CellaVision AB (publ)

Thank you very much for the intro, and thank you very much for everyone out there who has taken the time and interest to dial in to hear our quarter report, the first here in 2024. I have our CFO, Mattis Bix, with me, and we'll be happy to present and also to answer any questions you may have subsequently. But let's dive right into it. So the first quarter this year, we ended our revenues at 170 million SEC, which represents an organic growth of 22%, so essentially no currency effect. EBITDA margin-wise, we landed the result at 29%, so it's a little bit lower than our corporate target, and I'll get back to the main driver, which evolves around our gross market. If we take the highlight of our quarter, we believe this represents a solid start to the year. We have, in fact, growth from all regions, and we have had both number-wise, if you like, revenue-wise, but also the conversations we've had at interfacing with end users and so forth. We have a strong belief that our traction for all our solutions is really compelling, and that actually goes beyond just one region. That is also represented across the different markets. Financially, Celevision is in a strong position, and I will sort of elaborate on our cash flow, but cash flow, balance sheet-wise, we're in a very solid position. Furthermore, I also want to emphasize that we are working hard on progressing our strategic direction, and we are We are really progressing there. Finally, now one of the leaders for our strategic pillar around our globalization of our reagent business is going according to plan, and we now have our new factory up and running in Bordeaux. We had a little bit of an adjustment to our plan for the bone marrow under the specialty analysis strategic pillar. So the specialty analysis is where we're looking at new diseases to diagnose with sophisticated AI and tailor-made reagents. For the bone marrow projects, we do have an adjustment around our assumption to the registration. So basically, it was assumed to be a class A product initially, and we don't believe that's the path to take, which has introduced a longer time for registration as we need to engage and document in a way that has to be, we have to engage with our notified body to a larger extent and that adds delays. So we believe that our product will be launched next year in 2025. Furthermore, a key message which was actually happening in Q1, but we actually took the liberty to report that just after signing at the last annual report in the beginning of February. But we did in this quarter sign a strategic alliance agreement with Sysmex Corporation in this quarter. So we have formalized our mutual commitments until 2038 around our partnerships. And I can talk a little bit about that as we proceed, but we have really been trying to unfold and work on our objectives throughout this, our joint objectives throughout this quarter. With that, I suggest we take the next slide and try and unfold the P&L. So as said, Pretty strong growth organically. Of course, also fair to say up against a weak compare in Q1 last year. I think the weak spot in our results this quarter is actually not on the revenue, it's on the gross margin. We had a 66% gross margin. And that is really, there's a few drivers for that. It's the product mix. So the combination of the offerings, the different components, was not in our favor from a gross margin perspective. We were low on software, which hits us also against actually, even though the revenue last year in the compare was low, then the software component was relatively high. So we're a little bit hit on that. Material cost prices has gone up as well. And we have not implemented, only to a very little degree, our price increases. That's another thing that this represents on the cost side, the full year raise of supplies and materials. However, we have had no adjustments on the pricing. So that is also why the gross margin is a little bit lower than usual. On the operating expenses, I have to say we're in full control. We did some restructuring at the end of last year, which is coming into effect. So we've managed to keep our sales and marketing costs totally constant, even though there are cost increases also for some of these services and et cetera, but that has remained in total control. And we're also, we are only increasing our admin and our R&D with a little bit of consultancy and really minute. So it's, is pretty much kept constant according to our plan. Which means that our EBITDA of 49 million is obviously much better due to the higher revenue. However, the EBITDA margin of 29% really comes below our target of 30% or more, and that is due to the gross margin, as I just alluded to. We are continuing our path of investing in R&D to support our power of focus strategy, which is also pretty much in line with our plan here. And we're also capitalizing our R&D costs, so we capitalized about two million more than last year, so we ended around 15 million. Looking at the cash flow, We are proud to say it's a pretty strong cash flow. From operating activities, we landed at $50 million before we do the working capital adjustment. And when we do the working capital adjustment, we added another $21 million. So we landed our operating cash flow at $71. On the working capital, we've been working very actively Continuing the journey of reducing our inventory, that has given us some contributions sort of in line with previous quarters, maybe 20% of the working capital delta there, and then 80% actually comes from the accounts receivable, where we have gotten the payment from a strong Q4 as well. So cash flow-wise, it was solid. Yeah, on the investment side, I talked about the capitalized development, but also I think it's fair to say that we completed our manufacturing expansion, as I also mentioned in the beginning, and that actually brings $7-8 million less of investments into the equation, which also translates into a strong total cash flow of $44 million versus a negative result in our comparison. So balance sheet wise, this actually results in a cash and cash equivalent of 167 million sec today, which is in a compare of 93 a year ago. And we have driven down our long term debt, so it's about 25 million as of now. So we are in a very strong position from a balance sheet perspective, cash flow perspective. Let's go to the next slide. So let's take a look at the regional highlights. So across the board, across the three regions, as you see here, very similar growth from 21% to 23%, which translates into 22% overall of top line growth and organic growth. Essentially, I'm proud to see that there is really traction in Americas for, in fact, our instruments are growing large and small. We had a particular very good quarter on the small ones, so I would say high double-digit growth, very high double-digit growth for the DC1s. So again, we are building our strategy of building ecosystems in the hematology lab environment. And that is also about capturing the blood work in the smaller labs. And we are pursuing with that. So we are selling DC-1s for the small lab segment. However, for some of these IHMs in the US, the situation is that we are selling into that may already be running in the large labs, which means that the need for software is a little bit lower. So what we've seen is that's at least a main hypothesis that we are seeing a little bit lower software as a result of that. So our software sales this quarter, when we talk about product mix, has been weaker, and we are up against a relatively hard compare proportionally from last year on the software side. So this is one of the drivers for the lower gross margin. Other than that, we're ramping up sales in Latin America also on the Diffline. We see appetite for the Diffline, the DC-1, including our pre-analytical workflow components. So that's very interesting for us to drive growth in that region. And also we've gotten good feedback from the feature that we have launched in the U.S. in terms of feathered edge, which is able to detect platelet clumps in the blood smear. So that's another assisting digital enabling point for the clinical community that has been well received. In EMEA, we ended up with instrument sales of 27% in total. Sales increased to 79 million for the region. But 27% growth on the instrument side. And I'm also super pleased to see that that was entailed both from our large instruments, but also we had significantly growth in the small segments. So it is promising. Specifically, if we zoom in on the UK, where we've traditionally had a little bit of challenge getting adoption there, we're really seeing some interesting moves there. and also in the Middle East where, of course, Saudi is probably the largest country in that, or largest market in that region. I'll talk a little bit more about regions later. For APAC, yeah, here I was super pleased to see that our revenue is actually continuing in China, but actually we're also seeing growth in Japan. We have had a little bit of an inventory situation in Japan, but we are out of the woods, so we're starting to see orders coming from Japan as well. And then, given the alliance with Sysmex, we're also seeing some very good conversations on time and getting closer to how we can penetrate and adopt digital cell morphology in that region, which is a little bit more immature as opposed to EMEA and Americas. So all in all, also positive signs from India. If we go to the sales per product group and slide the sales numbers per family, product family, the first one is instruments. So here we had, on the instrument side, in total it was 91 million versus 66 in the quarter. So it is a significant growth, but we also had a little bit of inventory adjustment in the comparative quarter. That's fair to say. I did mention the significant DC-1 adoption in America very much, and also so for Europe. And again, we are pleased to see that this line, I'm aware we've been talking about the launch of this line sort of quarters back. But bear in mind that for us, that's our launch, that's when the products are ready and then our partners actually bring it out and test it in the labs, get the feedback from the clinics. So there's a time delay from we sort of launch it as a celebration and then until our partners really bring it out and launch it and push the marketing campaign. But that is starting to happen now in the U.S. as well and with traction and opportunities in Latin America. So exciting times for us. On the reagent side, just continuing a steady recurring revenue growth there with 20% out of EMEA. And so we increased 36 million. So that really sort of really makes us comfortable in terms of the significant investment we undertook throughout 2023, where we built a new factory and we are ready to entertain this double-digit continuous growth figures we see from our hematology fraction of the region business. Software, again, yes, up against a tough compare, but no doubt it was lower than expected. So we're sort of looking into that. But it was weak, and that is one of the drivers is the networks. But let's see what variability that was present for the quarter versus sort of the general drive of software. um yeah that is probably good so if we go to the key takeaways and i just give you the the brief version here again a strong start to the year um and as you saw really consistent growth across all regions um we acknowledge a weak gross margin um we are in full control OPEX-wise, and we've done some adjustments to really set us up for success with this new innovation and commercial setup with Sysmex, but we're in full control. Coming back to the gross margin product mix, price increases that are not really implemented to a great extent at all, did impact us, and then Everything, as I said, we translate our P&L and also our working capital management into a very strong cash flow for the company. So we've been working with enhanced collaboration with our key distribution partners, and I would pair that with our strategic alliance agreement with Sysmex. We've really started to get into the weeds of understanding the individual markets, making new connections with our colleagues at Sysmex, and starting to interpret what it really takes in terms of training and focus on what is needed at the end-user labs out there to pursue the mission of adopting digital cell morphology as part of the bloodline. but also to innovate new sophisticated solutions to protect our leadership within hematology. And then again, I want to emphasize that one of the levers for the first specialty application is the bone marrow. We are confident with the adjustments we've made in the product. We are running the clinical trials. However, we will spend months on the alignment and the dialogue with our notified buddies. So we will have the results or we expect the CE mark in 2025. Very limited financial impact from that because all the programs has been budgeted for and it's a slow ramp up, but it will be a module that will be used on the DC-1. So we have time also to build a solid loan strategy But for now, we are focusing on completing our clinical studies on the module. So with that, I think we should go to question and answers if there are anything around. So please open the floor for any questions you may have.

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Great.