Mentice AB (publ)

Good morning, everyone, and welcome to D&B Carnegie. My name is Maria Karlsson-Ossipova, and I'm an analyst here at the bank. And today's focus is the Q2 report of Mentes. And with me here in the studio, I have Frans Venker, CEO of Mentes, and Rick Van Veen, CFO of Mentes. Welcome.

Thank you. Thank you. Thank you, Maria.

And the format is as usual. You first get to present the quarter and talk us through the numbers, and then we will continue with the Q&A session. And I remind you guys to ask questions in the chat. So please, take it away.

Thank you, Maria. Thank you for having us. Today I'm here with Rick van Veen, our new CFO for the Mentus organization. Rick started two weeks ago and made a flying start within the organization. And maybe, Rick, you could say a few words?

Yeah, thank you, Frans. Joining Mentes, indeed, by the 1st of July. So, just started. Worked on getting to know the organization, getting to know the team, as well as this interim report that we are presenting here with you today. I came from Philips, where I was the head of finance for the CTMI business, and before that, I've been an audit partner at KPMG. I, so far, very much enjoy Mentes. I love the passion and passion Well, the sphere in the teams to go for our customers and the mission of Mentes. So that's what really struck me in the first days, Frans.

Fantastic. Now, thank you for being here. Maybe a little bit of a reminder. What is Mentes and what is the company Mentes? We have been a company for 27 years, founded in 1999, and it is a company that provides training and education solutions for both physicians and hospitals but also for the medtech industry in order to introduce their products, so basically their devices, in a safe and effective way. And we are the supplier of training and education solutions for, I think, almost 27 of the top 30 medtech companies, but also many of the hospitals. So, for example, we have more than 600 hospitals that we support with more than three of our 3,100 system in the installed base. We are listed on the Nasdaq First North here in Stockholm since 2019, and our revenues last year were 279 million SEK, as also order intake of 285 million Swedish krona. Overall, we are growing significantly. We are a global organization with representation both in North America, Europe, Asia, Latam, in order to support our customers. And I can state with confidence that standing here today, at the start of the second half of 2026, I'm stating here with much more confidence than a year ago. If you look back where we were as a company a year ago, We just had done an organizational change in order to reduce 25 million SEC of organizational cost out of the organization. We had announced a rights issue as also our cash position was so-so. In essence, we're in a much stronger position when it comes to cash, order intake, our customers, but also our order book that we have planned for the second half. And with that, also an organization that will deliver. Is it deliver on an order portfolio that we have, a lean organization also in order from a cost structure standpoint, but also with a cash position where at the end of Q2 we had 61 million SEC So that builds confidence and we're standing here with an organization that is not only focused on changing and re-organizing the organization, but it's an organization that is ready to take care of our customers and support them in an even better way. So we're standing here with confidence for growth going forward. And with that also what I would like to present today is first of all the highlights and the overview. Riek is going to provide an overview on the financials. I have some concluding remarks and then with Maria we do some questions and answers. Top line, and what we see, the highlights also from the second quarter, is that we received revenues, sales of 80 million SEC in the quarter. And that is a growth of 28%, that is equivalent to basically 26% year over year, if you include the foreign exchange effect. Our rolling 12 months from a sales perspective is 303 million SEC, up from 262 a year ago. Order intake of 79 million sec, growth also there of effectively 37%, but on the organic growth which was 41%. Order intake primarily came from the Americas region. What we saw the revenue growth was very much also coming from AMEA as also the APAC organization. The EBITDA margin improved significantly towards 8%, so it was 6 million, coming from minus 1% adjusted in Q2 of 2025, and that was primarily due to effectively higher sales, but also the cost control that we had in place. And there is a staggering improvement that we see quarter over quarter from an EBITDA standpoint. Cash flow, as I stated, in the quarter, especially the operating cash flow, was 8.3 million SEC. And so we had 61 million SEC also basically as cash compared to the 26 that we had a year ago. Order book totaling 128 million SEC, of which 79 million SEC is scheduled for 2026, so the second half. So a healthy position also if we look back. at the first half of 2026, but also looking forward, as I said, a good start where we can start the second half of 2026. So what you see as business highlights is that continued momentum, what we see from the medical device industry. So first of all, the net sales, but also the order intake, and coming from the MedTech side, and especially if you look at the development projects that we received, We saw significant growth in that trajectory, which bodes very well also for the future revenues to come. Received an order for $2.4 million. It were actually two orders from one medtech company specifically focused on structural heart. I said very pleased to receive that, and it shows also the confidence that these large medtech companies have in Mentes in order to invest. Our cash position, as I stated, is strong. So that was significantly improved in the first half. And that also helps with further investments that we would like to do from an R&D standpoint in order to sustain the growth that we have as an organization. This first half, we have done and attended 14 conferences. Currently, there are two ongoing, one in SNIS in Seattle as also the Society of Robotic Surgery in Hollywood, Florida. We are all attending those, and that really helps us to present our portfolio to drive engagement, but also interest in our portfolio, not only for medtech companies, but also the hospitals and the physicians. We announced a partnership with Siemens, which we're very pleased that we did. We're going to be integrated on their user interface with our Ankiro solutions, and that will drive further order intake also in the interventional neurospace, which we're very pleased that it was in place. And then finally, it is now really looking forward towards executing on the project developments and the project development pipeline that we have in order to drive the projects for our MedTech partners in order to do and deliver on solutions that really help our customer base. So with that, I want to conclude it for now and I want to hand it over to the financial overview that Rick has prepared and then we go afterwards back to me.

Thank you, Frans. Let's have a look once more on the key metrics that we follow within the company. First of all, net sales up 25% year over year, up to 80 million SEC in the second quarter. There's minus 3% of currency effect in there, so organic growth is even 28%. On the order intake, 79 million SEC for Q2. There are 37% year-on-year growth, and there was an FX impact in there of 5%, so 41% organic growth on the order intake. So both items in the top line driving significant growth. That is also translating in better EBITDA. The EBITDA at 6.3 million SEC in Q2 versus minus 8 in Q2 last year. The EBITDA has been significantly improved because of the additional sales growth that we have been able to achieve. The order book is now 128 million SEK for the net sales to come in the future quarters and years. 79 million of that is expected to convert to net sales in Q3 and Q4. And then the operational cash flow, as Frans already mentioned, up to 8 million SEC positive versus minus 7 million in Q2 last year. Also there, supported by our net sales growth, you see an uptick in our operational cash flow as well. Let me go a little bit deeper into the growth. If you look at the four quarters that we have just passed, every quarter we have been able to grow both net sales as well as the EBITDA. The net sales growth is mainly driven by the growth in the MDI business area. And if you look at the regions in the MIA and APEC in Q2, we have growth specific growth on the net sales. The net sales is also coming with a four quarters in a row step up in the EBITDA. If you look at the 12 months rolling from minus 17 million in Q2 last year to plus 28 now rolling 12 months in Q2 2026. I will come back a bit more on the EBITDA later. First, a bit deeper look into the sales growth. What you see here on the right is how the net sales for 12 months rolling is developing in both our business areas, MDI and HCS, as well as how the performance per region is for both business areas. There you see what I just also mentioned, the MDI growth being significant with 34% organic growth in Q2 alone. If you correct for the FX, you get to 30% growth on the MDI. HCS is not growing with the same speed yet. It's a focus area for us in the future. But if you look a bit longer out, first half year of 2026, we are growing 11% versus 2025. On the order intake, there you see three consecutive quarters of growth reported, with specific focus now on the Q2 results, of course, where we see 41% growth, mostly driven by the growth in Americas and also in our APEC region. Then last part is on the EBITDA. If you can go one more, Frans. Yeah, thank you. That is on our operational expenses. If you look at our operational expenses in Q2 2026, we are at the same level as a year ago, but there is a nuance to it. So the Q2 2025 was impacted by the strategic... strategic organizational realignment that was announced back then, and that as a result of the initiative taken a year ago, you actually see now in Q2 a lower base cost level, so that has reduced our cost and our headcount, as well as our other operational expenses, specifically on the rent. So there you see a reduction in cost. However, we also had to deliver on the 25% sales growth, of course, which has come with additional cost in terms of development hours that we needed to hire, as well as investments or costs related to bonuses and commissions that we had to pay for the additional sales that we are achieving. So net-net costs at the same level, but if you increase your sales with 25%, then you see a significant uptake in the EBITDA. And that's what we did in Q2. That's it, Frans, for the financial update.

Fantastic. Thank you, Riek. And a great graph also where you see the improvements quarter over quarter, what we have been achieved. So overall concluding remarks. So four consecutive quarters of growth. but also accompanied by strong order intake. And that is, of course, both very well for how we stand here today. EMEA and APAC, they really drove the net sales growth, where the Americas really drove the order intake, and that's also what we see for the second half, then for revenues. Momentum remains strong and the interest is also high as we also could see by a large order or two orders that we received from a large med check company where they stated also more than two million dollars that we received in structural heart. And we are taking strong step in order to basically remain the leader in the image guided therapy space. So we are focused on clinical workflows, procedural efficiency and making sure that we help Our customers support their interventions, but also the training and education needs. So overall, the focus remains on delivering on the projects that we have in the portfolio, and it is really that we have the compelling business propositions, not only for the MedTech segment, but also for the healthcare systems partners. So overall, the focus remains on execution and delivery on the portfolio that we have, But also, of course, also servicing new customers. And we're in a healthy position to drive the future. And basically, it's all on us in order to execute accordingly. So on us to drive the trajectory that you showed with the six bars that we had to drive that also for the future to come. So with that, I would like to leave it at this and come to questions and answers, Maria.

Thank you very much, Frans and Rick. And first of all, congratulations on the report. It's a great read in the morning. Thank you. But we do have some questions, and we'll walk through them. There's also some questions coming in here in the chat. To begin with, there's always so much focus on America, by all means. And for you, you saw that order intake grew 55% in Q2, but revenues did not grow quite as much. So the time lag there, how should we think about the timing of revenue recognition?

No, that's a very good question, Maria. It is the order intake to revenue, especially when it comes to project-related order intake, which, of course, the North America or the Americas organizations saw quite significantly. That is usually a three to four months to basically lag until the revenues come. And it simply has to do with the fact that these orders are going into the organization. We're going to scope also the project for those medtech companies. And then we're going to put them in the queue and we assign the engineers to it. And once we start executing on those projects, we also start the revenue recognition of it. Also with that, once we finalize such a project, then usually there's hardware also associated with it so that we provide a total solution for our customers. So when it is your question, what is the time lag approximately? It's usually three months to start and then basically three to four or five months until the full project is basically finalized. And then also further revenues will come also along the years because then other territories will also basically bank on the project that we have delivered for that particular customer.

And as for net sales, you presented quite a detailed view in the slides, so we don't have to go into that. But I would like to repeat the question on gross margins that we had in Q1. In Q1, we had some sort of a floor level there, and it's improving now in Q2. Would you care to just share some maybe expectations or the picture that you see going forward in the second part of the year?

Now, we can definitely explain where we are basically in Q2, and then you can make the projections yourself, what will happen for Q3 and Q4. But maybe you want to take that cross margin?

Yeah, so we expect that the current level is a sustainable level in which we can deliver our sales so that we can stay at this level. The current gross margin that you see is primarily driven by the impact of FX. So you see our sales with a significant part coming in U.S. dollar, while our cost footprint is also significantly in other costs, amongst others the Swedish krona. And because of that, you actually see a bit of pressure on the gross margin versus a year ago. So that is a driver. We have also been outsourcing part of the the work of manufacturing some parts that we ship to our customers from in-house, which we did with our own employees, into outsourced parts. So you see also a little bit of a shift in the P&L of some costs flowing into the gross profit. But there we expect that we are at a level that we currently can deliver. If the growth continues, we might need to shift more, but that is a decision to be taken at the moment that that comes.

And moving a little bit further down the line on the P&L, the EVTA improvement was quite hefty. Would you say that that improvement is sustainable for the future quarters to come?

If you look at our current cost level, that's where we can deliver the current sales with. So there is limited impact of exceptional items in there now, so that's a good indicator of future cost levels. Also there, if the growth comes significantly, of course we will need to invest in additional products. Yes.

You answered a little bit of my next question on the cost base for personnel, and there's also a question in the chat based on the personnel costs. They were asking also about some one-time items that you also mentioned now. So how should we think about personnel costs going forward, just to wrap it up since they came in a question here in the chat? Do you want to take that one?

Yeah, it was a little bit in the answer I just gave. So the personnel cost, there are some incidental items still in the quarter two, but limited, so not to an extent that we have disclosed it like a year ago. So the current cost level of personnel cost is a good indicator for the sales that we do today, and also if we stay at that sales level, yes.

So let's move on to the order book. You have around 79 million krona for the 2026 season now. Neft, how much would you say, how much should we expect of this to be weighted towards maybe Q3 or Q4?

Now we have done quite an analysis also on that order book and now it looks like it's approximately 50-50. So around 40 that will come into Q3 and the remainder into Q4. So that's the analysis and the breakdown to it. quite a bit and the order book is also project related so that's also quite positive and there is significant growth also in that order book also from a project standpoint in it which bodes well again for the future revenues to come

And just a little bit more on the order intake and orders. In Q1, we've talked here about that the order intake was coming from a very broad customer base. And now we've seen that large order of US 2.4 million coming in. What is the current situation? How much is it coming from the broad base of customers and how much is concentrated on maybe some bigger players?

No, it's a very good question. And I'm very pleased to state also that the majority of orders are still coming from a broad base of MedTech companies. And that will really help also with the stabilization of revenues going forward. So we are not concentrated to one or two customers. We really what we see is that we are servicing really a broad base of large medtech companies, but also the mid-sized and also smaller, the startups of medtech companies. And yeah, we are really established, I would say, in the space of interventional image-guided therapy. And the customers are also coming to us for their training and education solutions. primarily for two reasons. That our solutions have a high realism, so it is the reality of our simulations are very much close to how things are operating in reality. That can be towards anatomy, it could be device behavior, it could be how the haptic feedback is in catheters and wires. But also on top of that is the service of our employees. How we treat our customers, how we work with them, and how we service them going forward. And that's what we are really appreciated for. And that's what we're here for. We're here for our customers to take care of patients. And if we do that better, the revenues will come.

And that one specific large order, could you provide any more detail on the timing of that large order?

Limited to that extent. I would state, similar to what I stated earlier, it's an order that comes in. So what I stated also, usually you're asked about basically the effects on when revenues are going to play. That's similar to this year as well. Although this is a larger order, so the development timelines will be a little bit longer. more than the three to four months what I stated. But in essence, it is approximately in that direction. So we're positive with those orders that are coming, but also with all the other orders that are in our portfolio and that we're executing on.

One small area where order intake has actually declined in Q2 is the healthcare systems. So let's just dive into that for just a little bit. And we also talked about that previously a couple of times here, Frans. And basically the question is, again, what needs to happen for the healthcare system's growth to improve or come back?

It's a great question, and we have done quite an analysis also in this segment, and we're also investing in this segment in new propositions. What we saw is that in Q2 actually our revenues were flat, but the order intake was a little bit down. It's a little bit lumpy because a few deals actually moved towards Q3 and Q4. That's how I would relate it. They are not lost. They are simply that we're both still going to deliver on them. We still expect growth in this segment also for this year. And that's also if you look at overall what needs to happen is simply execution. And so we have the pipeline of the projects and it's simply making sure that we execute on it. Usually the money what we see is a little bit different how the allocation is. It comes either from grants or it comes from, what is it, philanthropic measures. So it could also be much more tender business in EMEA and APAC, and for that reason it could be a little bit more lumpy in order to execute on it.

And now I'd like to move a little bit to a bit of a broader topic. You mentioned that AI and robotics is one of your strategic areas of focus. And I mean, just yesterday, Ottawa got their FDA approval, if I'm not mistaken. I might be wrong on my news here. But let's talk a little bit about the AI and robotics roadmap for Mentes. What are your strategic priorities there? Do you see any early pipeline activity that you would like to highlight for us?

Yeah, absolutely. So first, if it comes towards robotics, Clearly, our training and education and simulation solutions fit very nicely into the robotics area, not only to train personnel to use a robot, but also in the future to steer a robot autonomously. And so we have software in it that could be very useful for that. And in that regard, it is a focus area. We are also attending now the Society of Robotic Surgery, which is currently happening in Hollywood, in Florida. So that started, I believe, yesterday or today, and it's going all the way to Saturday. So that's what we're attending. So this is an important focus area for us to be. The second piece is also what you stated about artificial intelligence, AI, not only important to how we operate within the company and how we do our R&D aspects, and so it is an integral part of how we provide our solutions for our customers, but it is also incorporated in many of our solutions that we provide. So Ankira, for example, if you would like to develop or calculate a center line, there is also already artificial intelligence support a user in order to execute on that. And that is what's going to go forward all the way also in our training and education solutions as well. To your point, robotics is a strategic area. AI is a strategic area as a means in order to also achieve the training and education solutions for our customers, but also to make procedures better and to make them more safe and effective.

And if we hold on a little bit on the conference topic, there's a question here in the chat that goes, if you could please give some further insight to the activity you're taking on conferences today versus historically. Any difference between the regions, maybe?

It's a great question. So the focus was very strong on North America from a conference standpoint where we are also looking at in order to make sure that we are also much more present in the APEC region as also in the AMEA region. You see that also in the growth that we are seeing to establish. So that is one aspect. The second piece is that we're not only focused on the clinical parts, but also on some of the technical meetings that we're attending. If it comes towards the Heart Rhythm Society, the HRX, if it comes towards the Society of Robotic Surgery, so robotics aspects. So we're also not only looking at the clinical part, but also the technical part. So in that sense for me it is being at those conferences not only important to meet with our physicians and also the healthcare systems, but also to meet with the medtech companies and to have discussions with them. So they're very important for us and that's why we recently also changed our look and feel. So we had at the Europe PCR we showed a new booth also for and how we represent our brand. And that is in order to attract and be more appealing also towards our customer base.

And one last question here from the chat. There is a chat participant congratulating on you on the Siemens Healthineers Partnership. And they understand that you cannot comment on future revenues, but could you share any perspective on the market potential? For instance, if there's any numbers on approximately how many artists Iconosystems are sold globally, and how should investors think about this partnership going forward?

No, exactly. It's a long question. So first of all, we are very pleased with this partnership with Siemens. And so the fact that they allow us to integrate on their user interface, that is truly fortunate. And we are a true partner in that to help them also to take care of their neural patients there. When it comes to the number of systems, I cannot comment to that. I know they're, as I said, the leader in the neurovascular, of the interventional neurospace, and they're basically together also with other imaging companies really drive this space in a very effective way. So we are pleased with this, basically, partnership. And this will help us in order to provide neurovascular solutions also for our partners and patients. And that will drive further demand and also towards our VIS systems, if it comes towards Ankyros, if it comes towards also the recently introduced what we call vascular twin, So the ability to create also patient cases on the fly for interventional neuro and to be able to simulate on this, yeah, that's a big focus on it, and that's the area. Neuro is an important area, and that's why we drive that also together with partners like Siemens.

Thank you very much, Frans and Rick. I think I'm done with the questions, and I'm looking forward to talk to you soon again in Q3.

No, thank you, Maria. Thanks for having us. And we'll look forward to being here the next time. Thank you.