to our free cash flow statement. Free cash flow was minus 2.2 billion in 24. Let me highlight the key elements there. Firstly, the free cash flow for the year reflects the end of the one of working capital optimization actions for 1.5 billion euro compared to December 31st, 2023. Details of these working capital actions will be shown on the next page. Then capital expenditures increased by 239 million euro, reflecting increased investments in client projects, particularly for a significant investment in the energy efficient exascale technology. So as we said before, we are no longer doing any one-off actions to optimize our working capital. The 319 million you can see here to the right consists only of customer payments received in advance of the inverse due date. I insist, we have not given any discount for this cash in advance, nor have we orchestrated it. This comes purely from large public sector companies, customers in various countries, various industries. As a reminder, working capital optimization amounted to 1.8 billion euros at the end of December 23. So logically, the impact on this year's cash flow statement was minus 1.5 billion. Going forward, our intention is to put in place measures to improve our working capital in a sustainable and recurring manner. The total of reorganization, rationalization, An associated cost, an integration and acquisition cost, reached €256 million, compared with €660 million in 23. Indeed, the group limited restructuring expense to manage its cash position in 24. Cash out related to other changes amounted to €504 million. This amount included costs incurred on onerous contracts, €466 million, for the most part in relation to the contracts that were accounted for in other items in previous years. It also comprised expenses related to financial restructuring for 226 million euro, out of which 110 million of external advisor costs, 38 million of lender fees, and 78 million of exit fee on the interim financing we had in 24. The litigation costs, including the cash disbursed to settle a major litigation are also reported on that line. In conclusion, the group reports a negative free cash flow of minus 2.2 billion in 24, reflecting the end of one of working capital optimization actions for 1.5 billion euro and higher capex linked to HPC contracts for 0.2 billion euro. The net cash impact resulting from net disposals amounted to 162 million euro, mainly relating to the net cash proceeds generated by the World Grid disposal for 232 million euros, including fees on disposals. This also included the write-off of a receivable on a past disposal. To conclude on the cash flow statement, let me spend a moment on what was the impact of the capital increases of our net debt. Following the successful closing of our financial restructuring on December 18th, we have restored our liquidity profile and reduced significantly our debt. This translated into 145 million euros of new money equity raised from the rights issue, as well as 2.9 billion euros of equitization of existing financial debt. The total net debt for the group amounted to 275 million euros, including 965 million IFRS 9 debt fair value treatment which will be amortized in subsequent years. As a reminder, before this IFRS 9 debt fair value treatment, the nominal value of our debt amounted to 1.2 billion euro. The group did not pay dividends in 24. The numbers you see on the screen related to the withholding tax paid by certain subsidiaries on internal dividend distribution and dividend paid to minority interests. To conclude my presentation, I would like to present to you our new financing structure and maturity. Cash, cash equivalent, and short-term financial assets at year-end were 1.8 billion euro, meaning we have sufficient liquidity to operate at mid-term and to execute our business plan. As a reminder, the 440 million euro of revolving credit facility is undrawn at the end of 24. Consequently, Our gross debt at December 24 is 3.1 billion euro. You can see on this slide the breakdown between bonds, loans, and RCF. We have no maturity before December 29, with the first lien debt of 1.8 billion, including the RCF, having a maturity in December 29, the 1.5 lien debt of 1.9 billion in December 30, and the second lien debt of 0.5 billion in December 32. All these amounts include the debts related to the interest in kind, PIC. I will now hand over back to Philippe.

Thank you, Jacques-Francois. So I think we are now ready for this new chapter for Atos. Now that I would say the financial restructuring has been completed in December, we can now focus on the transformation journey, which of course is very important. And the idea, of course, is to provide highest level of support to our customers through innovation and quality. So first, we have a new governance in place. We have now a combined chairman and CEO role, and we have a reduced board of eight directors with a strong and recognized Domenech's expertise. Two, there is a transformation plan in motion. In fact, I launched early December a strategic review, and also there is a launch of a transformation plan during the Q4 last year. And of course, this will give, of course, a lot of results in the course of 25 and 26. Three, I think the leader team now is appointed. The top 20 is almost complete. And I would say what I call the management team, around 200 people now are ready, I would say, to deliver, I would say, the results we are looking at, of course, for 25 and the next years. And finally, as I say, There was a strong commercial activity in Q4, and we are quite confident also that we will continue to have some good results in the course of 2025. So, as I said in my introduction, I will give you, I would say, we will meet you, I would say, on the 14th of May in France, in Paris. We don't know exactly where is the venue, but we will of course come back to you and of course the timing. I will present, of course, with Jacques-François and some of the top management, my vision for Atos for the 25-28 plan. So it's a four-year plan. Of course, this year and the next three years, we will give also guidance for 25 and we will also give a guidance for 28. With this operator, we can start the Q&A session. Thank you.