Hello, and welcome to the Agfa Group Q1 2025 Results. My name is Laura, and I will be your coordinator for today’s event. Please note, this call is being recorded. And for the duration of the call, your lines will be on listen-only mode. However, you will have the opportunity to ask questions at the end of the call. [Operator Instructions] I will now hand you over to your host, Pascal Juéry, CEO, to begin today’s conference. Thank you.

Thank you very much, Laura. Good morning to everyone. I’m sitting in Mortsel with Fiona Lam, our CFO; with Viviane Dictus, our Investment Relations Manager; and the rest of the Executive Committee ready to answer your questions. So we’re going to walk you through the Q1 results of the company. And without further ado, we’ll start. So Q1, stable EBITDA compared to last year, but with a very different sales and activity mix. And in fact, this is a story of, on the one side, the continuous decline of the film, which, as you know, has started to accelerate in 2024, and we are seeing this trend continuing, of course, in 2025. On the other hand, the good performance of the growth engines, and I would say, a good cost control overall. I’d like also to remind everyone that we are a seasonal business that Q1 is normally the weakest quarter of the year, similar as last year. We typically generate 75% of our EBITDA in the second half of the year. And therefore, the cash profile of the group is according to the seasonality, meaning a buildup of working capital in the first part of the year and a reduction during the second part of the year and most notably the fourth quarter, which is 45% of the EBITDA and the strongest quarter of the year. So this seasonality and pattern will be exactly the same in 2025. So overall, the key elements of the results. First, an extremely good performance of HealthCare IT, and probably better than our own expectations. Strong Q1 on two elements. First, the leading indicator. We left 2024 with a less 12 months increase of order intake at 32%. At the end of Q1, we are at 63% increase. And that, I believe, is demonstrating the strong momentum we have in this market. What I’m also happy with, it’s with new customers, and we continue to conclude cloud contracts, meaning we are moving the business to more recurring revenue business model. Top line increased by 12% in a typically weaker quarter for HealthCare IT and adjusted EBITDA, therefore, strong leverage of sales and the EBITDA, of course, increased to €5 million, last year it was only a bit over €1 million. So a clear also translation of this momentum into our P&L delivery. DPC, I would say DPC continue to progress. The comment that I would like to make is we have seen an impact of the weaker investment climate in our equipment sales in DPS and also in Hydrogen Solutions somehow, we had a bit of an impact here. But we have seen already a pickup at the end of Q1 on the strength of a number of product innovations and introductions. Nothing is broken in DPS at all. I think it was just a bit the economic uncertainty that created a bit of a delay in investment decisions, but all our equipment and launches are very well received in the market. And our ink sales, even in this context continued to grow significantly double digits, although it’s a bit of a different mix. So progress in DPS has been probably a bit weaker than what we thought, but we expect this to continue this progress during the year. Radiology, clearly, the impact of the decline of the medical field is really the main story and especially in China, where we’ve seen a rapid decline, mid-teens, about 15% to 16% decrease in our volumes, mostly related to China, which is the first market. And as you know, we have put in place a comprehensive savings plan that we are currently executing. In the meantime, we have also announced in April the shutdown of our finishing film factory in the U.S. It’s part also of this plan, which is not only a plan for Belgium, but a global footprint plan. So overall, even if the performance is comparable to last year, it is done with a very different mix. And for me the best news is really the good performance of HealthCare IT. If we turn to numbers, you see a minus 3% on top line, and this is exactly the trend I was describing and the one that we’ve been seeing now for a few quarters and even a few years, a decline of the maturity of the mature businesses and increase of our growth engines. And the trend is exactly the same for the EBITDA. So although the two numbers for EBITDA are very comparable, it’s a very different way to produce the EBITDA. We have translated it in order to be easier for you to understand not in the division view, but in a business maturity view. And you can see the trend as it is. So, continuous growth of the growth engine and decline of the mature businesses, whether it is in sales or EBITDA. I am going to now turn to Fiona, who will comment the EBITDA bridge and the cash elements. Fiona?

Thank you, Pascal. So, a bit of insight on the adjusted EBITDA. Like Pascal has said, our strategic transformation is working, where you also see back in the results as well on bottom line you see we have been able to – the growth engine has been able to compensate the losses in mature decline business. So even though we have done €8 million sales, and we have been able to deliver a stable adjusted EBITDA, that is helped by €1 million positive exchange rate. And then you see the gross profit of HealthCare IT and DPC, compensated largely or fully, offsetting the gross profit of radiology. And then you see also in R&D, we had a conscious decision to invest in HealthCare IT. Therefore, we have HealthCare IT investments a bit more, and we have some R&D tax credits that we need to compensate in the last quarter. And there, you also see in one of the transformation program on SG&A that we have been having very tight cost controls and the also delivers to results. So therefore, we have been able to keep our EBITDA quite stable with €8 million sales. Next slide please. In terms of cash flow, we still are, let’s say, largely consuming €27 million in Q1. This has to do like the traditional of steep increase of working capital normally in Q1 and Q2, and then stabilize slightly, start to decrease in Q3 and quite large steep decrease in Q4. This seasonality is not unexpected, but that’s the seasonality which we expect. So you see at this moment, we are consuming €27 million free cash flow. We have some higher CapEx spending, which we expected, higher than expected, but we consciously invest still on our future growth business in our R&D, and we capture actually positive cash flow in building our lease receivables – long-term lease receivables. So all in all, that leads to this final outcome of €27 million negative free cash flow. All the rest are actually in line with what we have expected. So, nothing surprised us as such in this free cash flow development. Also, a bit of insight on the evolution of the total debt since – of course, 2023 until now, what you see the net financial debt, excluding IFRS, so that’s really our net financial debt position. That has been, let’s say, evolved from a positive cash position to a net debt position of €72 million in Q1. On the other hand, you also see positively the net pension debt has reducing quite gradually year-over-year. So, from €511 million to now below €400 million. So it’s a significant reduction in the last two years on net pension debt as well. Our current credit facility is €230 million that will be maturing in May of 2026. Like already you have seen in our annual report, we are, of course, working on the refinancing of the facility with good cooperation with the financial institutions. In terms of the governance, just to remind, the governance test is only valid for half year and year-end. Of course, we calculate the quarterly ratios just to keep track of it. So Q1, the leverage ratio is 1.4 versus a governance of maximum 3, and interest cover ratio is 11% versus a minimum of 5 – as you would know that we expect Q2, Q3 normally to slightly increase our working capital, and then will start to reduce. Therefore, it’s quite expected that the leverage ratio would raise in Q2 and Q3 and then again to deeply drop in end of Q4 again, like last year. So that would be the trend that we also expect on the leverage.

Thank you, Fiona. Clearly linked to the seasonality of our business. This is the reason why we have this cycle during the year. Now, if I turn to the P&L, well, I think I already commented on it, negative top line, but with a very contrasted performance between growth engines and mature businesses. You see that gross profit is in spite of the steep decline of the film is almost – is quite almost stable, I would say, and even slightly better in terms of absolute margin. Operational expenses, as you see, we continue to make progress in not only controlling inflation, but actually decreasing actively the fixed cost base of the group, which leads to comparable EBITDA and actually improved EBIT performance versus last year. In the rest of the P&L, of course, we continue to, I would say, ensure the transformation of the group through all our actions. And therefore, after EBIT, we still have restructuring expenses and the cost of transformation, which translates for a loss in the period. Now, if I turn to business, and I will start with HealthCare IT. Clearly, it’s a record after record we are breaking in terms of order intake in absolute numbers, in increase of the order intake. I mean that’s really showing the momentum we have in the market. I think we have considerably improved our competitive positioning in this business. And we sit today among, I would say, the top of the league of the medical IT aging provider. So for Q1, cloud deals were 15% of total deals, net new customers showing the fact that we are gaining share in the market, 30% of the order intake. And as you see, a mix of project versus recurring business order that is clearly increasing in the recurring side, which provides more visibility, and which is a testimony of the business transformation we have undertaken. Again, all this stems from, I would say, we have today, we are sitting at the top of the league table in terms of customer satisfaction, which creates a very positive momentum for us commercially. And I can say that Q1 has been probably the busiest commercial Q1 that we ever had. We have a very strong pipeline. So my comments really extend for the rest of the year. We see today HealthCare IT doing probably better than what we thought a few months ago on the strength of this activity. So overall, I would say everything all the indicators are really green in HealthCare IT. 12% in sales, again, Q1 is normally the weakest quarter of the year. And this translates into EBITDA. You can see that the gross profit margin also has increased in the year from 44% to 48%, reflecting also the quality of the business we are lending with our customers. Order intake, plus 63%, it can be a bit lumpy quarter-on-quarter. So I don’t expect that we keep this level during the full year, but it will still be a spectacular increase again in 2025, of course. But I’m very pleased with the performance here. So if you look at the P&L, so you see sales translates in profit. Operational expenses are quite, I would say, under control, and therefore, we have a strong EBITDA leverage. If I now turn to DPC, so we have globally sales in line with Q1 2024 in DPS. Well, in fact, as I said, we had a bit of delayed investment decisions, thanks to the investment climate that has become more uncertain. It’s fair to say that the volatility created by the tariff situation didn’t help, and it’s still, by the way, still volatile today. And the overall anticipation of the economy has translated into more caution at our customers regarding investments. However, I can confirm that we are – since a couple of years, we have been almost totally renewing our product portfolio through several innovative launches. And I can tell you that the reception in the market is extremely good. We were last week at the digital printing fair in Europe, and we actually recorded – record sales or order intake, should I say, during this fair, more than double what we’ve seen last year at the same event. So, things are working. The good thing as well is even if equipment has been subdued in Q1, ink is still going strong, a little bit less in capital, and a little bit more in our OEM ink businesses. So overall, ink remains a very strong engine. So, it’s not because we had a weak Q1 in equipment sales that it changes the fundamentals of the business. Absolutely not. Absolutely not. And what’s important for us is, again, the second part of the year and especially Q4 sales in business. The launches, I mean, five new engine launches in Sign & Display, you can see our solution on the left-hand side of the slide, it’s more and more very sophisticated with automated 24/7 industrial printing solutions and very well received in the market. And in packaging, as you know, we announced the collaboration with BHS, and I’m happy to say that we have installed already the first print engine in the BHS line during Q1 in the U.S., and we believe that the polychrome one will be done during the second part of the year. So, actually, the collaboration is translating already today into concrete sales. And the beta test phase of the SpeedSet, which has been working at the beta customer for a little bit over six months right now. We are coming to a point where we are very confident that this will be finalized during Q2. That’s our belief. We are very close to it. And this will be feeding our future growth. Remember, I remind you that it’s a business growing 12% per year for a couple of years. And if anything, we are expecting an accelerated growth from these initiatives. And the new thing is we had a position in water-based decor that was very subdued following the, I would say, the energy crisis and inflation back in 2022, and we’ve seen a revival of this market, which is good news for us because we have solutions in place and leadership in this segment. So, not an excellent quarter in equipment sales, but the fundamentals of the business remain strong, and we remain confident going forward in this activity. Green Hydrogen, well, as you know, it’s been a couple of years where we have a bit of a contracted market picture. We – there is a delay clearly in the implementation of the pipeline of projects. We are also seeing some electrolyzer manufacturers going out of business. So, the industry structure is changing, of course, and consolidating, I would say. The Western markets are still being a bit hindered by regulatory issues, especially in Europe and North America is not also clarified. But we are seeing a very good momentum in Middle East, Africa, and Asia. We told you, I think, a few months ago that we had our first Indian customer, that’s a perfect illustration. So, we have a global presence in ZIRFON, and we deliver throughout the world actually. I think ZIRFON is the product of choice in the alkaline technology. And actually, today, we are very busy expanding our reach and especially marketing our products in Asia with, I believe, success. So again, we are very happy where we are going in term, but it’s fair to say that the growth is going to be quite subdued in 2025. In 2025, we will end the construction of the new plant, which will give us ample capacity to answer the market demand, and actually a bit too much with the current market demand. However, the new plant brings significant advantages in terms of productivity of the membrane. So, we will benefit from this. So, if I turn into numbers, you see that actually the stability in Q1 for DPS and green hydrogen. The growth of sales in DPC comes, and that’s a bit of an exception from Film and Chemicals, which had a good quarter. And the adjusted EBITDA is increasing, but that also reflects the fact that we had a little bit of a flatter performance for Q1 in our growth engines. If you turn to numbers, you see that gross profit is flat over here, that we continue to manage our operational expenses, I think, very responsibly, and that we continue to have a better performance than last year in DPC. Now let’s turn to Radiology Solutions. And clearly, this is the area where we’ve been clearly impacted by the decline of the medical film market in China. As you know, we have put a plan in place. We have made an agreement with social partners at the end of January. So, we are starting to implement as I speak, we are implementing actually putting in place all the social measures in order to deliver the savings, announcing the shutdown of finishing plant in the U.S. So, gradually, this will build up, but there is a bit of a lag between the market impact and the ability to generate savings. Regarding DR, the message I would like to pass on last year, we had overall an 8% growth in DR. We are expecting also to continue the growth this year. And the way we differentiate in DR is really through AI and software. So, either to support the workflow, the convenience, if you want for radiologists to add value on pathology detection and also to continue providing what we believe is the best-in-class image processing software of the industry, which is the reason why we are able to outgrow the market in DR. But overall Radiology Solution is very severely impacted by the situation, of course, of film you see it in the numbers. We are – sales are decreasing by 16% and EBITDA is strongly negative in Q1. Q1 is also the weakest quarter typically in film and the situation in China regarding the end market is further compounded by the fact that, of course, you have supply chain adjustments, meaning reduction of inventory at dealers, which further amplified this move. But again, the answer is what we are currently doing in terms of cost of €50 million program that we are putting in place. So if you look at the numbers, in fact, sales minus 15%, gross profit impacted, but you see also that operational expenses are being reduced also not as fast, of course, as the loss of the volume, but also significantly in this context, and we have, of course, a lot more to deliver on this. So overall, what does it mean for the outlook? I would say, again, I repeat the strategy works and the growth engines are delivering. Again, the first quarter was not ideal for equipment and for ZIRFON, but that’s just one quarter. It doesn’t change the whole trend. However, if I look at the 2025 outlook compared to what we said a few months ago, I think we have a much better outlook for HealthCare IT and the strength of the first quarter, and we are very confident given the quality of our leading indicators. And so we clearly expect to improve our performance quite well versus last year. So it’s probably an improvement of the guidance here. DPS, DPC, we will continue to grow in top-line and profitability through the growth engines. And again, the first quarter does not put into question the overall trend. But if anything, of course, it has an impact. We’re going to be progressing probably a bit less than what we thought because we believe that if there is an investment in – well, a delay in investment, we are not probably going to be able to catch it back, so to speak. But again, I’m not concerned at all regarding the DPS outlook. And there we’ll continue to make progress in making the product – so we will continue to have efficiency gains, but we are not expecting growth in this market in terms of volumes for 2025. I think 2026 and 2027, we still believe that things are coming and projects are doing prepared. Radiology, we are expecting what we’ve seen in Q1 to continue. The trend is there. It’s not going to improve. There is no turning back, and we will mitigate it through the savings program. But if anything, I would say, the decline has been a little bit more pronounced than what we thought originally. Just a point on the Aurelius cash payment. Unfortunately, well, we have made progress, as you’ve seen because we have received from Aurelius half of the undisputed amount, which represents 20% of the total amount that is due and this amount was already paid to us. Actually, however, we have not yet any conclusion from the independent expert on Aurelius. And of course, you’ll be the first ones to know when conclusion is reached on this area. Just we added a slide on tariff – you have all the details here. Well, that’s slide with, I would say, a short validity date because things are changing a bit over time. But the key message I would like to convey to you is the direct impact of tariffs is neutral to positive for us, meaning actually, when we say neutral to positive, we mean that we are not impacted more than our competition. And in some cases, we are rather less impacted given our geographic footprint, especially for DPS, our plant in Canada and our plant in the UK as well. So it’s okay. However, the tariff impact for us is not so much a direct impact, but the impact of making all the goods more expensive, which in turn has an impact on the market demand, potential impact on the market demand. So we remain a bit cautious on this area. And of course, as we know, this is a kind of the situation of today might change tomorrow. Just a word on the transformation that I would like to come back. As you know, we have chosen growth engines in which we have invested. And I just would like to come back on what we achieved actually the front two [ph] a bit. We have been working in DPS to totally upgrade our portfolio of equipment. I was commenting that we have renewed almost the totality of our product range in equipment in the past couple of years. We are still launching new products today. We have grown the business significantly, meaning we’ve grown critical mass in terms of installed base of printers, and you’ve seen the impact of the ink. And we are entering the high-growth packaging market and with single pass painting. So that’s really the key achievement. So it means we have everything in place to continue our growth and accelerate our growth, not only in Sign & Display, but of course, in Packaging. And the value creation in this business is really to grow the installed base most of, I would say, the profit we make is on the recurring internal sales. And as you see, it continues to be a good growth engine for us even in Q1. Green hydrogen, four years ago, it was an R&D project. Today, it’s an industrial business. I think ZIRFON and we still have work to do, but it’s clearly recognized as a global standard for H2 membrane. If you do – if you ask ChatGPT, what is the best membrane for alkaline process, the answer will be ZIRFON. So even AI agrees with us. We are able to monetize our first-mover advantage. We have been able to manufacture very efficiently, and we are still continuing this journey. And HealthCare IT, I think the turnaround that we have achieved is, I would call it, spectacular in the past three years. We have totally refreshed in new North American-based leadership team. I remind you that North America is more than 2/3 of the market. We have totally flipped the customer satisfaction, and we have now promoters and sitting in the top league in this area, and we have developed cloud solutions, which we are missing. And today, what we are seeing in terms of leading indicators is purely the results of this very hard work for the past years, actually. And today, we are in a position where we are invited to more deals. We are winning more deals. We are winning customers. And as I told you, everything is really very positive. Just also a very important word in sustainability. We continue to be engaging in sustainability and not only through the CSRD reporting. We are actually doing real actions to improve sustainability in terms of emission targets where we will reduce our emissions according to the European goals. Engaging our workforce and stakeholders, we continue to work on – I know it’s probably less fashionable in some regions, but in diversity, equality and inclusion. We want everyone fairly represented and have a fair chance in our company. And we are actively continuing to reduce the number of accidents and improving safety at work at Agfa. I also would like to say that this was the first year for us to do CSRD reporting. I think we are not – we are just at the beginning of the journey. It’s a very heavy reporting, but I would say we are doing everything we can to make it in the best possible way. And I would like also to stress that although we are relatively recent in our approach in sustainability because we started three years ago, we are already sitting in the top 20% of all companies assessed by EcoVadis. I’m happy with that because, again, we’ve been doing that fairly recently, whereby companies have more than 15 years of practice in this area. So we are making good progress. So I’m going to now turn to questions from analysts.

Thank you. [Operator Instructions] Thank you. We will now take our first question from Guy Sips of KBC Securities. Your line is open. Please go ahead.

Hi. Yes, thank you. Thank you for taking my questions. My main question is actually on ZIRFON. The question is actually, are you losing market share? Or is it the general market? And in what markets do you see this evolving? And are you taking measurements? Or what is actually the situation of Agfa at this moment? Or is it just wait and see and that you’re very sure that the market will regain strength starting from 2026 on? Thank you.

No. Thank you very much, Guy. We are not losing market share at all in this market, but I will leave it to Vincent Wille to comment further, but we are not losing market share. On the contrary, we are making progress in new geographies.

Yes, correct. So indeed, it’s not market share. It’s really the market that is a bit stalling, and there are several large projects that we have in our pipeline, but we do see that new projects are really not coming online or are being frozen in time. So it’s a bit for everyone, the same for the moment in the market. That being said, of course, we are internally making ourselves ready for the next step-up in growth. We had a big step-up in the last two years. we expect, honestly, 2026, probably more second half of 2026 and 2027, if we listen to our bigger customers now when the next step-up will happen, and we’re getting ready for that, of course. And in the meantime, we really keep our costs under control and continue to improve on our own production efficiencies.

So yes, so not a market share issue, but the market kind of delay. And it’s catching us now probably a bit later than our customers, in fact. But nothing is, I mean, everything is good in terms of development with new geographies as well.

Correct.

And the production facility is on schedule. And yes, can you give us some indication what do you internally expect for 2026 for ZIRFON?

Your first question, the production facility online – on time, I would say. We are on time, and it will be actually operating before the end of the year. So no issue there. 2026, I prefer – we have visibility on ZIRFON, but not yet for the 2026. We have visibility for the year because we know pretty much what we had in the order book, and that’s a business with quite some visibility on most of the market. I think 2026 is a bit early, Vincent. I don’t know if you want to...

No, that’s correct. We, indeed, our customers cannot give us a lot of visibility on 2026 yet. We do have some, but I think it’s too early to really confirm.

Yes, it’s too early to say. But things can change also rapidly. We are working on a lot of opportunities we might – that might become concrete at some stage as well. So, today, I will refrain from having guidance on 2026.

And the last follow-up question on this. You mentioned customers, but can you give us a clue your Top 5, Top 10 customers, what slice of the pie do they represent? And the second question is also on ZIRFON on the subsidy, the European subsidy. How is that evolving? Is that on schedule?

Well, the first question is, yes, it’s a concentrated market for us today and the Top 5 customers represent a disproportionate amount of our business, quite typically, by the way, in this area. And if you look at the main players in the market, I mean, if you look at the main electrolyzer producers, you can understand very quickly that you have kind of a Tier 1 with a few companies, all of them being our customers, I would say. And to your question regarding subsidy, we are on track. We are on track with subsidies. Just a couple of things. Subsidies, we need to operate the plant. We need to demonstrate that the plant is operating. So we are on track to do that. And we are currently, by the way, are in discussion with the European Innovation Agency and things are quite on track. So no surprise normally.

Thank you.

Thank you.

Thank you. We currently have no questions coming through. [Operator Instructions]. We will now take our next question from Laura Roba of Degroof Petercam. Your line is open. Please go ahead.

Good morning. Thank you for taking my question. A question on the guidance for the remaining of the year. So you are now more bullish on HealthCare IT, a bit less on DPC and also on Radiology. So I was wondering how we should expect those elements to balance out. Is the more bullish expectation on HealthCare IT going to offset the lower expectations for DPC and radiology? Thank you.

Good question. I think overall, I would say, again, I will repeat, our seasonality is heavily tilted to the second half of the year. So having a slower start for DPS is, of course, I would have liked to have a better start, but that’s not where we are making the year. So yes, I think you summed it very well. We are more bullish on HealthCare IT. We are today a little bit less bullish on DPC. And of course, we are seeing the film impact being more pronounced. Overall, if I take everything, I don’t think we can fully compensate the film decline, thanks to the increase in HealthCare IT. I think we have a question mark on the rate of decline of the film for the rest of the year, for which today, we are seeing probably we are seeing a curve of decline that is a bit stronger than anticipated.

Okay. Very clear. Thank you.

Okay. So if no further questions, just let me repeat. Really, the business is seasonal. Q1 is always the weakest quarter. HealthCare IT, excellent momentum, excellent performance in this business. ZIRFON and DPS for different reasons, have more subdued performance, DPS, especially on the equipment side, but we expect it to be temporary. And ZIRFON, I think we explained the situation and a more pronounced decline of the Radiology market, but for which we take specific cost measures that are going to kick in mainly during the second half of the year. So overall, I repeat, I think the growth engines deliver, and you shouldn’t look at just quarter-on-quarter, but everything is – I continue to say everything is in place to do the pivot for Agfa. Thanks very much for your attention.

Thank you. This concludes today’s call. Thank you for your participation. You may now disconnect.