Boule Diagnostics AB (publ)

Good morning and welcome to our Quarter 1, 2026 earnings call. My name is Michael Avenkafelt. I'm the CFO of Bull Diagnostics. And with me today, I have Torben Nielsen, our CEO. We will be recording this session and after the formal presentation, we will open up for questions on the line and in the chat. With that, I will hand it over to you, Torben.

Thank you, Michael. The first quarter of 2026 represents an important step forward for Boone. Despite continued external headwinds, we returned to organic growth, delivered our fourth consecutive quarter of positive operating cash flow, and completed several critical operational milestones that strengthened the foundation for improved profitability going forward. During the quarter, we saw improved underlying demand across key parts of our portfolio, and sales of our five-part systems almost doubled year on year. OEM sales, on the other hand, were impacted by changing customer patterns, which significantly affected quarterly comparisons. The outlook for our OEM business stays strong, and we expect sales to catch up in the coming months. During the quarter, we successfully completed a site consolidation in Sweden, an important milestone in our margin improvement and efficiency program. While the consolidation resulted in temporary costs during the quarter, it sets up a leaner and more efficient operational footprint going forward. In addition, both BSI and FDA audits of our Swedish operations were completed during the quarter with no findings. These outcomes confirms the robustness of our quality management systems, regulatory compliance, and manufacturing controls. and reinforced Bull's longstanding commitment to product quality and operational excellence. Looking at the Q1 financials for the group, group sales amounted to 102 million SEC, compared to 113 million in the prior year. Reported sales declined by 10%, primarily driven by negative currency effects of minus 13%. The return to organic growth underlines the strengthening commercial momentum in the business. Gross profit amounted to 42.2 million SEC, corresponding to a gross margin of 41.6%, compared with 47.4% last year. The decline reflects significant currency headwinds, product nicks, lower OEM volumes, and one-off costs. Adjusted for 3 million second costs related to the site consolidation and relocation, gross profit would have amounted to 45.2 million and a gross margin of 44.5%. Adjusted EBIT for the quarter was negative 1.4 million compared with 15.1 million in the prior year. The result was significantly impacted by the 3 million one-off moving costs. Adjusted for these costs, EBIT would have amounted to approximately 1.6 million, corresponding to an adjusted operating margin of 1.6%. While the reported EBIT outcome is not satisfactory, it reflects a transitional quarter rather than a deterioration in the underlying business. Operating cash flow amounted to 17.7 million compared with negative 9.8 million in the prior year. marking the fourth consecutive quarter of positive operating cash flow. The positive development illustrates a clear structural turnaround and reflects stronger working capital management and the benefits of structural cost actions implemented in the past years. Available liquidity at the end of the quarter amounted to $31.5 million. Taking a closer look at our two business segments, starting with our diagnostics business. Diagnostics delivered 7.6% organic growth in Q1, showing continued underlying business momentum despite external headwinds. Reported sales declined by 3.7% due to unfavorable currency effects. Reported revenue was 81.1 million SEC in Q1 2026, compared with 84.1 million in 25. The decline was driven by a negative 11.2% FX impact related to U.S. dollar exposure. Underlying demand remained solid, supported by growth in our five-part instrument sales, continued expansion of the licensed business in India, and clinical chemistry distribution in the U.S. Adjusted operating margin improved to minus 4.8% up from minus 6.5% last year. Gross margin was negatively affected by one-time items related to the site consolidation in Sweden. Key margin pressures here included higher rent expenses and under-absorption of overheads due to a temporary close-down in production. Operating expense decreased materially, reflecting restructuring actions implemented over the past 12 months, and currency effects also weighed negatively on the operating margin. Overall, the organic growth confirms the resilience and competitiveness of the diagnostics business. Cost actions are delivering results with clear sequential margin improvement, short-term margin pressures temporary and non-structural. Turning to our CDS and OEM business, Q1 revenue declined to 24.3 million SECs from 33.7 million last year, reflecting a 28% reported decline driven by order timing and FX headwinds. 7 million SEC of orders shifted from Q1 2026 into Q4 2025, changing the quarterly pattern, but not the full year outlook. Organic revenue declined by minus 11%, with a significant 16.8% negative currency impact from U.S. dollars. Despite the weaker quarter, the full-year outlook stays strong, and we expect to close the gap over the coming months. Adjusted operating margin was 20%, down from 26% last year. The gross margin declined to 47.7% due to product mix, higher material costs, and underabsorption of overheads from lower production volumes. Operating expense was reduced by 20% year-on-year, showing strong cost discipline and flexibility. Overall, Q1 reflects timing effects rather than demand weakness, with profitability staying solid and momentum expected to improve through the year. With that, I'll hand it over to you, Michael, to take us through the financial summary.

Thank you, Torben. Financial summary. Starting with the financial summary for the quarter. As we've discussed, organic sales saw a growth of 3% during the quarter, mainly due to growth within the five-part segment, license fees, and clinical chemistry. But we faced a very unfavorable environment in terms of currency. As we often point out, most of our sales are in the U.S. dollars, while most of our costs are in Swedish krones. As compared to Q1 last year, we therefore saw a top-line currency effect of negative 13%. Of course, the currency also affects our margins. Costs of goods sold remain basically the same, resulting in a decrease of gross margin. As Torben explained before, this was to a large extent caused by costs that are non-recurring. During Q1 2026, we were paying double rents for our facilities in Sweden and also had direct costs related to moving. Furthermore, the move caused a stop in production of several weeks, which led to an under-absorption of overhead costs. The total of these non-recurring costs amounts to 3 million SEK. When we compare the gross margin to the first quarter last year, we also have large differences in terms of inventory revaluation. This was positive last year and negative this year. Operating expenses decreased by 24% from last year if we include restructuring costs. If we exclude the write-off of Russia, the decrease in operating spend was 29%. As the savings implemented in Q1 of 2026, foremost aside to consolidation in Sweden, now take effect, we are looking forward to an even lower cost base. Operating profit was lower than last year, mainly as a result of lower sales and lower gross margin. Operational cash flow was positive in the quarter, mainly due to improvements in working capital. And if we look at the operating cash flow, If you see the trend, it's very, very positive. The operating cash flow is very much the focus for us, and we can note that the first quarter marks the fourth quarter in a row with positive operating cash flow. Inventory increased somewhat during the quarter, but remains at a much lower level than Q1 2025. Receivables were significantly improved on the other hand. We're, of course, very happy for the positive trend in terms of operating cash flow, but we remain vigilant. and are actively working on further improvements. When we look at liquidity, we ended the quarter with a cash position of $19 million and unused credit facilities of $13 million. Total liquidity decreased slightly from last quarter as we continue to amortize on our debt. This is also something that we keep in our focus. With that, I'm leaving back to you, Torza.

Thank you, Michael. Our strategic priorities for 2026 are designed to transform Boole into a higher growth and higher margin company, while strengthening the scalability and resilience of our operations. Margin expansion stays a top priority. Key initiatives for 2026 include automation of the reagent manufacturing line in Sweden to improve efficiency, quality, and cost competitiveness. In parallel, we are digitizing RAQA processes through the implementation of an EQMS, an electronic quality management system, as well as streamlining our global operations teams. Together, these actions are expected to deliver both immediate cost benefits and long-term operational robustness. Growth is driven through focused organic investments. aimed at delivering sustainable and profitable expansion. We're expanding our sales presence in Africa. We're ramping up digital marketing and lead generation globally. And taking actions to structurally improve the profitability of the global service business. These initiatives strengthen the commercial execution while keeping a clear focus on profitability and cash generation. Finally, portfolio development is the third pillar of our strategy. We're launching a new vet hematology instrument globally. We're accelerating the development of generic blood controls, and we are commercializing OEM projects. These initiatives reinforce Bull's competitive position, broaden our addressable market, and supports long-term value creation. With that, this concludes our formal presentation, and we're now ready to take your questions. It does not look like we have any questions. So with that, thank you for your attention and have a continued nice day.