Envipco Holding N.V.

Okay, good morning, everyone. It gives me great pleasure to welcome you to the Q1 2025 results presentation of Invipco. My name is Simon Bolton, CEO of Invipco, and I'm joined by my colleague, Michael Clement, Chief Strategy and IR Officer, to run you through the highlights of the quarter this morning, followed by a Q&A. Highlights for Q1. Following a record end to 2024, and as anticipated, as mentioned last quarter, somewhat slower start to 2025. Group revenues, 21 million, 23% down year on year. Gross margins continue to develop well. We've had, obviously, a target of 40%, getting to 40% gross margins, and we continue on that journey with really good productivity and also cost efficiency in addition to good work on the commercial side. Overall EBITDA with costs under control this quarter at half a million. And then the cash balance, which Michael will go through in a little bit more detail later, ending the quarter at just over 20 million. We continue to strengthen our business. I think for those who follow the business for some time, you know that we're positioned in this space, really unprecedented market opportunity ahead of us, driven by EU regulation. which mandates introduction of a deposit return scheme, so a small fee on bottles or cans to return them to recycling point, which needs our technology, our services and our skills to make the whole system work. So we continue to develop our organisation, our technology and our capabilities so that we can be ready to deliver all those opportunities when they come. We have announced continued excellent wins and progress in Romania. So two specific wins were announced this quarter. And in addition, in Romania, we had the pleasure of opening up our Engineering Centre of Excellence Inclusion Epoca last month. And I will talk a little bit more about Romania later on. Again, we continue to invest in the team, the markets and products, and also our operational administrative processes so that that grows to really take these opportunities in addition to grow with efficiency. For those who maybe just joined for the first time, a reminder, we are a global recycling technology business. Again, we are set for rapid growth with these market opportunities ahead of us. We have, over the last few years, captured a leading position in these European growth markets. And as I said, we continue to invest in building our business executed by a developing seasoned team. Over the last few years, we've seen significant growth and sustained profitability, and we expect that to continue in the future. A little bit more detail here. What we see is two key parts of our business. North America, really a 40-year business, but which is set for decent growth over the next few years. And then a higher growth European business with this year new markets principally being Poland and Portugal. One of the things we do want to highlight is where our center of operations are. So we actually have four centers of production where we make our reverse vending machine products. North America, so that's in Connecticut, Nogatook in Connecticut, and then in Europe, in Cebes in Romania, Athens, Greece, and Osnabrück in Germany. This allows us to have a very decentralized production base with ample capacity. And if you look on the right-hand side of the slide, That's just an assessment of our installed capacity at the moment versus what we've actually sold over the last couple of years. So we are ready and we are set to deliver on these growth opportunities. Also, of course, depending on what's happening in the world, by having decentralized production centers with very localized supply chains means that we can respond effectively and produce in market for market. Romania has become a real important part of our growth strategy. We've actually been in Romania over 10 years, supplying components to the rest of the Invipco group. And more recently, in 2021, we started to develop our growth strategy and growth plan for Romania as part the country was heading towards a deposit return scheme. That was launched in 23. And over time, we've built up a very solid commercial position, team, and also loyal customer base within the country. Now we've on a clear path to be 30% plus, which is our market share target. And we continue to see opportunities in the future Examples, the follow-on orders that we announced in Q1, and also potentially new market segments where recycling centers are put in municipal locations. So very exciting market, very important part of our growth story. Good. And now to go through a little bit more detailed numbers. Michael. Michael? Thank you, Simon.

Good morning, all. Let's start out by moving into the profit and loss statements. Revenues in the first quarter of 2025 were 21 million euros. This is down 23% from the first quarter last year. Gross profit was 7.8 million euros, with gross margins at 37.3%, an increase of 220 basis points from the first quarter last year, driven by operational improvements in our own assembly and production, as well as in the supply chain. Operating expenses, 9.8 million, driving EBITDA of 0.5 million in Q1, down from 2.7 million in Q1 last year. EBIT, negative 2 million, down from 1.1 million last year, with net profit at minus 2.4 million in Q1. Europe remains our largest region of revenues, also in this quarter, but revenues were down on a year-over-year basis, as well as down sequentially following a record Q4 24. Europe revenues were 12.3 million euros, down 38% from Q1 last year. largely on shifts, accordingly shifts in revenues. Specifically this quarter, Greece was soft, coming off a very strong Q4. Our RVM sales in Europe were 11 million euros, down from 19.2 million euros in Q1 last year. Romania was our largest market in Q1 this year, followed by Hungary. Romania sales were up strongly from Q1 last year. Program services in Q1, 1.3 million, nearly double 0.7 million euros in Q1 last year. Program services, comprised services, lease, throughputs, revenues continue to make up a very small share of our European revenue base as our growth primarily will be driven by new installments of equipment. North America, solid growth this quarter, 16% year-over-year growth to 8.7 million euros. Program services were up 4% to 7.4 million euros, our largest share of business in the US, while RVM sales increased solidly to 1.3 million euros on various installations across the country with various accounts. Operating costs this quarter were 9.8 million euros. This is down from reported OPEX of 11.3 million euros in Q4 and adjusted OPEX of 10.7 million euros in the quarter. The drop sequentially comes from lower personnel costs and professional fees. Year over year, our OPEX was up by 1 million euros, primarily driven by higher personnel costs on higher headcounts. Invipco will continue to invest in our business to ensure that we have the footprint and the organization ready to take on the anticipated growth in years to come. Then moving over to the balance sheets. This quarter, our total assets were down by roughly 10 million euros to 119.9. driven primarily by on the equity side of lower borrowings and equity. On the asset side, non-current assets were 38.7 million, down by about a million, primarily made up of PPE and intangible assets. Current assets total 81.2 million, down from 89.5 million in Q4. The drop is largely explained by a lower cash balance coming down from 30.7 million to 20.7 million at the end of Q1. Inventories up slightly, 31.3 million, with accounts receivables at 29.3 million. Equity ratio was 54% this quarter, Non-current liabilities, 15.6 million, down a tad from 16.4 million at the end of Q4. Current liabilities were 39.9 million, down from 45.4 million at the end of Q4, with total borrowings, short and long-term, at 15 million, down from 19.4 million at the end of Q4. Finally, the cash flow in the first quarter. We started out the quarter with 30.7 million euros in cash. Our cash from operations were down by 4 million euros, primarily driven by a working capital build on higher inventories moving into higher activity in the second quarter. Interest and tax paid was in excess of 1 million euros in the quarter. Cash from investing activities were 1.1 million euros in Q1. Capital expenditures were 0.7 million with capitalized R&D at 0.5 million euros. Finally, cash flow from financing activities were negative 4.8 million euros with a reduction of borrowings and lease liabilities this quarter, paying down on financing facilities. for a total net change in cash of 10 million euros and an ending cash balance of 20.7 million euros. Then Simon, let's move into...

outlook right great michael thank you so last couple of slides before q a so yes um so as we see these uh these countries coming through to uh introduce deposit return schemes as i mentioned that will drive the market and the demand for our products and services So this is just a quick snapshot going back a few years, our revenue development and what we expect to continue in the next few years. Also, how much of the population of European countries are covered by what's happened and what's coming ahead? So over the last few years, deposit schemes have covered countries with about 42 million of population. In the next few years, that will be 278 million people and possibly another 150 million on top of that for those countries that are covered by EU regulation, but maybe go later, 28, 29. So a very significant market opportunity in this deposit return scheme, second wave to hit the continent. This is something we've showed before, but really here, these countries then are starting to firm up on their plans, on the preparation for introduction of a deposit return scheme. So we were in the throes of final commercial discussions in Poland and Portugal. We had great news from the UK a couple of weeks ago. The operator of the scheme, so-called DMO in the UK, that has been announced. That's very positive. And UK remains on track to be a very significant market. for us in the future. And then we have other countries that are also starting to develop and discuss schemes to put things in place before the deadline of 2029. What does this mean? Well, this means obviously, as we are positioning for this growth, both in Europe, but also continuing a strong business in North America, means top line growth of the business, work that we are doing to continue to develop margins. We know that's important. And obviously, as we grow, And we will continue to invest in the business, but we expect operational leverage as we expand in the time ahead. So that was update of Q1. Just a reminder, 13th of August is our Q2 results. And I think with that, Michael, we will open everything up for Q&A. Thank you.