BICO Group AB (publ)

welcome to bico q2 2024 report presentation for the first part of the presentation participants will be in listen only mode during the questions and answers session participants are able to ask questions by dialing pound key 5 on their telephone keypad now i will hand the conference over to ceo maria force and cfo jacob thordenberg please go ahead

Hello and a warm welcome to everyone for joining BICO's earnings call for quarter two 2024. My name is Maria Fors and I'm the president and CEO of BICO and together with our CFO Jakob Thordenberg I will present our report and let's begin with today's agenda. Our agenda today is divided into five sections before the Q&A. We will give a summary of the quarter and highlight significant events. We will also comment on the market developments and thereafter present BICO's financial performance for the quarter as well as deep dives into the business area's performance. I will also comment upon the development of our strategic priorities. These sections will be in listening only mode. After the presentation, we will invite you to our Q&A session, where you are welcome to participate. The financial hearing host will be back with further instructions. Let's begin with summarizing the quarter. In quarter two, we delivered stable sales levels in line with our peers, despite a volatile market environment. We delivered sales of 534 million and an organic growth of negative 2%. Jakob will give you more details on the financials later in this presentation. All business areas were profitable in quarter two, reporting a total adjusted EBITDA for the group of 46 million, generating a margin of 9%. And as I mentioned during our earnings call for quarter one, we had some additions in the executive management team as well. Both Katarina Nordlund and Anders Fogelberg have joined us during the past quarter. Katarina as our chief HR officer and Anders as our chief commercial officer. After the quarter we have also announced that Andreas Joesjö has been recruited as general counsel. He will succeed Lotta Bus and will be joining us latest mid-October. Andreas previous experience and a commercial mindset will contribute to further developing our legal function. All in all, we're continuing to build an organization suited for the next phase for BICO. Later in this presentation, I will also comment upon the work done with our strategic priorities and how that has developed since they were launched earlier this year. I will now move on to the second section for today and comment on the market development. This section was introduced last quarter and gives more flavor to the market development, and I will also comment on sales per geography. The indications of a slower business for BiCo in the academia and diagnostic segments continued during Q2 2024. And as you can see on the map, the sales in North America increased, mainly driven by biosciences, whereas Europe was flat. Asia, and foremost China, experienced significant drop in sales levels due to lower demand compared to Q2 2023. I believe that we see the same trends and patterns as many of our peers have reported in Q2. And as mentioned during my previous slide, Baico is performing in line with peers in unpredictable market conditions. And it's time for me to hand over to Jakob for a summary of our financial performance.

Thank you, Maria. And yes, I will now comment on the second quarter of 2024. Please note that all numbers presented is in Swedish crowns. Also, I would like to remind you that from the first quarter of this year, Baico reports in functional reporting and comparable numbers have been adjusted. Furthermore, all organic growth figures are in constant currency. Baico delivered sales of 534 million with an organic growth of negative 2%. And I will comment more on sales on the next slide. Adjusted EBITDA amounted to 46 million and EBITDA was 36 million for the quarter, which is an improvement compared with the first quarter of 2024. I also have a separate slide where I will present EBITDA development during Q2. The gross margin for the quarter amounted to 52% compared to 46% for the corresponding quarter last year. This can be explained by the product mix and the extraordinary write-offs made in Q2 2023. This is the second quarter we report with functional reporting structure. The reason why we changed is to increase comparability and adapt to the most common market practice. As mentioned also in the Q1 report, this change has affected the reported gross margin negatively as more costs than before, for example, production staff, depreciation on production equipment, et cetera, have been included in the reported cost goods of sold instead of objects. The net loss for the quarter amounted to negative 79 million. And if we look into sales for the group for the second quarter, The second quarter generated sales of 534 million and a flat total sales growth of negative 0.6% and a negative organic growth of 2% compared with Q2 2023. Q2 showed mixed sales performance among our companies following the same pattern as in Q1, where bioscience showed good sales levels, especially in the lab automation part of our business, and a positive organic growth. Bioprinting continued to show weaker sales due to the dependency on the academia and research segment, as well as softer sales in Asia and foremost China, compared with Q2 2023. For bioautomation, Cyanion showed improved sales levels compared with Q1 2024. However, Cyanion was negatively impacted by their dependency on the diagnostic segment. And if we move on to profitability, adjusted EBITDA for Q2 amounted to 46 million, corresponding to a margin of 9%. EBITDA amounted to 36 million, corresponding to a margin of 7%. All business areas were EBITDA positive in Q2. The improvement compared with the corresponding quarter last year can be explained by lower cost levels, primarily related to personnel. EBITDA trended positively compared with Q1, partially due to seasonality, but mainly due to cost measures and product mix. As always, staying on course with cost control has been in focus in the quarter and will continue to be during quarters to come. And if we move on to the next slide and our cash flow. The cash flow from operating activities for the quarter amounted to negative 51 million. This includes a negative effect from changes in networking capital of 54 million. Out of this, 20 million was related to increases in operating receivables. Inventories decreased by 32 million, continuing the trend of decreased inventory levels as also seen by the end of last year and which followed in Q1 this year. Cash flow from changes in operating liabilities decreased by 66 million, which was driven by contract liabilities in biosciences converted to revenue, as well as a decrease in accounts payroll. Investments in intangible capex amounted to 6 million. Several R&D projects have been completed in the second half of 2023, with a reduction in capitalized R&D as a result. Investments in tangible capex amounted to 15 million. We didn't pay out any earnouts during the quarter, and total estimated remaining earnout payments amounted to 20 million. Total cash flow during Q2 amounted to negative 101 million, and cash reserves by end of June amounted to 688 billion. Activities to further strengthen cash flow will continue to be a priority for the group. On the next slide, I will further comment on the development of networking capital. This slide shows the development in networking capital between Q2 2023 and Q2 2024. During this period, networking capital has decreased from 527 million to 519 million and has been stable around a level of 20 to 25%. Hence, to conclude, BICO has for the past quarters now showed that the action is implemented in 2023 to improve working capital were successful and resulted in BICO now having levels of networking capital in line with industry peers. Maria will now comment on our three business areas performance.