Agfa-Gevaert NV

Ladies and gentlemen, welcome to the AGFA full year 2025 results conference call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing pound key five on their telephone keypad. I will now hand the conference over to Pascal Jouery, CEO. Please go ahead.

Hello, everyone. I'm sitting in Mortsel right now with Fiona Lam, our CFO, Vivian Dictus, our investment relationship manager, and the rest of the executive committee. I'm going to walk you through the Q4 and full year results for the group. My first message is indeed we had a quite strong Q4. I would like to remind everyone that we do have a strong seasonality in our business and that every year Q4 is by far the strongest quarter. But I realize that in 25, actually, we almost beat all records, because Q4 EBITDA is 2 thirds of the EBITDA of the year. So it's even more pronounced, I would say, than the years before. Also, second very positive point, positive cash flow performance in the quarter and in the year. uh so i'm gonna move the slide a bit indeed a positive performance of cash flow due to three elements i would say one is of course the management of the operations because the reduction of working capital was a strong computer the second was also i would say our management of liquidity because we are actually winding down our vendor loans in AXA, so loans that we have extended to customers. And number three, we have resolved the AXA photo case and received actually the reward for strong cash flow. These results are also coming, and I need to be very clear about it, but they're coming from a very stringent cash and cost management that we have amplified and accelerated actually in Q4. And that's also the reason why we are coming to you today with probably results that were slightly better than expected, I would say. so 39 million for the quarter i'm going to come back to a bit in details about the contribution of different businesses but overall as you've seen this is pretty much across the board that we are improving the results now If I turn briefly to the headlines of each business, I think healthcare IT, as you know, we are in a cloud transition. And being in a cloud transition is having a short-term impact. When I say short-term, it's really two to three years' impact on your top line and bottom line. I will come back to that. And in this context, what we are looking at is really The leading indicators, of course, and order intake has increased over the year by 14%. 187 million, this is the highest order intake ever for the business, and we are getting reports after reports. And more importantly, the cloud order intake has increased by 38%, which shows really the dynamics of the cloud transition to date. Cloud technology is about a third of global order intake of 25, but when you look sequentially, actually this trend is accelerating, because in 2004, for instance, it was up to 58%. Now, as you know, quarters are lumpy in terms of order intake. We shouldn't be looking at quarters too much in terms of order intake. But the trend behind is really 33% of cloud order intake, up from 27% in 2014. But we are seeing an acceleration. And also, I want to stress that we are winning the market. We are winning net new customers, 43% of order intake. So today, we are taking a share. market in the order intake, and that will translate to sales, especially when it's cloud, approximately a year after taking an order. So overall, pretty good performance in LCPI-T, I would say, in spite, by the way, of the adverse currency impact. We are operating mostly in dollars, and therefore, our translation impact is significant on the top line. bottom line. So that's where we are. CPC, clearly a very strong Q4, representing, by the way, 50% of the portfolio for this business. Across the board, I would say we have a strong Q4. All businesses are contributing to the growth, actually. I'll give you a bit more details. On radiology, I think the message here is, as you know, it's been particularly impacted by the strong decrease of film or medical film that we discussed over the past quarter. I think the message I want to pass is for the first time this year we have a positive idea. This is a reflection of the ramp-up of the savings, but also of the acceleration of our productivity plan in our main needs. product supply operations, but also go to market. So that's what we are seeing, along with, generally, what is the stronger the industry for, anyway, is the level for the field. Unfortunately, this year as well, our DR business was impacted by the fact that the end market for DR for the first time in many, many years has been strongly negative. And even if we are slightly outperforming the market, has a negative impact, of course, on our activities. So, in this backdrop, two things I would like to share further with you. First, as you've seen, and you've seen examples of this before, but it will continue in 26, of course, we are accelerating the plan to optimize our costs. First, we have accelerated the implementation of the current plan, and we have just actually concluded about 10 days ago, an agreement with our social partner of the plan part two, if you want, to work on additional measures that will put into effect as soon as April in this year. To continue to adjust the space of the film activities, not only in manufacturing, but also in other areas. I would like also to remind you that we have a new structure in place from the beginning of this year, and that we will operate and report in three business segments. No change for ICICI. I would continue to provide full results as we do today. However, the change is more on the industrial part of the company. Industrial solutions regroups to Rosangie. So it's going to be, I would say, a more direct read, also, of the performance for the company. And imaging and chemicals, we have a group all-film activities. We did it also for operational reasons, so we can manage this business a lot more asset-driven than market-driven, given the challenges that we're facing. And of course DR that remains a specific entity. We have a bit of a new testing indeed for DR that was announced a few months ago. Now let me walk you through the numbers before I turn to Fiona for more details. So top-line in Q4 still challenge to see the strategies, market decline, continues, I would say, unadapted, really, so the trend is really there. But we also have reduction of top-line for LCIC. We had a slightly smaller quarter than last year, but this is also the impact of two things, transition to cloud, to say it's less for the short term, more on the recurring basis, and also the impact of currency. Now, if you look at the EBITDA, you see a strong improvement over last year, mainly from health care, I would say, give or take a step level of magnitude of last year. and clearly also a quick management, as you can see, of off-cost and corporate costs, while radiology, we are closing the gap as compared to last year. Now, if we look at the full year, top line, same comment as for Q4, the top line comes from mainly the decrease in radiology and the currency impact for us in 1994. that we are an export-oriented group, and most of our business is actually two-thirds of our business is done outside of Europe, in different currencies. And you can see that this impacts the same comment for Alaskan IT. Now, if you look at the . We have a strongly negative impact of the film, while all the other businesses are contributing positively to the bottom line. I would say in a difficult background and context. There was not a lot of tailwinds for us in 25. So I'm going to turn to you, Fiona, to comment on the bridges and the cash and other financial reports.

Thank you, Pascal. So, a bit more insight on the adjusted EBITDA bridge. Indeed, we ended the full year with 11 million lower in adjusted EBITDA, but that is mainly coming from earlier sets, the 25 million radiology due to the volume decline, and also the savings program only started to take in the second half of the year a little bit, and a bit more in Q4. So if you see healthcare IT and DPC, they have been contributing positively. Healthcare, there is also a 5 million negative trade trade impact. A large part of that is due to healthcare IT. Because as you know, healthcare IT has a lot of US business, while the other business have global spreads of their currency. So you can see a large part that actually is related to healthcare IT as well. Otherwise, they would have been performing much better in the past. A part of this negative impact on radiology has been offset by a very strong strain and cost controls. You see in the CNA, we have delivered, and R&D also we have delivered, so that's ended at the end. We narrowed the gap up to $25 million to $11 million, so we could deliver $59 million for a big time. On the cash flow, next slide, here. On the cash flow, as we said, we actually have a very good year of free cash flow. We ended at 35 million positive, despite we lose actually 11 million adjusted EBITDA. In this, of course, it's actually helping on three elements. Very, very good working capital that contributed 36 million. Also, like Pascal already mentioned in the beginning, our customer lease financing portfolio, that's contributed also another $28 million. And we have the one off of our total $38 million. So these three big improvements are able to help us to continue to invest in the capex of $34 million. and also pay our legacy liability of the pension, which is high. At the same time, it also helps us to continue to transform and support the restructuring amounts in the non-recurrence issue, and to also have a cash out of $48 million for last year. So all in all, I think the improvement on working capital and upper finance strategy is the one that helps and continues to support the company's transformation and provided us a much better headroom with the free cash flow. Next slide, please. Associated with the free cash flow, you also see a nice, good, smooth movement, development of our net financial debt. You could also see here problem of 2024 end of the year, and it moved actually structurally down. So we ended at the end of 21 million net financial debt. Of course, we still have quite a large total debt in the banking, but also there you see the trend are all going down as well. So we also have ended our pension debt in the past and now coming down to $433 million. So this is also a good development trend. If we look at the revolving credit facility, we did at the end of the year draw $100 million, so out of the $180 million, we still have $80 million in the room. but we actually have a lot of cash in the bank, because a lot of cash came in at the end of the year. That's also why you see net financing, that is only 21 million. Following this, we confirmed that we have a good, sufficient headroom at the end of the year for all our government's compliance, which we have agreed to keep to the bank. The liquidity headroom $158 million. You can also see the leverage is much lower. Also, the interest cover has sufficient . And just the EBITDA is $41.8 million. So that's quite a good . Also, you see earlier slide already, the pension funds has been improved a lot from the status. Here is the four material countries, and you also see that 318 million, and now we are at 327 million. This mainly comes from benefits, payments, also we have a favorable year end ability measurement. In terms of 2026, we expect actually the cash out will be lower on the pension. We also expect the surface costs will decrease, mainly because of Belgian-German. We also see we would expect 8 million HD less contribution because of 2026 versus 2025. Here are some concrete numbers which I will not go through one by one, but you have seen them already. Sales deteriorated by 4.5% nominally. Part of that is due to a strange rate. If you look at the gross profit, that has reduced percentage-wise because of larger turnover, less fixed cost coverage. So therefore, you see, actually, due to radiology, we have less gross profit. Operating expenses has been contributing, like, it puts stringent cost control, and we are able to maintain, bring the total operating costs down according to more than what the top line increases. So you see the percentage has increased, improved, And that ends our adjusted EBIT 2025 versus 2024 with a difference of nearly 4 million, if you look at the adjusted EBIT. After the adjusted EBIT, we had quite a significant amount of adjustment and retrenching expenses. Under this adjustment and restructuring basis of $58 million for 2025, there is also $38 million alpha photo that is positive impact. So you can see they contributed this positive impact as well. Another net finance cost as well, there is also a alpha photo $7 million interest benefit that's otherwise reported at POM versus 2025. All in all, this brings our results for the period of 71 million losses compared to 2 million of 2024. If you look at the restructuring adjustments, just coming back to the size of our photo, we also have an impairment of our radiology, especially on the spelum part of the business because of this time. Pre-cash flow, I think I already went through all of them, so you can see the numbers. I don't think we should repeat this because it's all in the ground as well. Thank you very much.