BioGaia AB (publ)

Hi, this is Teresa Agnew, CEO of BioGaia, and I'm here with Alexander Koutsinas, our CFO. So we are here to report on our Q1 2025 results. For Q1, our sales were $366 million sec, which was a decrease of 1%, so relatively flat to last year. This was mainly due to lower sales in Asia Pacific and as well as Europe, Middle East, Africa. Specifically in Europe, Middle East, Africa, our sales decreased by 23%. And this was mainly in France, Central Eastern Europe, and South Africa. We did see a nice increase in certain markets, such as Italy, where we are returning to growth. In Asia Pacific, we saw a decrease of 19%, and this was mainly in China, and it was also due to some order fluctuations where we had significant orders in Q4, while the Americas increased significantly by 42%. We saw strong growth in the US that was fueled by additional marketing investments that we've been doing. We also saw strong growth in Canada, as well as in Brazil. Our EBIT was 97 million sec, which was a decline of 32%, and our EBIT margin was 37%. We did have some launches. What we always like to report is when we launch our products into new markets. So you see here a number of launches in Morocco, Nicaragua, Vietnam, China, United Kingdom, and Hungary. We do have a sub-brand called BioGaia Pharax that we are continuing to launch around the world. And China was one of our next markets this quarter. We also had some key events in January, January 16th. we announced that we were going to be taking our business direct in France. So we did terminate the agreement with our partner in France, and we will see some temporary sales fluctuations due to this, but now we are positioned in France for long-term growth, which we'll talk about as the quarters unfold this year. We also announced in March, on March 20th, that we do have a new anchor shareholder which is Anatom Holding. So Anatom Holding had already acquired shares last year. They are a Switzerland-based investment firm. They have experience in health and ingredients markets. And we are happy to welcome them as our anchor shareholder. I also wanna take this opportunity to thank Peter Rothschild and Anwal and Rothschild Investments. Peter Rothschild is the founder of our company has been with our company for 35 years and we really appreciate everything he has done as the founder and we are sad to see him go but we know that his contributions will be remembered forever so we will we will have you know more announcements about uh peter uh in the future uh in may uh actually earlier uh uh Today, we announced that we are taking our sales direct in the Netherlands. Actually, the Netherlands is one of the European markets that we did not have a business either through a partner or direct distribution. So now we will have direct sales and we are primarily doing this through online channels. So local marketplaces such as Amazon and Bowl. So more to come on this in the future since we're just starting, but this is an exciting opportunity for us. A little bit on the sales per segment, our pediatric segment did decline by 8%. And we saw these decreases mainly in Europe, Middle East, Africa. So it was Eastern Europe, France, as well as Asia Pacific, mainly in China. In our adult segment, we saw an increase of 26% for the quarter. And this was primarily due to increased sales of Prudentis as well as Gastris that was mainly in the US and also Protectus tablets, which was mainly in Hong Kong. So currently our pediatrics represents 74% of our business for Q1. If you look at by region, as I said previously, Europe, Middle East, Africa, declined 23%, that was mainly in France, South Africa, Eastern Europe. And our sales were negatively impacted in the quarter with our decision to start selling direct in France. So we do see some fluctuations in sales when we do take a market direct. So that is expected. Sales were positively impacted though by a royalty agreement extension that we had as well for Europe, Middle East, Africa. And sales were positively affected, like I said, in Italy. So we are returning to growth in Italy. For Asia Pacific, as I said previously, our sales decreased by 19%, which was mainly in China, and that was due to some quarterly variations for orders. And in the Americas, as I said, we increased by 42%, driven in the US, Brazil, and Canada. And in both US and Canada, our sales on Amazon increased significantly, as well as through some of our wholesale channels. So now I'll turn it over to Alex to take you through the specifics on the financials.

Thank you, Theresa. So first of all, just to summarize the financials, we had a sales decrease, as we heard, of 1% to 366 million SEK. Our gross profit increased with 1% due to a slightly higher gross margin of 73% versus 72% one year ago. And our earnings before interest and taxes decreased with 32% to 97 million and a margin of 27% in the quarter. In terms of the sales, we had an organic growth of minus 4% and a currency effect of plus 3%. And all in all, the decrease of 1%. If we look at our gross margins, we had gross margins of 73% versus 72% in the same quarter last year, an increase with 1%. In terms of distribution between the segments, pediatrics had a stable gross margin of 75%. However, adult gross margin increased from 57% to 67%. This increase was mainly due to some geographic mix effects, but also partly due to a previous price increase that we did. If we look at our operating expenses, they were at 171 million SEK versus 123 million one year ago, an increase of 40%. If we look at the line items for the OPEX, we see that sales and marketing increased with 18%. This is mainly driven by increased costs for our subsidiaries due to the large increases we are having in sales and marketing and the things we are doing there. But it's also partly also due to some of the startup costs we have in relation to France, which is not yet generating any sales. Sales and marketing costs were flat or actually down 10% at 23 million. This is mainly due to phasing of our clinical study costs. So we will probably see these costs increase eventually. Administration costs were down 20%. This is mainly due to that we had a one-time cost in the same quarter last year for the litigation and the termination of the distribution agreement in Italy. Excluding that, our costs were sort of flat. And then we have a big change in what we call other OPEX. This is mainly losses in receivables, exchange rate losses in receivables. And we took a cost of 24 million in the quarter versus a gain of 12 million in the same quarter last year. And all in all, this leads to an OPEX 171 million. And we don't have any adjustments in the quarter. However, as I mentioned, we did have an adjustment last year due to the distribution agreement litigation in Italy. If we move on to the profit and loss, just to summarize, sales were 366 million, OPEX 171 million, and an EBIT of 97 million then, a decline of 32%. And all in all, this leads to a margin in the quarter of 27% versus 40% in the same quarter last year. However, if you then would exclude the other OPEX line, which is the exchange rate loss on receivables, the margin was 33% in the quarter. So that currency effect explains a lot of the decrease in the profitability in the quarter. In terms of the cash flow, the cash flow reflects the lower profits and we have an operating cash flow of 36 million. We had very low investments in the quarter. This was more due to timing effects. They will increase going forward, obviously, but in the quarter they were low. And we had a total cash flow in the period of 33 million versus 41 one year ago, a decrease of 19%. And cash at the end of the period was 1.25 billion SEC versus 1.6 billion SEC one year ago. So with that, I hand over to Theresa for some concluding remarks.

So as we said, for Q1, our sales declined 1%. So sales were relatively flat versus last year. And we anticipate to get back to growth in Q2. Our sales did decrease in Europe, Middle East, Africa. We saw the decline in France to our termination of the distribution agreement. We also saw a decline in sales in Eastern Europe and South Africa, but we also had strong results in Italy and Finland and also in Belgium. In Asia Pacific, we saw a decrease of 19%. That was mainly due to weaker sales in China and also some sales in Japan due to order variability. And just as a reference, the same quarter last year was exceptionally strong. So we were comparing to a strong quarter last year. We also had very strong results in Australia, Hong Kong, and Indonesia throughout Asia Pacific. And in the Americas, as we said, we had excellent performance with growth of 42%. The US and Canada both demonstrated strong growth in sales of pediatrics, as well as higher growth of our adult products. In Latin America, we had double digit increases with strong development in Brazil, Chile, Guatemala, and Colombia. As Alex said, our operating expenses grew by 40%, and our EBIT margin came in at 27% for the quarter. So thank you, and we will open now for any questions.