Azelis Group Nv

Good day, and thank you for joining us as we present our trading update for Q1 2026. As usual, we have Anna Bertona, Group CEO, who will give an update on our operating progress year-to-date. Boris Cambon-Lalin, Group CFO, will present the financial results, and then Anna will say a few words on the outlook. After their presentations, we will open the call for Q&A, but until then, you will be on listen-only mode. As a reminder, this presentation may contain forward-looking statements that are subject to risk. We will make a recording of this call available on our website later today. I will now hand you over to Anna.

Thanks, Ben, and good morning to everyone. Let me start with the most important messages regarding Q1 26. First, we saw mixed trends across our regions during the quarter. Some end markets are stabilizing and others continue to be very challenging. In this quarter, we have seen some but still limited pre-buying from customers, but we expect this to change as the Middle East conflict continues. The relatively limited pre-buying suggests that there are at least part of the stabilization that we have seen in some end markets and that that has been demand driven. I will go into more detail per region and end market in the next slide. Second, we generated broadly the same amount of cash despite lower EBITDA during the period, translating into a 113% cash conversion. This performance is another demonstration of the asset-light, cash-generative nature of our business. And this is actually a good segue to my third point. The Middle East conflict has further increased volatility across our markets. highlighting the need to balance growth and take the right actions to protect our profits. And this is exactly what we are doing. We are on track with the implementation of strategic programs, while at the same time prioritizing cash generation and remaining disciplined on costs. This means managing our own costs as well as passing on the costs to customers as a result of price increases from principles and logistics. Now let's move on to the key highlights from the first quarter on the next slide. In this quarter, we generated a revenue of 1 billion, which is broadly stable versus the prior year in constant currency. This was driven by the 3.9% organic revenue decline being offset by a 3.3% contribution from acquisitions. We achieved an adjusted EBITDA of 104 million and a very strong cash conversion ratio of 113% during the quarter. Once again, demonstrating the benefit of an asset-light cash-generative business. Overall, market volatility persists, and this is evidenced by divergent trends across regions. Generally, where we have seen stabilization, it was mostly driven by volume growth. The pricing picture remains mixed across end markets and did not change materially in quarter one versus quarter four last year. Now let's look at the drivers of our organic revenue growth. Clearly the largest supporters driver in our revenue performance was APEC, which is 20% of our group revenue. The region turned positive for the first time in 10 quarters and generated a 4% organic growth. The constant focus on commercial programs and the pruning of our portfolio is delivering results. In the markets that generated growth, it was mostly driven by a volume increase. Another positive in Q1 was the sustained momentum in US food, based on volume growth and stable pricing. And we also saw green shoots in personal care and F&F in US, which both turned positive in Q1, supported by volume growth. These positive trends were offset by some challenges. Europe recorded a significant organic decline due to the tough comps as the demand environment across all end markets was challenged compared to Q1 of last year. This is also valid for MIA, but there we have seen an acceleration in negative momentum since the start of the conflict. Latin did not grow organically, especially Mexico and Brazil have seen pressure on both volume and price. And lastly, in APEC, there are still pockets of weakness, and specifically in ANZ. And that makes up 20% of APEC. Their volume decline persists. And if you take this weakness of ANZ into account, it means that the growth in the rest of APEC was even larger than the 4% organic growth. While we manage the short-term challenges, we remain focused on executing on our strategy. The strategy that we presented in 24 remains unchanged and is based on segment leadership, being an active consolidator and building one agile Azelis. We have three important strategic programs to achieve our objectives. Customer's first choice is focused on strengthening the value proposition to our customers and equipping our salespeople with better tools. From our global customer satisfaction survey, we know where we are good, but also where we need to improve. The programme is one of the elements contributing to improving top-line performance and gross margin management. Winners of the Future is about expanding our cooperation with companies that provide a portfolio of innovative, high-quality and sustainable products. I am personally spending considerable time on this and I am pleased to see we have been successful to add new mandates with existing and new partners. Future Fit is a program that is shaping our organization to become more customer focused and more agile. As we are shifting certain activities to regional structures, our local teams can focus on what really matters, our customers. This also enables us to accelerate the rollout of our digital tools for business operations. And we are currently in the middle of the implementation of this program. Digital and AI play an important role in especially customer's first choice and future fit, both supporting the commercial side as well as the back office processes. We are making good progress on the three programs and more information about the impact will be shared with you later in the year. With that, let me turn you over to Boris, who will take you through the numbers.

Thank you, Anna, and good morning, everyone. As Anna mentioned during the business update, Zelis once again generated robust cash flow in a difficult market. But first, let's get started with the group P&L. In the first quarter, ZS delivered a revenue of €1 billion, representing a 0.7% year-on-year decline at constant currency. This performance was supported by a little growth in life sciences, which was up by 0.2%, while industrial chemicals declined by 2.1%, both expressed at constant currency. Gross profit in the first quarter was 246 million euros, a year-on-year decline of 2.3% in constant currency, corresponding to a margin of 23.7%. The 43 basis point margin contraction reflects the negative mix effect across the group, notably an unfavorable country mix in Asia-Pacific. Adjusted EBITDA in the first quarter was 104 million euros. a decline of 7.9% in constant currency versus prior year. However, the EBITDA in Q1 last year included about 5 million favorable one-off items that are not present this year. So, adjusting for those and still at constant currency, the EBITDA decline would be limited to 4.4%, corresponding to an EBITDA margin of 10.0% compared to an equivalent of 10.4% last year. This evolution was driven by the lower gross profit, but was partly offset by the full benefit from our cost-saving actions implemented last year. As a reminder, we announced in April 2025 a 20 million run rate cost-saving program that was fully implemented by the end of 2025 and that is now fully impacting the 2026 P&L. The conversion margin remained at a healthy 42.4%, which, although lower than Q1 of prior year, shows an incremental improvement from 2020. 36.2% in Q4-25 and 41.5% in Q3-25. And let's move on to the overview of the regional performance. In EMEA, which makes up 46% of the group, revenue was 483 million euros, representing a year-on-year decline of 2.3% in constant currency, driven by organic revenue decline of 9.5%, with most end markets weak. Gross profit was 123 million euros, implying gross profit margin of 25.4%, with strong margins in Europe offsetting continued weakness in Middle East and Africa. Adjusted EBITDA of 58 million resulted in a margin of 12.1%, with cost discipline and contribution from acquisition partly mitigating top-line pressure. Versus prior year, M&A in Europe delivered plus 7.2% in sales, plus 8.6% in gross profit, and plus 9.3% in EBITDA. In the Americas, which makes up 34% of the group, first quarter revenue was 351 million, or 1.2% behind last year in constant currency, reflecting organic performance during the period. The organic performance was driven by stable life sciences, where we have started to see tentative signs of stabilization, as Anna mentioned. This was offset by industrial chemicals, which remains weak. Gross profit in the region decreased by 2.1% in constant currency to 83 million euros, and the adjusted EBITDA decreased by 9.8% to 36 million euros, resulting in EBITDA margin of 10.2%. The margin contraction was large due to dilution from lower EBITDA margin in Latin America. In Asia-Pacific, which makes up 20% of the group, revenue in the quarter increased by 4% in constant currency compared to the prior year to 208 million, reflecting the organic growth in the region. We saw some early signs of stabilization in some end markets, with revenue growth in the region driven by volume growth in industrial chemicals, and stable life sciences and stabilizing prices across most end markets. Gross profit in the region was 40 million euros, a decrease of 3.3% in constant currency, driven by negative mixed effects, as well as competitive pressure in the region. The strong cost control in the region translated into an adjusted EBITDA of 20 million euros and a conversion margin of 49.8%. Overall, foreign exchange remained a significant headwind, mostly in Americas and APAC, with stop line impacted respectively by 7.4% negative and 8.8% negative versus prior year, driving gross profit down by negative 4.3% and EBITDA by minus 4.8% on this FX impact. Showing now usual breakdown of the performance in this detailed table. Let's move directly to the overview of our cash and its biggest operational lever, the working capital. Net working capital to sales is down to 13.9% at the end of Q1 2026 versus 14.7% prior to March and versus 14.1% at 2025 year-end. This reduction reflects our continuous focus on working capital management and cash generation as reflected in the incremental optimization of working capital intensity from the end of 2025. Though, let me be very clear, we're reducing the inventory we don't need, like the slow movers, while managing strategically the inventory we do need. Free cash flow was €119 million, broadly stable compared to the prior year, and represents a free cash flow conversion ratio of 113%. compared to 100% in the prior year, and is further improvement from the 106% reported in December 2025, again reflecting your group's strong focus on efficient management of working capital. This relentless focus on working capital efficiency and cash generation allowed us to further drive down our net debt at the end of March to 1.5 billion, a 4% reduction compared to the end of December 2025. Although the EBITDA decline is keeping leverage ratio above our target to 3x, we will continue with our cash focus to drive down our leverage ratio. Now, let me hand you back to Anna for some words on the outlook.