Agfa-Gevaert NV

Hello and welcome to the Agfa Group Q1 2025 results. My name is Laura and I will be your coordinator for today's event. Please note this call is being recorded and for the duration of the call your lines will be on listen and remote. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand you over to your host, Pascal Jouery, CEO, to begin today's conference. Thank you.

Thank you very much, Laura. Good morning to everyone. I'm sitting in Mortsal with Fiona Lam, our CFO, with Vivian Dictus, our Investment Relations Manager. and the rest of the executive committee ready to answer your questions. So we're going to walk you through the Q1 results of the company, and with further ado, we'll start. So Q1, stable EBITDA compared to last year, but with a very different sales and activity mix. And in fact, this is a story of, on the one side, a continuous decline of the film, which, as you know, has started to accelerate in 2024, and we are seeing this trend continuing, of course, in 2025. On the other hand, a good performance of the growth engines, and I would say a good cost control overall. I'd like also to remind everyone that we are a seasonal business, that Q1 is normally the weakest quarter of the year, similar as last year. We typically generate 75% of our EBITDA in the second half of the year, and therefore the cash profile of the group is according to the seasonality, meaning a buildup of working capital in the first part of the year and a reduction during the second part of the year. and most notably the fourth quarter, which is 45% of the EBITDA and the strongest quarter of the year. So this seasonality and pattern will be exactly the same in 25. So overall, the key elements of the results. First, an extremely good performance of healthcare IT, and probably better than our own expectations. Strong Q1 on two elements. First, the leading indicator, we left 24 with a less 12-month increase of order intake at 32%. At the end of Q1, we are at 63% increase. And that, I believe, is demonstrating the strong momentum we have in this market. What I'm also happy with, it's with new customers, and we continue to conclude the cloud contract meaning we are moving the business to more recurring revenue business models. Topline increased by 12% in typically weaker quarters for healthcare IT and adjusted EBITDA. Therefore, strong leverage of sales on the EBITDA, of course, increased to 5 million euros. Last year, it was only a bit over 1 million. So clear also translation of this momentum into our P&L delivery. DPC, I would say DPC continue to progress. The comment that I would like to make is we have seen an impact of the weaker investment climate in our equipment sales in BPS and also in in hydrogen solutions somehow. We had a bit of an impact here. But we have seen already a pickup at the end of 2021 on the strength of a number of product innovations in production. Nothing is broken in DPS at all. I think it was just a bit The economic uncertainty that created a bit of a delay in investment decisions, but all our equipment and launches are very well received in the market, and our ink sales, even in this context, continue to grow significantly, double digits, although it's a bit of a different mix. So progress in DPS has been probably a bit weaker than what we thought, but we expect this to continue this progress during the year. Radiology, but clearly the impact of the decline of the medical field is really the main story, and especially in China, where we've seen a rapid decline. about 15% to 16% decrease in our volumes, mostly related to China, which is the first market. And as you know, we have put in place a comprehensive savings plan that we are currently executing. In the meantime, we have also announced in April the shutdown of our finishing film factory in the U.S. It's part also of this plan, which is not only a plan for Belgium, but a global footprint plan. So overall, even if the performance is comparable to last year, it is done with a very different mix. And for me, the best news is really the good performance of healthcare IT. If we turn to numbers, you see a minus 3% on top line. And this is exactly the trend I was describing and the one that we've been seeing now for a few quarters and even a few years. A decline of the maturity of the mature businesses and increase of our growth engines. And the trend is exactly the same for the EBITDA. So although the two numbers for EBITDA are very comparable, it's a very different way to produce the EBITDA. We have translated it in order to be easier for you to understand, not in a division view, but in a business security view, and you can see the trend as it is. continuous growth of the growth engine and decline of the mature businesses, whether it is in sales or in EBITDA. I'm going to now turn to Fiona, who will comment on the bridge and the cash elements.

Thank you, Pascal. So, a bit of insight on the adjusted EBITDA. Like Pascal has said, our strategic transformation is working, where you also see back In the results as well on bottom line, you see we have been able to, the growth engine has been able to compensate the losses in mature decline business. So even though we have done 8 million euro sales and we have been able to deliver a stable adjusted EBITDA. There is help by 1 million positive exchange rate and then you see the gross profits of healthcare IT and DPC compensated largely or fully offsetting the gross profit of radiology. And then you see also in R&D, we have a conscious decision to invest in healthcare IT. Therefore, we have healthcare IT investments a bit more, and we have some test credits that we need to compensate in the last quarter. And there you also see in one of the transformation program on SGNAs that we have been having very tight cost controls. And they're also believers to themselves. So therefore, we have been able to keep our EBITDA quite stable with ADN and UCL cells. Next slide, please. In terms of cash flow, we still are, let's say, largely consuming 27 million Yen Q1. This has to do with the traditional of a steep increase of working capital normally in Q1 and Q2, and then stabilize the studies. We start to decrease in Q3 and quite large steep decrease in Q4. This seasonality is not unexpected, but that's the seasonality which we will expect. So you see at this moment, we are consuming 27 million request flow. We have some higher car tax spending, which we expected, not higher than expected, but we consciously invest still on our future growth business in Siphon and R&D, and we capture actually positive cash flow in building down our long-term lease receivables. So all in all, that leads to this final outcome of 27 million negative free cash flow. All the rest are actually in line with what we had expected. So nothing surprised us as such in this British food market. Also a bit of insight on the evolution of the total debt since, of course, 2023 until now. What you see, the net financial debt excluded, so that's really our net financial debt position. That has been, let's say, evolved from a positive cash position to a Net deposition of 72 million in Q1. On the other hand, you also see positively the net pension debt has reducing quite gradually year over year. So from 511 million to now below 400 million. So it's a significant reduction the last two years on net pension debt as well. Our current credit facility is 230 million that will be mature in May of 2026. Like already you have seen in our annual report, we are of course working on the refinancing of these facilities with cooperation with the financial institutions. In terms of the governance, just to remind, the governance test is only valid for half year and year end. Of course, we calculate the ratios just to keep track of it. So Q1, the leverage ratio is 1.4 versus a governance of maximum 3. and interest couple ratio is 11 versus a minimum of 5. As you would know, we expect Q2, Q3 normally to slightly increase our working capital, and then we start to reduce. Therefore, it's quite expected that the leverage ratio would be raising Q2 and Q3, and then again to deeply drop in end of Q4 again like last year. So that would be the trend that we also expect on the leverage.