Boule Diagnostics AB

Good morning everybody and welcome to the fourth quarter's earnings poll for Bull Diagnostics. I'm Holger Lembree, CFO for Bull Diagnostics. With me I have our CEO Torben Ilsen and after our presentations we will open up for questions. Please also feel free to type questions in the chat field along the presentation. With that I'm handing over to our CEO Torben.

Thank you Holger and good morning to everybody on the call. Let's begin by taking a look at the Q4 highlights. Overall, it was a stable quarter in which we delivered slightly below last year. Instrument unit sales closed slightly above last year. However, overall sales was negatively impacted by lower average selling price on our instruments. Consumable sales was, as expected, negatively impacted by the transition to a licensed manufacturing model in India. This impact will further increase as we ramp up production in India for both consumables and now also instruments in 2025. OEM compensated partly for the lower sales and once again delivered a strong quarter. Our primary focus in 2024 has been on expanding our operating margins through structural cost reductions and fostering a culture of operational excellence. In Q4, we executed our third and most comprehensive restructuring round to date. This involved reorganizing our R&D team, streamlining operations, and reducing overhead costs, resulting in an annualized savings in spend of approximately 18 million SEC. In the process, we established a new supply chain function, integrating purchasing, planning, and order management to optimize our processes and enhance our customer service. In R&D, we restructured the team and put in place new leadership tasked with challenging the project plan and scope. And finally, we have transferred all product maintenance projects to a newly formed product engineering team in operations. We delivered significant improvements in both operating profit and margin, and we begin to see the impact of all the initiatives we've taken to reduce cost and increase productivity. As a consequence of all these changes, we incurred higher restructuring costs, which adversely impacted our cash flow. From a portfolio perspective, Q4 has also been very eventful. Our license instrument manufacturing site in India went live in Q4, as scheduled, and we booked our first instrument license revenue in the quarter. And finally, we're very pleased to announce that Buhl has entered a multi-year exclusive distribution agreement with Vital Scientific for their clinical chemistry portfolio in the US. Vital Scientific is a leader in benchtop clinical chemistry solutions, and they've been in the US market for more than 20 years. Like Buhl, Vital Scientific develops and manufactures high quality instrumentation, for the decentralized segment. This agreement represents an important step towards building a more diversified and synergistic portfolio that meets our customers' needs. There is a strong synergistic fit with Bool portfolio of products. Our companies share similar customer target segments and a similar distribution model. Clinical chemistry is complementary to hematology, which will add value to our customers and also give us bundle opportunities. And we can leverage our current sales and service infrastructure in the US, giving us some operational efficiency gains. We're excited about this future partnership and we anticipate the commercialization of this agreement to commence in the first half of the year and be fully implemented in the second half of 2025. When fully implemented, this will add approximately 20 million SEC to our US revenue with a good margin profile. In summary, we reported Q4 sales of 143.2 million SEC down 3.3%, where 1.5% was related to currency, leading to a negative 1.8% organic decline, which, if we adjust for the India license model impact, is equivalent to a 1.2% organic growth. Adjusted gross profit was flat at 65.7 million. Adjusted gross margin improved to 45.9% from 44.5% as a consequence of favorable mix and efficiency gains. Adjusted EBIT significantly improved by 85.7% to 19.5 million as a result of the improved gross profit and lower operating expenses. and adjusted operating margin reached 13.6% up from 7.1. Cashflow from operating activities was 15.1 million and available liquidity at the end of the quarter was 58 million SEC. Looking at our full year performance, we reported sales of 559 million down 0.6% organically, which again, if we adjust for the India license model impact is equivalent to a 4% organic growth. Adjusted gross profit increased by 2.2% to 250 million. Adjusted EBIT significantly improved by 63% to 64 million, and adjusted operating margin reached 11.4%, up 4.5 points. Cash flow from operating activities closed at 47 million SEC. Taking a look at the overall sales by quarter, Q4 was down 1.8% organically. However, we closed 2024 more or less flat, declining 0.6% organically, which, as I stated earlier, equates to approximately 0.4% organic growth if we adjust for the India license model impact. Looking at sales growth by region in Q4, it was a bit of a mixed bag from a geographical perspective. We had good performance in Latin America, Eastern Europe and India. In Southeast Asia, we continue to struggle due to competitive pressure from Chinese manufacturers and also local policies favoring local manufactured products. Africa, North America, and Western Europe were challenged in the quarter. And specifically in Africa, we've been challenged with delayed payments blocking new orders. From a product mix perspective, OEM and consumables slash license revenue continue to outgrow our instrument revenue. Zooming in at our hematology business specifically, we had a soft quarter. Sales declined by 11.9% for the quarter and full year closed 6.5% below last year. Adjusted for license revenue, Q4 closed at approximately negative 3.5%. Main detractors in the quarter was a geographical mix with a proportionally higher sales in lower price markets. Instrument unit sales in Q4 totaled 1,144, which was 1% above last year, despite the fact that we activated our instrument license model in India. Reagents and controls business was down 13% for Q4 and flat for the full year. In Q4, we started switching our instrument sales to India to a license model, which will have negative impact on our top line of estimated 30 million sec annually, but with a positive margin impact.

On the OEM side, we see continued good performance.