Fagron Sa Ord

Hello and good morning, everyone. Welcome to Fagron's H1 2026 results webcast. I'm joined today by our CEO, Rafael Padilla, and our CFO, Karin de Jong. Rafael will start by discussing the company's performance and a closer look at regional developments. Kenny will then walk you through the financial results. We will open the floor for questions at the end of the session. With that, I will hand over to Rafael.

Thanks Ignacio and good morning all. We're pleased to report a strong performance with revenues reaching 552 million euro. This reflects 3.1% organic growth at CR, 7% when normalizing the GLP-1 effect. Growth was driven by brands, Latin America, V&E North America and EMEA. Profitability grew by 12.7% to 107 million euro. The margin of 19.4% reflects an improvement in both EMEA and Latin America and temporary effects in North America Pacific Compound Services. On M&A, we closed the acquisition of Amber in Singapore and Malaysia, completing five acquisitions across all regions in 2026. We also entered into a collaboration agreement with NutraConnect in Asia, which will complement our Nutraceutical platform. integration of earlier announced acquisition remains on track. We have also appointed Amy Jones to lead the North American Pacific region. Finally, we're also reiterating our full year guidance of mid to high single digit growth at CR and an adjusted EVDA margin of around 20%. Moving on to the regions, in EMEA, Performance was led by brands on the back of continuous strategic focus while essentials remain balanced. We saw again strength in compounding services through high demand for key therapies and our focus on operational excellence translated into better availability and procurement savings supporting both top line and margin expansion. During the period, we completed the acquisitions of Pharmavit, Machilab and Amber and are working on integrating them into the group. Pharmavit and Machilab will strengthen our European platform and enhance our market positioning, while Amber will help us further expand our footprint in Asia. Finally, we continue making progress in our capacity expansion project in the Netherlands. In Latin America, Strong organic performance was led by the successful execution of our commercial strategy. In brands, our global R&D center in Brazil continues to be the engine of our global innovation. During the period, we completed the acquisition of Puri Pharma and Vepacum. Like Inimia, synergies and efficiencies during the integration process supported the region's profitability. In North America Pacific, performance was led by brands and essentials, together with contributions from CareFirst and UCP. Revenue growth in B&E was driven by new customer wins, improved product availability, strong essential sales, and continued operational improvements. Compounding services was affected by the normalization of GLP-1-related revenues and an industry-wide IV back record. Henthal Wellness continue to deliver solid growth driven by high demand for personalized therapies and new product launches. On M&A, over the last 18 months, we have done 17 deals across all regions. So far, all previously announced acquisitions have been completed except for Intraplast. During the first half of this year, we have focused our effort on integrating this successfully. Our teams have achieved significant synergies during the integration process, as shown in EMEA's and Latin America's margin performance. We will continue to benefit from further synergies during the integration process, which usually lasts 18 to 24 months. In H1 2026, M&A contributed around €69 million to the overall group revenues, with all acquisitions performing as expected or better. and as Karin will comment, our balance sheet continues strong and we remain open to exploring more opportunities across our regions and categories while maintaining a disciplined approach. On our expansion projects, as announced during our CMD in April last year, we plan to add 500 million extra capacity by 2028. In the Netherlands, the Sterl facility with a 15 million euro capital investment has a revenue potential of 15 million euro. In North America Pacific, our new 503A Tampa facility is already online with extra revenue potential of $100 million, while Wichita and Las Vegas, both 503Bs, are ongoing with a combined capex of around $68 million and revenue potential of $350 million. all expansion projects are currently progressing as planned. The additional capacity positions us to successfully capture future growth opportunities. Moving on to the health and wellness activities, we have received a lot of questions regarding peptides, especially after the hearing that took place last week where the PCAC recommended the FDA six peptides for inclusion in the 503A books list. Given our existing infrastructure and our proven track record, inclusion in the 503A books list will be an overall tailwind. The time to market is variable and can range from six to 18 months post inclusion, depending on various factors such as qualifying the right API suppliers and performing validations. And finally, on our North America Pacific leadership team, Amy Jones has been appointed area leader after being instrumental in transforming our B&E business. She brings 15 years experience in pharmaceutical compounding and will help scale the region to the next phase of growth. Additionally, building on our existing quality infrastructure, we're happy to announce the appointment of Kenneth Bonnell as the Global Head of Quality. Ken brings over 30 years of experience working in the industry across quality systems, quality assurance, regulation and compliance. With this, we hand over to Karin.

Thank you, Rafa. Good morning, everyone. Thank you for joining this call and let me walk you through the first half of the 2026 financial results and provide more color for the full year 2026. In H1 2026, revenues increased by 16% on a reported basis to 552.5 million, driven by acquisitions and organic growth in the regions. Cross-margin decreased by 218 basis points year-on-year driven by acquisitions and change in North America-Pacific product mix. Our operating expenses increased by 10% year-on-year owing to our recent acquisitions, though as a percentage of revenue, they decreased by 230 basis points. At a group level, our profitability margin decreased by 60 basis points year on year to 19.4%, mainly due to lower production volumes in compounding services in North America Pacific. We maintain our strong cash generating capabilities as operating cash flow improved by 10.8% year on year to 58.1 million for the first half of the year. And lastly, our net debt to EBITDA ratio increased to 2.1 times, largely because of payments for acquisitions. However, it remains below our internal threshold of 2.8 times. Moving on to the next slide, the bridge illustrates our revenue development for the first half of 2026. EMEA reported a solid 4.1% organic growth at constant exchange rates, while LATAM America posted an 8% organic revenue growth at CER, supported by strong performance of brands in Brazil. North America Pacific revenue was largely flat, growing at 0.2% organic at CER, where a strong performance in the brands and essentials was offset by soft compounding services. Our recent acquisitions contributed 68.7 million to the revenue. And FX during the period was a headwind, mainly in the US due to the weakening of the US dollar. On the right side, our P&L shows a 16% revenue increase together with our adjusted EBITDA growing 12.7%. Depreciation and amortization increased by 27.6% year on year due to the recognition of acquired intangible assets on a larger asset base reflecting both the acquisitions and continued investments in capacity and R&D. Our financial costs increased versus last year driven by increased debt because of funding of the acquisitions and higher interest rates on our debt. As a result, earnings per share grew by 1.6% to 63 cents for the first half of the year. Turning to the next slide, EMEA, revenue growth reflected a solid organic demand across all categories and countries alongside the contribution from acquisition. Geographical diversification along with a mix of price and volume increase drove organic revenue growth. and looking at the region's profitability, adjusted EBITDA margin expanded by 30 base points versus H1 2025, supported by operational excellence initiatives, sales mix and integration benefits. And as Rafa mentioned earlier, we closed the acquisitions of Pharmafit, Magilab and Amber during H1 2026. Moving on to Latin America, sales increased by 38.7% to 120.5 million, reflecting strong organic growth in brands and contributions from recently acquired companies, aided by a strengthening of the Brazilian REI. Organic growth at CER was 8% and it was largely led by a strong volume growth and recent product launches in brands in Brazil. We achieved a 120 base points adjusted EBITDA margin expansion to 18.6% supported by operational improvement and strong performance of the acquisitions, especially for PACOM. Moving on to the next slide, revenues in North America Pacific grew by 0.4% to 213.2 million. A strong traction in brands and essentials was offset the short-term headwinds in compounding services. Reported growth was also affected by currency movements. B&E continues to grow at a fast pace, mainly supported by operational improvements in product availability, leading to volume growth. Compounding services performance was impacted by the reduction of GLP-1 production at our 503b facility and limited availability of the IV bags. Adjusting for the GLP-1 impact, the organic growth for the region will be around 10%. Our operating costs in the region increased slightly year on year due to acquisitions and ongoing investments. Overall, this resulted in an adjusted EBITDA margin of 17% in H1 2026. Turning now to our cash flow, our business model has several strengths and one of them being the strong cash conversion. Our operating working capital increased by 310 basis points to 16.9% due to the recent acquisitions and higher inventories to support product availabilities in brands and essentials. Operating cash flow increased by 10.8% to 58.1 million and maintenance capex ended at 2.6% of revenue when excluding the one-off projects. Our free cash flow conversion was 40.9% when adjusting for one-off capex. Slightly below our guidance, however, we've seen during full year 2025 We expect it to correct towards the end of the year as working capital normalizes. Moving to our net debt evolution, the bridge shows an increase of 222.1 million in our net debt, growing from 283.3 million at the end of full year 2025 to 505.4 million as of H1 2026. The increase is mainly related to acquisition and working capital movements. As a result, our net debt to EBITDA increased to 2.1 times, however, still below our internal threshold of 2.8 times, giving us ample room to pursue opportunities. So before I hand it back to Rafa, let me go through our full year 2026 outlook. For the group, we are expecting revenues to be in the mid to high single digit organic row at CER. with different dynamics depending on the region, and a profitability margin of circa 20%. We expect maintenance capex to be at 3.5% of revenues for 2026, excluding the already announced one-off projects and investments. I would now like to hand it back to Rafa for his closing remarks.