BICO Group AB (publ)

Hello and a warm welcome everyone to BICO's third earnings call for 2024 where we will present our quarter three 2024 report. My name is Maria Fors and I'm the president and CEO of BICO and together with our CFO Jakob Tornenberg I will present our report. Today's agenda is divided into five sections before the Q&A. We will begin to summarize the quarter and highlight significant events. We have also had some recent events which we will also comment upon even if they occurred after the end of Q3. We will further on comment on the market development and thereafter to present BICO's Q3 financial performance, as well as deep dives into our business areas performances. This will be followed by a presentation of the development of our strategic priorities, strategic agenda and financial targets. And these sections will be in listening only mode. After the presentation, we invite you to our Q&A session. and the financial hearing host will be back with further instructions. Before presenting a summary of the course, I would like to recap shortly on one of our main events this year, namely our Capital Markets Day, which took place mid-September. The main purpose for the Capital Markets Day was to launch our updated strategy, which in essence entailed a new vision and mission. Our four strategic priorities and financial targets were reiterated, Our key priority, commercial excellence, has been reinforced with five focus areas, and we also launched a new business area structure with lab automation, life science solutions, and bioprinting. From this quarter, they also constitute our reporting segments. If you haven't watched yet, just click on the QR code to access the recordings from the digital sessions, and they can also be found on our website. Let us now move into the quarter. For quarter three, we can conclude a soft market for instrument sales, primarily in academia and diagnostic segments, due to capex constraints and fewer project starts in lab automation. All in all, this hampered our quarter three sales performance. It's important to highlight that lab automation, i.e. by zero, has a project-based business with significant fluctuations in revenues between quarters. Hence, it's more relevant to look at the year-to-date figures, where we have delivered 26% organic growth. We continue to see a strong trend and demand for integrated lab automation solutions, and the decline in sales also impacted profitability, which was partly offset by strict cost control. We delivered sales of 496 million and an organic growth of negative 13% compared to a very strong corresponding quarter last year. Jakob will give you more details on the financials later on in this presentation. All business areas were profitable in quarter three, reporting a total adjusted EBITDA for the group of 40 million, generated an adjusted EBITDA margin of 8%. The operating cash flow for the quarter was 45 million, thanks to the development in networking capital. And as mentioned on the previous slide, we also launched our updated strategy. Our new general counsel, Andreas Joharsjö, was announced in July, and he joined us in October. His previous experience and commercial mindset will further contribute to developing our legal function. In addition, a few but important events occurred after the end of the quarter. Last Thursday, we announced that we have entered into an agreement to divest Nanoscribe. We have repurchased convertible bonds, and we have also announced further rightsizing and launched a sharpened commercial agenda in selling. I will now hand over to Jakob to comment on the first two events which occurred after the quarter.

Thank you, Maria. We announced last week on November 21st that we have entered into an agreement to divest Nonoscribe, which is a company in our bioprinting business. Nonoscribe, based in Karlsruhe, Germany, is a producer of hardware equipment used in the microfabrication segment with customers mainly outside the life science industry. As per LTM Q3 2024, Nonoscribe recorded 230 million in sales, and a gross margin of 54% and adjusted EBITDA margin of 12% and a working capital level in relation to LTM sales of 24%. BICO acquired Non-Inscribed in May 2021 and the total acquisition value was 250 million in cash and circa 301,000 BICO shares. Additionally, between 2021 and 2023, circa 132 million has been paid in earnouts. The acquisition rationale at the time was to access nanoscale printing technology as a complement to the bioprinting offering. The enterprise value on a cash and debt-free basis amounts to 28.6 million euro, corresponding to circa 323 million Swedish kronors. Following net debt and working capital adjustments, the equity value amounts to 26 million euro, corresponding to circa 294 million Swedish kronor. The divestment is estimated to generate a capital gain of approximately 10 percent above book value per Q3, subject to timing of closing of the transaction and FX movements. The final financial impact will be reported in the interim report for Q4 2024, and non-inscribed will be treated as discontinued operations in BICOS financials from Q4 2024. The rationale behind the divestment is in line with the updated strategy, where non-inscribed has been concluded non-core due to its significant footprint outside life science industries. Net proceeds from the divestment following transaction expenses will be used to reduce long term debt. This is a good segue into the next slide on repurchasing of convertible debt. But before moving on to that, I would like to conclude and refer to what we communicated during our capital markets day in September. We continue to receive serious interest for many assets in our portfolio and by will continue to review our portfolio assets to maximize execution on our updated strategy and shareholder value. Now, let's move on to the next slide. First, to give you some background, in March 2021, Baico issued senior unsecured convertible bonds with a total nominal amount of 1.5 billion Swedish kronor. On November 22nd, Baico repurchased convertible bonds with a total nominal amount of 118 million at the purchase price of 83.6% of the convertible's nominal amount. The total purchase consideration for the bought back convertible bonds thereby amounted to 98.7 million Swedish kronor. Following the buyback, Bycos holdings of the convertible bonds totals a nominal amount of 118 million. The rationale behind the buyback was to optimize BICO's capital structure, i.e. reduce long-term debt, which was made possible by our strong liquidity position. BICO will continue to evaluate the bond market and may from time to time repurchase further convertible bonds in the market, if deemed attractive. I will now hand back to Maria.

Thank you, Jakob, and this means that we have reached the third and final event which occurred after Q3 that we would like to highlight. Just this evening, we announced further rightsizing and launched a sharpened commercial agenda for selling. The launched plan focuses on long-term stability and profitability, and this entails a sharpened commercial agenda and further rightsizing to achieve a sustainable cost structure. The measures taken will result in a solid platform to scale from and laid a foundation for sustainable, profitable growth. It will also entail an increased focus on the technologies where selling has a leading market position and optimize synergies with other BICO companies, which is in line with the group's updated strategy. The right sizing is expected to result in redundancy of approximately 20% of the employees across the selling organization. and redundancies are subject to union negotiations. All in all, these three events show that we are focused on delivering on our updated strategy and on our four strategic priorities. I will now move on into the next section, market development. This section was introduced in quarter one this year and gives more flavor to the market development. I'll also comment on sales per geography. The market environment continues to be challenging and uncertain with regards to demand, as well as macroeconomic and geopolitical factors. We are a few weeks post the U.S. election, which takes place after the end of the period. And Baku will monitor and stay proactive in terms of any potential negative impacts from tariffs or other trade barriers. For Asia, including China, direct exposure is, however, limited, representing only 6% of sales in quarter three. And this is a decline with 12% units compared to the corresponding quarter last year, which also impacted our sales levels. The slower market in China is also reported by many of our peers and is indirectly impacting our business. For quarter three, we can conclude the pattern we have seen for some time, i.e. that customers are holding tight to their CapEx spendings. And this has impacted our sales levels compared with those of our peers who are less dependent on instrument sales. However, we see improved sales development in our companies that are more focused on consumable sales. As you can see on the map, the distribution in sales changed during the quarter due to the significant drop in Asia and foremost China. Sales in Europe have increased in relation to North America due to fewer project starts for lab automation during the quarter. And despite the short-term challenges that BICO faces, we believe that we are right positioned with our updated strategy and we focus on commercial effectiveness. It's now time for me to hand over to Jakob again for a summary of our financial performance.