Fagron Sa Ord

Hello and welcome to the Feigrin Half Year 2023 results. My name is Caroline 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 only mode. 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 questions. If you require assistance at any point, please press star 0 and you will be connected to an operator. I will now hand over the call to your host, Karen Wilk, to begin today's conference. Thank you.

Thank you very much, Caroline, and good morning all. Welcome to the first half-year results of Fagron. I'm here together with our CEO, Rafael Padilla, who will discuss the numbers and give a deep dive into the regions, and then Karen will take over for more information on the financials. And as just said, afterwards, the floor will be open for questions. Thank you.

Thanks, Karen. Good morning and welcome all. We're happy to report another set of strong results driven by solid execution on our strategic initiatives and improving operational capabilities. As we all know, during the first half of the year, we operated in a very dynamic and challenging environment, so it is pleasing to see organic revenue growth at 8.4%, and REBITDA increased by 14% to €72.2 million, with a margin of 19.4%. We saw strong performances in North America and EMEA, while we have good progress on structural improvements in Latam. This positive momentum is a result of our strategic actions and operational excellence initiatives, which, together with high-quality standards, are key factors in our industry. Our free cash flow for the first half reflects the one-off investments we made, which Karen will discuss later on. On the M&A front, the integration of LEPCO, FSS Boston, and Wildlife is progressing as planned, and we remain on the lookout for any opportunity in the market that meets our disciplined approach. Finally, for our 2023 full-year guidance, we expect high single-digit revenue growth with increasing profitability. Now, moving on to the regional update, EMEA's growing trajectory continues on the back of efficiency improvements seen to our Polish GMP repackaging facility, innovations and reinforcing registration and in licensing capabilities. This was further supported by strong demand across most of our markets. Pricing pass-through was very important in this region, and we have seen excellent execution on that front, although it is now fully completed. One of our key markets, the Netherlands, has shown again solid performance. While, explained before, we continue diversifying across the EMEA region and have delivered strong results in markets such as Poland, Czech Republic, South Africa, and UK. Moving into Latin, given the attractiveness of the Brazilian compounding market, the competitive landscape remains heightened while we see signs of customer demand improving. we continued our focus on maintaining market leadership and also drive operational efficiencies through several levers. Firstly, we have completed, earlier than planned, decentralization of our distribution activities in Brazil, and we expect to see operational benefits in the second half of this year. On brand rationalization, last year, we completed consolidation of three brands, and this year, on the equipment and packaging side, we combined three more. Given our strong innovation capabilities in this region, we have launched new successful products that are expected to drive margin growth. Next to this, we also continue to further diversify into Mexico and Colombia. Looking ahead to the second half of the year, we expect better revenue and margin performance on the back of our commercial and operational excellence initiatives. To conclude, we remain committed to maintaining our market leading position in Brazil as it is the second biggest compounding market in the world, and long-term fundamentals remain attractive. Moving into the largest compounding market in the world, North America, we continue seeing structural growth as hospitals look for outsourcing of pharmaceutical compounding, while Anazeo is well-placed to capture the growing demand in prevention and lifestyle. Moving to B&E, As communicated before, we have now completed the transfer of our CGMP API repackaging activities to Letco and have decided to close down the remaining operations of the SIMPOL facility by the end of this year. Further, to build on our key strategic pillar to have market leadership in B&E, while maintaining highest quality standards, we have announced that we will invest in building a state-of-the-art CGMP repackaging facility in Decatur, Alabama. Moving to FSS, we have reached the 135 million run rate for Wichita and Boston combined. This was achieved on the back of strong market demand and increasing operational efficiencies. At Wichita, to further enhance our performance, we expect visual inspection to be operational in the second semester. Regarding Boston, integration is on track, and we have now 27 licenses, including Texas. As we guide it, we expect to be break-even during the second semester. To finalize, we are also very pleased with the developments of our Health and Wellness Division, which is capitalizing on strong underlying demand for personalized treatments as well as short-term drug shortages. We also confirm that our investment in the Tampa facility is progressing as planned. Moving on to the next slide. As mentioned, we're currently experiencing a fast changing environment where agility and guaranteeing the highest quality standards are key. Looking at the external factors, we closely monitor inflationary developments and as mentioned, while our other regions remain dynamic in pricing pass-through, a very well executed exercise in EMEA has now concluded. Regarding competitive landscape, we aim to maintain leadership in all our markets by strengthening our commercial approach, balancing competitive pricing, and being unique with our brands and the widest portfolio. Being the global pharmaceutical compounding leader, we have strengthened our quality management organization and continued implementing our global quality systems across all our regions, aiming to set the highest quality standards in the industry as the regulatory environment evolves. Also, in order to remain ahead of regulatory requirements, we commit to invest in state-of-the-art infrastructure, especially in North America. Truck shortages is a primary driver of our industry, and during the first half of this year, it has created favorable opportunities. This enables us to have potential structural long-term gains, such as onboarding of new customers. Coming to internal drivers, we have intensified our procurement and supply activities, resulting in stronger purchasing power and better logistic terms. Finally, on operational excellence, while we always focus on it, it has now become necessary to be our key strength to support our activities across the globe to be more competitive. And we already see good developments to increase product availability. Regarding our discipline and many activities, we continue to look actively for opportunities across all our markets. Now, Karin will go through the financial highlights analogy.