Agfa-Gevaert NV

Ladies and gentlemen, welcome to the ACFA second quarter 2026 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 5 on their telephone keypad. Now, I will hand the conference over to Pascal Juery, CEO. Please go ahead, sir.

Good morning, everyone, and thank you for attending our conference. I'm sitting today with Fiona Lam, our CFO, and the rest of the executive team. And before I walk you through the results, I'd just like to come back to the transition we are having today with Fiona Lam, who's going to lead the group by the end of the month, and the announcement of our new CFO, Diclan Guerra. So I just want to publicly thank Fiona for the two years she has spent with AGFA having an excellent impact and helping me in steering the transformation of the group. This is the last call that Fiona is going to do today with you and there will be no vacancy because in November we'll have our new CFO in place. Thank you Fiona. Turning to the results. As you've seen, pretty resilient results, but a lot of moving parts actually. If I start with the three growth engines of ACFA, I can start with healthcare IT, very good commercial momentum, very good order intake, excellent move to the cloud, a lot of net new customers, but as I Repeat every time there is an impact of this cloud transformation and that's the delay of revenue and margin recognition. And as you can see, the SaaS transformation of the business is accelerating because our order intake was 50% cloud-based during the quarter. But the message is also we are winning in the market. 54% of our order intake is with net new customers meaning we are winning share and we are able to win this share against the market leaders DPS is back to growth for the semester after a 25 year that was a year of we call it consolidation we are back to double digit growth and that's very good so it's very positive And last, of course, the membrane is having, I would say, a very difficult year, the hydrogen membrane. It's a trough, we're part of a trough today, where actually we are very confident to see a very sizable rebound in 27. But in 26, we are in a situation where our customers have already what they need in terms of membranes in inventory. and therefore it's a bit of a last year for Zirphan but we remain extremely confident going forward about the growth potential for Zirphan and that will start materializing as soon as 2027. So that's the state of the three earth engines. The resilience of the results is also to be credited to Imaging and Chemicals. This film in a volume decline environment has been able to actually generate positive results. This is a reflection of the huge restructuring effort we have undertaken now for a year and a half that places us ahead of the curve today and is more than enough to compensate today the volume decline. And we are able to do that in a very turbulent environment, especially with the huge volatility on silver prices. We are able to navigate the market to increase prices to customers as well. So it's a very positive thing for the group. And DR is, I would qualify it as stable. So overall quite I believe a good performance given the market backdrop. I will turn now to Fiona to walk you through the numbers.

Thank you Pascal. So in terms of the numbers, I sold a quarter like Pascal have said. The filament, chemical, imaging, chemical, the silver impact on the revenue offsetting more than the volume impact. So you see plus 2.6% growth in currency. We are specifically pleased with 11% growth on EPS. although still not sufficiently offsetting the decline of green hydrogen solutions because of soft market condition this year. But like Pascal said, the rebound we are expecting in 2027 in green hydrogen solutions. We are also very pleased with healthcare IT in terms of the transformation, the order intake, the recurrent revenue. So the quality of healthcare IT revenue has been improved on track even though we see a minus 9.5 percent decline in the second quarter on healthcare IT in the current revenue which is anticipated because we also know last year we had a very very strong healthcare IT own license sell in the first half of year so seasonality of healthcare IT last year in the first half of year was very strong and we anticipate on healthcare IT second half of year we would be basically offsetting that negative trend If we look at EBITDA, I think we could say it's really a solid performance on the EBITDA. We see the step up of film and chemicals on the saving program that have adjusted our base, cost base for the decline. So we are able to step up from 4 million to 9 million. For industrial solution also there and also green hydrogen solutions, a very small decline. based because of the top line but the good cost control has been able to maintain a reasonable adjusted EBITDA level and healthcare IT is actually better than our internal expectation even though you see a decline we anticipated it this cloud transition we anticipated strong last first half year so all in all we are happy with the Q2 adjusted EBITDA because it's a very solid performance Here you see also the bridge basically it confirms earlier we said healthcare IT and industrial solution were because of the top line decline. Imaging and chemical, the saving programs were able to contribute so that the volume decline is offset on the gross profit and then we have all the work being done within AFA on adjusting the costs and that savings are delivered and stabilizing our Q2 EBITDA as such. On free cash flow, so even though we still consume 10 million negative free cash flow, it is well managed. It's better than expectation internally because we actually have a large quarter of cash out for the expected transformation program, restructuring program, which we have announced last year. So it's anticipated a large cash out this quarter. we have of course the normal pension so if we look at that all in all our working capital has been managed very well and also our provision etc without let's say the impact of silver it would be much better but we managed to offset quite a lot of this negative impact internally so a minus 10 million cash flow is a good outcome for Q2 And that you can also see the evolution of our debt. If you see the net financial debt basically in Q2, of course, it has been stepped up from 58 million to 74 million because of the net negative cash flow. But we also know, like I earlier said, it is better than expectation. So we have now end of Q2 with $430 million of facility out of the $118 million. It's also provided at the end our Q2 governance tests have sufficient headroom. You see liquidity headroom is sufficient compared to the minimum of $13 million. Leverage ratio is stable at 1.4. And interest cover is also well managed. And just the EBITDA governance is at $52 versus $13 million. This is basically thanks to all the efforts and the business in the working capital improvements and also the better EBITDA as first half of the year. So if you look at the numbers we just highlighted in the graph, the Q2 numbers here is worth also to have a quick look on the first half of year. So first half of year, we deliver actually 10 million more We are working on last year just wanted to remind last year in We had the ARCA photo that was being booked in June of last year, 38 million. It was not cash being received, but it was booked in the P&L last year under the non-recurrence in 2025. Also, the net finance cost was another 7 million because of ARCA photo that was being booked as well in last year. So all in all, you see, without ARCA photo, our net result Improvement step up is equivalent to what we have step up in the adjusted EBITDA to be aware. Free cash flow is the same as what we have earlier set, minus 10 million free cash flow, but also for the first six months we are at minus 52 in total and that's offsetting, remember the first half year we have 45 million silver impact of purchasing silvers for the stock ramp up of our networking capital for that and we were able to offset quite a large part of this and maintain a step up compared to last year of minus 30 to minus 52 so that's in fact is quite largely managed. Thank you for the opportunity to help IT for Pascal.