Agfa-Gevaert NV

Ladies and gentlemen, welcome to the AGFA First Stepwater 2026 results conference call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now, I will hand the conference over to Pascal Furet, CEO. Please, go ahead, sir.

Good morning, everyone, and welcome to the ACFA call. I'm sitting here in Marseille with Fiona Lam, our CFO, Vivien Dictus, Head of Investor Relations, and the executive team of ACFA. So, first quarter. Let me move the slide. So, I'm going to briefly give the highlights, then pass on the mic to Fiona for the financial review. I will do the business review and the outlooks. So, first highlight, clearly, Q1 for me is a robust performance in positive supply coming from price in the area and volume impact in digital printing. The rest of the group being slightly below last year. strong EBDA increase year on year. You know last year was a relatively weak quarter for us. It reflects our ability to implement efficiently our selling programs. You will see it throughout this presentation. And as well, the ability to pass on the silver price impact to our customers in the firm activities. As you know, we've been We've been seeing a tremendous increase of silver, I would say, since a year and a half, with price having almost quadrupled in the same period. And these results show our ability to navigate these market circumstances with efficiency. Save programs that we have launched last year, I'm happy to report we are now in annualized savings of 57 million. If you remember, we talked about the plan of 50 million first, and we launched at the end of last year another plan for an extra 25. So we are right on track, and as we started to see in Q4, actually the impact of the cost measures are now coming to the P&L, and also what you see during the first quarter of the year. Silver, of course, had an impact, a specific impact on the cash for a very simple reason. When we buy silver, you have an approximately five to six months cash cycle before you recover it in terms of cash from your customers. The PLL impact is faster, but the cash impact, of course, takes a lot longer and it has, of course, a tremendous impact on the cash of the group and especially through the working capital. More than 40 million worth of silver price impact during the first quarter that we will start to recover over the year. But the overall impact of silver cash during the year will be negative. Now, business by business highlights. Health care IT, I would say, transformation to SaaS on track. However, as we repeatedly said, orders are larger in SaaS. We are also addressing just larger customers. And therefore, the contract and the order intake is a bit Lumpy, meaning you can have significant variation quarter on quarter, and this is the case. We have in Q1, I would say, a quarter that is soft in terms of order intake, while we are expecting in Q2, and we know that because we have already signed the number of deals, we are expecting for Q2 a very strong order intake quarter. So the last 12 months decrease that you see at the end of Q1, does not change the overall picture of the guidance that we have, that at the end of the year we will be again increasing order intake to the highest level ever and probably high single digits. The good news also that we are seeing is in this context, Our recurring revenue increased by 5% now and now amounts to 67% of total Q1 revenue. This is a number that three years ago was barely above 50%. And it shows also the transition of the business to a recurring business. The total top line still decreased due to the fact of the change of model as we explained several times. the short-term impact of the move to a subscription model rather than a project model. Industrial solutions, I would say good DPS and very subdued green hydrogen business. Good DPS because we are back at 10% gross supply for the first quarter. So it shows that what we've seen during Q4 has been confirmed. However, a very soft situation for green hydrogen and 26 is probably going to be a lot softer than we even forecasted, actually. And we are already seeing shaping up 27 that will be kind of back to normal, but we are really going to a trough during the 26. And last but not least, imaging and telecoms with our business, as you see, a significant increase in adjusted EDA due to savings and what we did around silver. And we also discussed, of course, DR. We are here with pettings. Our top line is increasing. We are deploying our plan as scheduled. So overall, in a volatile environment, we have been able to navigate all the market conditions successfully, and we are also confirming the drive, the impact of our cost savings measure. I'm going to turn now to Fiona, who will walk you through the financials.

Thank you, Pascal. This slide summarizes the growth, which Pascal actually just highlighted on top line and bottom line. On the top line, you see here the nominal sales growth compared to comparable sales growth. The current impact is actually better, like Pascal already mentioned earlier. The group actually post a 1.7% comparable sales growth because of the higher silver prices. You also see on a comparable basis, actually, the industrial solution also has a growth, even though GHS was soft, but ETS was stepping up in that context. Healthcare IT, on a comparable basis, is roughly 5% down with our currency because of, actually, if you recall last year, the first half of the year of healthcare IT was extremely And this year, it will be in the normal seasonality. We still expect the full year of healthcare IT will lead to a certain growth. If you look at, I guess, EBITDA is a step up of €10 million for Q1, driven again by emerging chemicals, largely related to the savings program, now that we have a larger savings program taking in now, starting this year. step-by-step, you see that as well, and the ability, of course, to pass through the superimpact to the market so that we don't have any negative impact in our P&L on the sell-on path. For industrial solution, you also see a step-up, although the step-up could have been larger if we don't have the headwind of GFS, but all in all, it's a step-up driven by EPS. Healthcare here, I already mentioned, is a systemality of Q1. Q1 last year and Q2 last year was very strong. And so with the good controls, control, et cetera, they still are delivering a good, decent number of online. Corporate is more less in line than what we expected, the systemality as well. Thank you. Next slide. If you look at the bridge, he says about the 10 million earlier slide that we have seen, you see here exchange rates on bottom line. Luckily, we have a very diverse geographic spread. And so you see all the business at the end on the bottom line, exchange rates has zero impact. And then you see the gross profits of healthcare IT driven by the strong first quarter last year. And this is a bit down and you see also the step up on the gross profit because of the saving programs and the safer pass-through ability. Also, the APA team in the first, I think, again, still has continuous cost control. And you see also R&D, SG&A continue to contribute. They've had significant high cost control that also contributed to the results. So it's been, I think, a decent group so far. Free cash flow, I must say I'm pretty happy with this result. Even though you see a first quarter of minus 42 million free cash flow, bear in mind that there's a 41 million silver impact. With the resilience of all the efforts, which is continuously on working capital improvements, it really delivers. We have been already in the last I think six quarters improvement of working capital, and this can counterbalance the silver impact that we have for this quarter. Caprice is expected, and also provision of others. We continue to monetize the customer lease portfolios as well. So all in all, if you look at without silver impact, actually free cash flow would have been zero at break-even level, which is significance, you'll be able to fund the pension and all the transformation programs in this case. If we look at the next slide on the late debt, financial debt evolution, we are also evolving right. Of course, you see in Q1, globally, it's always a step up because we need to build the working capital timeline again. But despite the silver, you see the working capital timeline is still significantly lower for all business units, and therefore we have stepped up by from 21 to 58 million. If you look at, actually, on the revolving credit facility, we draw into 129 million out of the 18 million. For Q1, there's only one applicable governance, that's the liquidity headroom, and that is at 120 million of the minimum of 30. As for the reference of all the other ratios, it's not applicable in Q1, but applicable from half-year testing. We actually have also a good term room there, and leverage, you can see it at basically Q1 of 1.1, half-year in Q2 should be at 3 as well, and year-end 2.75. Interest cover is at 12.5, and in the time, In terms of numbers, I think I don't need to repeat. Once again, we have seen them the same as in the first two slides on this one. Maybe just next slide.