Earnings call transcript: AGFA Gevaert’s Q4 2024 sees record EBITDA growth

AGFA Gevaert NV reported strong financial performance for the fourth quarter of 2024, with significant contributions from its growth engines. The company’s stock surged 9.2% to close at €0.85, reflecting positive investor sentiment. According to InvestingPro analysis, the company appears undervalued based on its Fair Value metrics, with a notably low EV/EBITDA ratio of 2.44x. The company’s Q4 results accounted for 43% of its annual EBITDA, underscoring a robust year-end performance. Despite a negative free cash flow of €46 million, AGFA’s strategic initiatives in healthcare IT and digital printing are gaining momentum, contributing to its market competitiveness.

Key Takeaways

• AGFA’s Q4 2024 EBITDA accounts for 43% of the annual total.
• Stock price increased by 9.2% following the earnings announcement.
• Healthcare IT and digital printing sectors are key growth drivers.
• The company reported a leverage ratio of 27%, significantly above its target.
• Pension liabilities were reduced by €50 million.

Company Performance

AGFA Gevaert demonstrated a strong finish to 2024, with its growth engines in healthcare IT, digital printing, and green hydrogen contributing to a record performance. The company achieved impressive revenue growth of 16.19% in the last twelve months, with total revenue reaching $391.5 million. The company’s strategic focus on innovation and digital transformation has allowed it to gain market share, particularly in the healthcare IT sector, where cloud solutions are becoming increasingly prevalent.

Financial Highlights

• Full-year free cash flow: -€46 million
• Net financial debt: €37 million
• Pension liabilities reduced by €50 million
• Leverage ratio: 27%

Outlook & Guidance

For 2025, AGFA anticipates stable performance in healthcare IT, with continued growth in order intake. The company currently trades at a P/E ratio of 6.5x, suggesting potential value opportunity for investors looking at the company’s growth prospects. Discover more detailed valuation metrics and expert analysis with InvestingPro’s comprehensive research reports. The digital printing segment is expected to maintain its growth trajectory, while the radiology division will focus on a transformation program to adapt to market changes. The company remains committed to its CO2 reduction targets and sustainability initiatives.

Executive Commentary

"Our strategy is well in place, demonstrated by the successful run of our growth engines," stated Pascal Liguerais, CEO of AGFA, highlighting the company’s strategic direction and focus on innovation. He also addressed the challenges in the film market, emphasizing AGFA’s commitment to addressing these issues.

Risks and Challenges

• Supply chain disruptions could impact production timelines.
• Market saturation in certain segments may limit growth potential.
• Macroeconomic pressures, such as inflation and currency fluctuations, could affect profitability.
• Transitioning to a cloud-based model may delay revenue recognition.
• Potential U.S. tariff impacts on profitability.

AGFA Gevaert’s Q4 2024 results reflect its strategic focus on growth and innovation, with positive market reception evidenced by the stock’s post-earnings rally. The company continues to navigate market dynamics with a focus on sustainability and technological advancement.

Full transcript - AGFA Gevaert NV (AGFB) Q4 2024:

Conference Operator: Hello, and welcome to the AFSCA Full Year twenty twenty four Results Conference Call. Please note this call is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question. I will now hand you over to your host, Mr.

Pascal Liguerais, CEO, to begin today’s conference. Thank you.

Pascal Liguerais, CEO, Agfa: Thank you very much, operator, and good morning and welcome to everyone attending the call. I’m sitting here in Motsal with our CFO, Jernell Lam, my colleagues from the executive committee and the India and Dictus in charge of investment relations. And we are going to walk you through, Fjernal and I, our Q4 and year end results before opening to questions first in the room and then to the analyst and the press on the phone. So let me start by saying, well, to make a long story short, I think Q4 and also 2024 is showing actually record results for the three growth engines of the group HealthCare IT, Digital Printing Solutions and Zafen. All had record years and record Q4 quarter where we’ve seen an acceleration of the growth.

And I would like to note that indeed we are a company with a strong seasonality because we are 43% of our EBITDA in Q4 actually. And that stems from the business seasonality, especially in Healthcare IT and also in the businesses where we have equipment sales involved like DPS, digital printing, but also in fact Doctor in Radiology. So Q4 is of critical importance and I believe you’ve seen that we did a record Q4 for all the growth engines. At the same time, we are also addressing the challenge of the other parts of the company. I was reading this morning in the date a tale of two companies.

And well, we are one company, but with distinct indeed activities and the film decline has accelerated in 2024. We have put in place a transformation program to address this state of the market that is now ready for implementation and I’m going to come back with more details on this. So overall, HealthSky here the record Q4 and a fantastic year where we launched our cloud solutions successfully and where our customer satisfaction and order intake are the best, I would say, testimony to our growth of successful profitable growth strategy in the business. DPS also had a very good year boosted by the growth engines of DPS and their fund. Radiology, of course, was strongly impacted by the decline especially that we’ve seen in the medical field market.

Doctor is still growing and growing very nicely digital radiography, but cannot make up for the decrease in the film. So that’s a bit the key messages I would like to convey for the year. Now if I turn to numbers and look at the sales, well Q4 a nice growth compared to last year. But again, a tale of contrast where we’ve seen significant still decrease in the Radiology during the quarter and 8% growth in Healthcare IT and 15% growth in DPC. If you look

Unidentified Executive, Agfa: at the full year, it’s pretty much just

Pascal Liguerais, CEO, Agfa: a trend except that in fact Q4 has shown an acceleration of the growth, but the trend is still there, a significant decrease of our film activity, offset by a significant increase in VTC. The decrease for the full year of Healthcare IT stands really from lower margin businesses and mainly hardware and effectively to the market moving partially to the cloud, in fact. So meaning our customers some customers stopped buying hardware in anticipation of their mix in the cloud and it has a short term impact. But if I look at EBITDA, again, same as sales for the full year we’ve seen very nice growth of DTC and LCR IT and a steep decrease for hydrology. If you look at Q4, the trend is even amplified actually.

In fact, most of the growth has been accelerating for our growth engine for the year. One comment, the radiology situation in the film is being addressed through our transformation program. However, getting in place such a program means that there was almost a very limited impact in 2024. The impact will really start in 2025. So we are bearing the weight of the decrease fully in ’20 in Q3.

Now if I take a step back and look at the past five years, which is I think extremely important for a company like us in the full transformation, You see the direction of Stradala. You see the tail of yes, I mean, the film business, but here it’s certainly the film business, but our clinical business and all the art is going to start with this gray bar as well. You see a decrease, 3% decrease CAGR or well your average in the past five years, while our gross engines are going 9% in the same period. And I would tend to tell you that actually the growth has only accelerated in the past two years actually. If you look at EBITDA, this is the same story of the transformation of the company.

In 2020, most of the profitability of the work was related to the film. It has decreased significantly in the past five years, while we were growing actually the 0% genes. And again, these five years are not equally creative. Of course, we’ve seen an acceleration of this trend in the past couple of years as we have put in place all the elements of success for the growth engine in the earlier years of the plan. Now we can start seeing some of these benefits.

I also want to jump immediately on the transformation program for the film. So it’s let me tell you, it’s not only a cascading exercise that we are doing in this transformation program. We are also changing the way we were. We are setting up our operational excellence projects and we are considerably changing the way we operate the plan. The good news is we have a social plan signed and agreed with our social partners.

And I have to say, it’s also testimony of the ability we have to work in full partnership with all stakeholders. We did it without any conflict of any day of price, which was not a given given the size of what we are undertaking in this program. We confirm the EUR 50,000,000 plus recurring cost savings impact. It will start kicking in, in a significant way in the second part of the year, the time to implement. So we are just starting actually now to raise the loan.

I confirm it’s a cash accretive program. Receptoring costs, we told you that we were estimating about EUR 50,000,000 in fact, if we start to do in our P and L, a little bit more in terms of cash, EUR 57,000,000. As you see, the expected cash out is pretty well spread out for the next year, which is also one of the reasons we can use such a technique for the program. So very pleased with the plan. We are now in implementation phase and we’ll give you a regular update.

So where we are. I’m going to turn to you, Jonas, to comment the P and L.

Jernell Lam, CFO, Agfa: In terms of the P and L, the numbers, sales and top line and bottom line, Pascal, of course, already highlighted by a lot. Your program already now. Thanks to the growth engines that are in both top line and bottom line, you see largely compensating actually the fixed cost coverage losses we have in radiology. So you see our gross profit is relatively stable. So that’s good to see that we have been able to keep our gross profit percentage at stable like the year before even though we have lost quite some volumes on the top line on the total year level.

And also with the good cost control of our operating expenses, basically, the inflation we were able to reduce it at 2,000,000, keep the previous also quite stable. So we see we post a decent, let’s say, adjusted EBITDA and EBITDA level for 2024. The top line that we have lost, of course, cannot avoid that the volume impact still has certain bottom line impact as well. If you go from the adjusted EBIT to the operating result before tax, there we have quite a significant amount of adjustments on restructuring and one off non recurrent business. This is expected largely the $65,000,000 in Q4 related slight for sales at $32,000,000 to the restructuring which we were planning expected this actually could use because it’s lower than what we originally thought of.

It’s a cash out item. We also know already in advance this acceleration of radiology, we would have to reevaluate the impairments of the fixed assets of of radiology, which is not a special item, but we know we need to do that for our balance sheet. So we have impaired radiology largely all the dedicated assets, EUR 24,000,000. Those are the biggest items of the postings of the 65,000,000 in Q4. Plus, of course, we also still have some smaller ones like Germany being managed to actually close announced to close down the sites in radiology areas as well.

So we also booked a $5,000,000 closure of that site and some other etcetera. The financing cost is quite stable. We have been quite stably compared to last year. There’s no major accident or expectations. We are not going up or going down, so I expect in relative to the stake.

That led to our net financial results still with a loss of 75,000,000 On the free cash flow, Q4 like EBITDA was the 43% of the year. Free cash flow for Q4 at Afai is also extremely good. You see we have $35,000,000 positive free cash flow largely driven by good positive EBITDA results, but also significant reduction of our networking capital in Q4. So that has led to a positive free cash flow of 35,000,000. Unfortunately, if you look at the full years, we are still at minus 46,000,000.

You see we have a good reduction in Q4 Q4 on the working capital compared to 2023. We still are slightly higher than what we have in 2023. So we have a deal of working capital of 18,000,000. Some of them are also related in Q4 higher sales that you led to a higher accounts receivable. Good thing is that a big part of this consumption of the cash is the conscious planning on CapEx investment for the growth of the future.

So you see in the year, we still have planned million investments. Large part of that, of course, is also the SIPON investment on the site here in Vauxhall. And then we have, of course, continue to invest in the IT infrastructure, some of the energy consumption utility investments as well on the energy side. So you see we have still quite a large CapEx investment in which we invest for the future of businesses. And we have also a positive contribution on the provision others of EUR 16,000,000, which is linked to largely to our strategy going forward for our AXA Finance strategy, which used to have in the past, financed, let’s say, long lease customers, you say, acting like leasing companies for our customers.

This strategy do not fit our current strategy anymore, so it actually would amortize and try to phase out this strategy. So in the coming years, it would have positive impact actually in the coming years every year in this magnitude of amount. With that, all the rest are stably like what we have expected pension cost of million, which is every year roughly at this number. Every year, we are reducing these million to million of expense on the cash out on the pension side, etcetera. And then we have to restructuring adjustments of cash flow of $21,000,000 on this.

So that led to minus $46,000,000 of free net. And that also means we have now a net financial debt and acquisition of $37,000,000 The leverage is still very, very healthy. It’s As you’re 27% versus investment governance of 3% also on the interest of government of 23% versus minimum of 5%. One good news also to mention is on the pension status. So you see we have here you see the material countries of the material five countries overall have reduced by 51,000,000.

At the group level, total have been reduced by 50,000,000 at the end of twenty twenty four, meaning we have actually a good reduction of million on the asset side of our pension versus our liability. And therefore, the net pension that we actually reduced by million on material countries.

Pascal Liguerais, CEO, Agfa: Yes, and I take it back from here. So healthcare IT. So as you’ve seen and already touched on it, for the full year sales are slightly below due to the transition to the cloud actually. But for me the highlight of the results is really the order intake of plus 32% versus last year. Actually at the end of Q3, we guided for plus 20%, twenty five % and we ended up at plus 32%.

It’s illustrative today of the real momentum we have in the market due and clearly due to the customer satisfaction and the image of XRRL in the market, which has been totally turnaround, I would say. One good news and in this other intake, also the good news is it’s cloud related for about a little bit less than 30%. And all of this increase is coming from net new customers. So I mean, when we have net new customers representing all of this increase of 30%, it means we are getting share. We start getting share, which is totally new for us.

The total turnaround of where we were, we say a few years back. Also a very good indicator is recurring sales are growing actually even if total sales are not growing. And this is also a testimony two things behind it, testimony to the shift to more and more recurring revenue model, of course, but also due to the fact that we are not using any customer anymore. So we don’t we have an SME volume that is remaining constant. So it’s combination of the two.

The EBITDA in spite of the sales top line decrease is actually improved due to the fact that indeed the sales we lost were rather lower margin sales and the progress we made using higher value services to make a long story short. And as you can see also illustrated by the margin percentage, which continued to increase. So rather good year and as far as leading indicators are concerned, really excellent momentum for the business. If you look at the P and L, more than pretty much illustrate what I just said, we continue to be very conscious regarding our rational expenses. Cost profit is increasing.

And yes, the transition to the cloud has an impact for us in terms of revenue recognition and margin recognition. We delay the revenue recognition and the margin recognition. I would like to remind you that if I sell 100,000,000 in project sales, pretty much it’s going to be in my sales for next year. If I sell 100,000,000 of subscription model, I will have 20 or 25 in my next year of sales, okay? So it has this condition as an impact.

But today, we have a growth momentum that probably means we won’t see such a dip. It will just limit our growth in the next year, but all these excellent news for the business, right, concerning project revenue into recurring revenue guidance. So overall for the numbers. If I go to the next slide, so really, really pleased by the year. I mean, it’s a record profit number, it’s a record other impact.

We never had so much other impact in the year and records are made to be broken. I’m sure we’ll do even better in the And I’m very confident it’s going to be the case when I look at the dynamism of our commercial pipeline today. Cloud deal 27%, remember the 24% was a first year where we were also in cloud solutions and it’s already a very sizable part of our future business. Net new customers, as I told you for the first time, they will share. Meaning now we have still we have to serve project business and a 34% recurring investment in our other industries.

But probably the most part of is really the customer satisfaction. The way we have improved in the class time game, which is based on customer feedback is unprecedented actually, unprecedented. And for the first time ever, we have three best in class awards in The U. S. The first two elements of our enterprise in aging systems that are being recognized.

And the third one is actually a conversal award for the full healthcare IT industry. And it’s so it’s testimony to the progress we’ve made in our product with our customers must include the software. The feature that we’ve been implementing are working extremely well in the market and that’s recognized. So very happy with the SDIT. Stellar performance and I’m very confident going forward.

DTC, also a very good year, 7% top line growth, but of course, if you see like a small XL. So not everything is growth oriented in DPC. And if you look at the growth side of our growth engines, 13% in digital printing and 27% in their form. Well, again, we deliver what we said we are going to deliver and even in a rather subdued volume environment for Giffon and we’ll come back to that in a couple of slides. We still are able to increase ourselves significantly and also our bottom line actually.

And for DPS double digit, double digit growth. We are fully delivering on our strategy. The Inca acquisition works. We have made a number of launches that we are successful in 2024 and things are increasing plus 15%. We are outgrowing the market in in GPS and we are basically doing what we told you we are going to do.

When I look at the year, you see therefore a significant progression for DTC. Well, DTC and LKIT are competing for the highest absolutely demand number in the grid, but I think we will continue to see twenty five years for growth in this nature for DTC. Two weeks. We have everything it takes to be successful. If I turn to the P and L, you see that the growth also has accelerated during the growth of Q4, which is the most important factor for us, is plus 14.7%, while the growth of the full year is 7%.

So the growth has accelerated during the year, which is normal due to our product initiatives. In fact, I will say the partnership that took place more in the second part of the year. We keep our operational expenses on the front pole actually with the growth of the percentage on sales is decreasing steadily. The EBITDA number is not yet where we would like it to be, but we are making significant progress. So if I turn to the news on EPS, why are we successful in this market?

First, we are very active with our innovation and we are launching new center that has received a very good welcome in the market. And every time we launch new center, printers, these are larger, more productive, more full consuming painters. So there is also an improvement in the mix of what we do. So we have grown everywhere except for the onset. The reason being, we are renewing the onset for next year.

So it was a time of a transition period before the relaunch that we are forecasting for ’25. ESI partnership worked very well. We are very happy and the growth is exactly where we wanted to be. Plus 15%, it means we are going to double our business every five years in weeks. We are also, as you know, made progress on speed set.

I think the beta situation as our customer in the retail is working well and we expect to finalize the sale of the data in the next at least in the first half and see and of course we are confident that we’ll do also after sales of 2025. We have announced actually a couple of days ago the signing of our formal agreement and partnership with DHS by which we are going to supply print engines for their surrogated lines, so monochrome one, a black one, if you want and a polychrome one. And we will also have the same opportunity regarding this partnership. So that’s also a testimony to I think the fact that we are recognized as one of the leading players in the digital world. This jetliner actually, as you said, the fastest digital printers in the world.

And we continue also today market share in what are based decor. Decor is not a market that is an interoperable for the time being, but digital is stated really the technology plays of the future and we expect the growth to come up in the next year. Green hydrogen, maybe here a few comments. In any situation like that, we are leaving a bit the summering moment from the high survival gen two to three years ago to the reality of the market. So it’s a normal process that will happen in any such innovation like Green Hydrogen.

So globally, the number of new investments is decreasing, meaning the announcement for new projects are decreasing in terms of trend. But reversely, the number of FIDs of FIDs, so final investment decision is increasing. So it’s a contrasting trend. You know the first one is really the announced project and when you look at the sum of announced project, it’s an extremely high number, more than 1,000 gigawatts. But the SID is what we need to look at in order to make sure that we have a market reality on that.

So actually it’s encouraging to see that investment decisions are increasing. Now, geographically, we see different dynamics and it’s clear to say that Middle East, Africa, Asia are moving faster than Europe. I think Europe has also a tendency to regulate and to until everything is absolutely clear in terms of regulation, it will slow down a bit the development for hydrogen. But for us, it’s not an issue. We have a global presence and that’s the point.

We are coming also to a time where you have a number of FedEx Proyzer producers and market in this environment will probably rationalize our consolidated date and a fewer number of large players. So, we continue to be doing very well against this market backdrop, but volume I would say, well, the volume decrease is probably not what our customers expected. So we are growing 27% in French store. We are extending our customer base. We are selling now in Asia.

We had another I think it’s from Norway, right? It’s down in some parts, partner as well. And we have we have also set up now a few months back a lab to continue innovating with new versions of Gethon and we have promising stuff in our pipeline. And of course, the construction of the plant is on track. Radiology, but Radiology much more contrasted.

Of course, here on the left hand side, you see minus 10% overall for the division for full year 2024, but in fact it’s minus 16 for the film and it’s plus eight for VGR. This was very contrasted also within Hydrolygy and the impact on the film is quite tremendous in terms of volumes. And remember, this is before we are implementing our transformation program. We don’t have yet the necessary adjustment in the cost base showing in this number and that’s what we are working on. If you look at the P and L, same story, There was a bit of noise on the line.

Hello. I think we are back online. I’m sorry for the interruption. It’s not we just don’t know what happened. So sorry, I was about to comment the P and L of Radiology Solutions and I would say, as you’ve seen, we’ve been very busy also adjusting our expenses to the reality of the market, but not yet with the transformation program for the plants.

And therefore, we had significant impact on the volume decrease for film for the time being and that’s really the objective of the transformation program. If I look at our business, I think I already said the main element. We are also taking care of the CR, I would say, end of life technology. And we have also announced the shutdown of German plant where we were making CR components at the same time. So we are addressing the declining part of the business.

Reversely, Doctor is still growing and we are, I would say, outgrowing the market. And the way we do it is actually we provide more and more AI based and software based innovation to the market and that proves to be quite successful. We already had the strong imaging software in with Musica. But today, we are complementing this software with solutions that are embedded right at the point of care for our Radiology solutions. And I think this is a way forward and we are receiving a very good response from the market with this approach.

So that’s for Radiology. I’m going to go now to the outlook ’25. And to make a long story short, we expect the strong performances of the gross engines to continue in 2025. Of course, I’m saying that this outlook is based on the current economic environment. I think everybody knows that the environment has become a little bit more volatile since January, of course.

And therefore, we have a little bit less view on some of these elements. But for us, we are staying the course. And per division, as I told you, the momentum in order intake is expected to continue in 2025. Probably our guidance when I say our performance is expected to be roughly in line with last year or maybe a bit conservative. But I’m cautious.

Uniquely, as what I explained to you, meaning the impact on the going from more projects to cloud projects, which is just delaying some revenue and margin transformation, But I think we are still in an excellent position in this area. DPC, we will continue to grow as you’ve seen in 2024 both in EPS and in Relayogent Solutions, even if the growth of Relayogent Solutions don’t expect a spectacular revenue improvement. That’s not going to be the case, but we will continue to grow our business and to improve our bottom line. And hydrolyzed solution will be stable and we still believe that the decrease in the market will continue, but we’ll be able to mitigate it through our transformation initiative. One thing we are unfortunately we have not made any progress is we have been expecting the results of the expertise for Aurelio’s discussion regarding the purchase price agreement.

We have been now eight months in the process. Unfortunately, we have no lever on the expert, which is an independent expert and we are still waiting for the report in in spite of our numerous actions to follow-up from that, we still do not have it. And I already discussed extensively about the transformation program on the film. So overall, we are going to address the film decline in a very significant manner with our transformation program and we expect the continuation of the growth of those engines. Just a word on sustainability, we have committed to science based target initiatives in terms of CO2 reduction in line with 55 program.

We remain committed to this program, of course. The inclusivity, we will continue to work on that. The idea is even if we are we need to make sure we work on inclusiveness and for everyone to have a chance the same opportunity in the company. So we continue to do that. Also working on the representation of gender in the company and of course safety programs.

Safety programs, I have say that this is the second year in a row where we are decreasing the number of accidents by about 15% and we expect to continue making progress in the same way for the next year. Last but not least, we are actively working, of course, on the CSRD reporting for sustainability for this year. Even it’s a significant commitment in terms of resources, I must say, and it’s quite a complex set of measures for a company outside even the number of activities we have, but we are actively working on it. So I’m going to stop here for Q and A and I will first take questions from the room. But again, we are really on track to succeed the access transformation and the success we’ve seen in the gross engine is the best testimony of this.

While at the same time, we are not trying to manage our declining business through contractions. Turning to Alexander?

Unidentified Executive, Agfa: Yes. Hello. Alexander from CapExatur Group. Based on your order intake, it seems that the order book in Healthcare IT is up with about 30% to 40% year end. You highlighted the excellent momentum in Healthcare our guarantee with higher sales and recurring revenue, which has already become a sizable part of the net unit base.

So I’m a bit confused as to why you guys saw a stable performance in 2025. Could you clarify that out a little bit, please?

Pascal Liguerais, CEO, Agfa: Yes. But just because of the nature of the order intake has changed. And again, if I was in a project base, you could roughly say that whatever we say in order intake for the year end will be revenue recognized in the year end plus one, okay? So what you take in ’24, you will recognize in the year end plus one. But it’s not anymore the case and when you recognize the sale, you recognize the margin and therefore the EBITDA.

If you have now recurring projects, instead of putting this project, this other intake as sales, it will be spread out five, six, seven, eight years depending on the length of the contract. Meaning that mechanically the way you recognize your profit is also delayed. So going from a project model to a subscription model has a mechanical impact to delay revenue and margin recognition. So if we were in an environment where we were not growing, actually we would see sales decreasing significantly and EBITDA decreasing significantly before during the transition year, okay? It’s not the case here due to the fact that we are growing.

So we can make up this mechanical effect due to the fact that indeed, our other intake growth is significant. But still, it means that all your growth, you will not get it in one go. You will get it spread over many years. And this is the reason why you are guiding. Typically, what you see in a business making a task commission is a sales bid and a profit bid for of two, three years.

That’s not what we are saying with regard to what we say. We believe it will be at least at the same level. And I say maybe I’m a bit cautious of I have a cautious outlook. So already by doing that, it means that we are able to do that just because we have significant growth in the other intake.

Unidentified Executive, Agfa: Okay. Then how much growth do you actually expect from 2025 or is it here from? Because you mentioned the number of investments is up threefold, the audit decisions at least. So I’m wondering whether we should take that as a guide I’m assuming.

Pascal Liguerais, CEO, Agfa: No, no, no. We will not take it as a guide that we are going to multiply our designs by three because there is a timing impact. Francois, what’s your growth of the iPhone for 2020?

Unidentified Executive, Agfa: Yes. So in 2024, we grew by close to 30%. I think in 25%, we should see something that will be in the same order of magnitude. So not the massively more is what we believe. We do believe that the market will pick up more than that, but it will be in 2016.

We see now bigger projects being announced and companies again starting to look at real projects, I’d say, not just high level trees. So this will indeed come forward for the now three years. Then a bit of a maintenance question and then I leave the floor to my colleagues because there seems to be a slight change in reporting as you didn’t include tax of exchange rates this year. So considering the dollar was rather strong the year, I could call you mentioned that the fixed response, but maybe you can clarify how the fixed impact

Pascal Liguerais, CEO, Agfa: Vivian, Sonae, I don’t know who wants to Actually,

Jernell Lam, CFO, Agfa: it was a very full year basis, a very minimal effect and that’s why we didn’t explicitly mention it anymore. Yes, it was minimum, not material in numbers.

Unidentified Executive, Agfa: Okay. Thank

Analyst, KBC Securities: you. Okay. SIPs KBC Securities. I do not want to spoil the party, but can you give us on the division by division an impact of potential U. S.

Tariffs? And what’s your U. S. Exposure division by division? And what could be impacted by tariffs?

Yes, of course. Well, first, it’s a bit difficult for me

Pascal Liguerais, CEO, Agfa: to comment because it seems to be changing quite rapidly on a second basis. But what the area where we are exposed is mainly because we have a Canadian plant for centers, okay? So of course, this is one plant that supplies the world and of course, North America. So we are exposed in this geographies, but we also are working on contingency plan, okay? We have also a plan in The UK where we also assemble the printer and we could imagine to use The UK plant as a backup.

This being said, there is no talk of tariffs for The UK for the time being, but that could come to more. So we’ll manage according to what we see, but this is really the one specific exposure that I can point out. Now, things are complex to understand also we might have positive impact for instance for Doctor because actually most some of our competitors are doing the equipment from China. If they want to go to The U. S, they have this need.

For the time being, we don’t from Europe or the countries where we operate. But I’m very cautious because it’s good chance to know. So it’s a little bit difficult to say. I don’t think at the end of the day, what the specific impact for me of the deal is more about the impact it has on the market itself. Meaning, in such uncertainty, we people are not making CapEx equipment decisions.

They say, I’m going to wait a bit to understand what’s going to happen in the market. So for me, what worries me is, of course, the direct impact of the duties, but we have ways to mitigate it. But it’s more about the impact on the market and the decision making by customers. As a head of when you run a business, I mean, you need stability in order to make a CapEx decision. And for the time being, I’m not sure the situation is stable, so to speak.

But this is really the one area that we need to look at.

Analyst, KBC Securities: You used to work China for the first time in this conference call after forty five minutes. I have to look at the transcripts over the last fifteen years. I think it’s first time that China is not mentioned that much. I think But your situation in China in regulatory solution?

Pascal Liguerais, CEO, Agfa: I think, yes, I was about to say a situation in China. I mean, when we are talking about the decrease of medical field market, that’s mainly China. So that comes mainly from China, which is normal because basically China is more than 50% of the world market for film. And the situation we are seeing in China is actually a market decrease due to some digitalization initiatives in China. So yes, I do mention that we have China seen in the call.

Analyst, KBC Securities: And then last question from my side is on the printing division. So BHS, you mentioned, ink opportunity. Can you quantify that a little bit on a per device, yes, per year? What is the potential? And on the speed setting, you mentioned that the beta will be sold probably in the first half of this year.

What is the number of targets for this kind of machines on a full year basis. How many machines do you repend selling? Okay.

Pascal Liguerais, CEO, Agfa: In VHS?

Unidentified Executive, Agfa: Sure. So on In VHS, maybe a comment there. These machines, these are big machines. They take a long time to install and it’s not like, let’s say, our bigger sign and display printers, you’re talking one to two weeks installs on these bigger sign and display printers, bigger, sorry, single path printers, you’re talking certain for betas, several months. I don’t know what time this should go down to maybe six weeks or so.

But so clearly in the first period, we will see equipment sales before we actually start seeing, let’s say, substantial ink sales. We are indeed the preferred ink partner for VHS, but these will be Open Systems. So we will not be the only ink supplier, but for sure we’re one of the certified and preferred ink suppliers. So I would say you will see in 2025 mostly equipment effect. You will see as of 2026 also the ink

Pascal Liguerais, CEO, Agfa: starting to ramp up. But maybe talk about let’s talk about the potential. These machines are consuming a lot of ink actually.

Unidentified Executive, Agfa: The monochrome machine will be not using so much ink, but still it’s

Analyst, KBC Securities: substantially more

Unidentified Executive, Agfa: versus one of our own tiny display printers. Are you talking somewhere between 12,000 features of ink? And it’s actually quite a big spread because you can imagine if you do an Amazon box with just a little bit of black on it versus a lot more on the box, a lot more. On full color systems, we will typically use up to 100,000 meters of ink per machine. Those are typically boxes that you print at least 50% if not 100% of the box with full images.

So there’s quite a big gap between monochrome printer imagine an Amazon box on making you small prints versus a full color box.

Analyst, KBC Securities: And competition there is on the Fuji?

Unidentified Executive, Agfa: There is actually limited competition today. HP has a machine in the market that we consider as a competitor. But I would say that the BHS machine is actually a first of the pack.

Analyst, KBC Securities: For the inks, for the inks.

Pascal Liguerais, CEO, Agfa: For the BHS machine, I’m talking about BHS.

Analyst, KBC Securities: As you’re not

Pascal Liguerais, CEO, Agfa: We are not the exclusive supplier. So the question I’ll give is, who are we competing against?

Unidentified Executive, Agfa: Today we’re not competing against, but we just can of course choose to they have certain other partners that they work with, but it’s not cannot give you all the names of the people they’re working with. Such as not

Pascal Liguerais, CEO, Agfa: for sure. These are smaller companies and actually when all this was done when it was INCA and not AXA, of course INCA we don’t have AEs, okay. So now we are coming to this game and part of the partnership will give us also access to significant portion of the zinc consumption.

Unidentified Executive, Agfa: Thank you. Good morning. Maximus Kranard, ING. A couple of questions on my end as well. Firstly, if I look at radiology, obviously, EBIT of $1,000,000 if I recall correctly for the full year.

Could you elaborate a bit on the trends in between medical claims on the one hand and direct radiography on the other? Presume that medical field is in negative territory in such a way. So a few on that firstly. Then just for my understanding, can you remind me you capitalize R and D U. S.

In Agfa Health Care and what’s the next year as well? And then finally, I’m going to do like the importance for the party of this. Looking at the offsets and the divestments, we were talking about 28,000,000. I think that’s been cleared already, but we’re talking about this. Any view on timing, certainty, coverage of that, anything you can

Pascal Liguerais, CEO, Agfa: share about that? Thank you. Okay. Capitalize R and D, you have the number on top we are capitalizing about 6,000,000, 7 million. It’s part of the acceleration that is also showing our ability to have upgraded our product quite rapidly and it will stay at the second, no change.

Regarding your question on hydrology, well, I’m not disclosing actually the profitability for the various part, but there are three components in Radiology, CR, which is end of life, the film and Doctor. Actually still knowing not money losing well, it’s not losing money, even in the situation we are in today. And our news, we are still talking about the same amount. There is no change. It’s just that we don’t have yet the report by the experts.

So nothing has changed. The work is just not being done today by the experts, okay? But nothing has changed. So the change in things has not changed. Our assessment has not changed at all.

We are diligent in trying to make sure the experts is working on the file, but there is so much we can do to join, I would say, assignment, we do use on XL. And we have, I would say, unfortunately, no giver on the Excel as it should be, by the way, as an independent Excel. So I still expect the situation to resolve during the year, but I’m extremely cautious because frankly speaking, we have already an eight months period for the exact same way too long.

Unidentified Executive, Agfa: Last call. I presume like if we’re building on like your whatever

Pascal Liguerais, CEO, Agfa: There is no we have no deadline obligation by the experts. It’s up to the experts to define the time they move to come up with the results.

Unidentified Executive, Agfa: Yes. Thank

Pascal Liguerais, CEO, Agfa: you. Ben.

Ben, Analyst: Yes. Hi. These guys already asked most of my questions, but I wanted to stand still at offsets again. Sorry. Just trying to get an angling of do you have an idea on what’s taking so long?

Is it like is it workload at the experts office? Or are there other things at play? Do you have any idea? I do not.

Pascal Liguerais, CEO, Agfa: You don’t you do not? I do not.

Ben, Analyst: And and they don’t offer an explanation, because it’s getting quite strange, for us as as outsiders to see as well.

Jernell Lam, CFO, Agfa: I see. But there is a restriction because of the dependency that we are also restricted not to approach her too much. So we have to wait for the status and we basically not like a normal situation where we can discuss timeline and set line and so we are not allowed to approach also to each.

Ben, Analyst: And does Aurelius share your annoyance at the time line or

Pascal Liguerais, CEO, Agfa: Because it’s a bit different. They have to pay us cash, so they are not in a hurry. So it’s a bit unbalanced in this story because basically, of course, for ILUCE, it’s okay to wait on and not to pay us what we do. So of course, it’s very unbalanced.

Ben, Analyst: And then maybe one more very general question. You’ve discussed on the transformation not being a straight line. Do you have like an indication on when it does become a straight line, when like the situation like kind of erode?

Pascal Liguerais, CEO, Agfa: Ben, life in real life, we don’t have straight lines, okay? I don’t think that exists, but I think the direction of travel is there and then you have always valuation according to value statements. But I think when I look at the mega trend, is green hydrogen going to be developing? So I guess, yes, so it’s needed. Do is digital printing growing?

This is the one growth technology in the printing market on which we’ll develop. And as I see, I mean, our solutions are absolutely well in tune with market expectations and the ability to actually process more in a more cost effective way in the health system. And in each of these businesses, in different, we have the market reference for the membrane for alkaline process. In DPS, in where we play, we are a little player on the growth so that we have a flexibility to that. And in Elk IT, today, we have put back ourselves totally top of mind in this market.

And therefore, we are enjoying not only the growth of the market today, but probably some share gain as exemplified by the other intake. Now it’s never a straight line and you cannot say, okay, I’m going to grow every quarter by X percent, okay? There will be always variation along the line, but the direction of parallel is new.

Analyst, KBC Securities: On Zifon, is there any change in competition? And can you give us already an indication on how the capacity constraints are evolving? So the factory?

Pascal Liguerais, CEO, Agfa: Competition, competition. What I mean, it’s clear that with

Unidentified Executive, Agfa: the market that was honestly not there three years ago and it is now starting to develop, there is also competition on the horizon. That being said, like I was saying, we keep on being the reference supplier. We also are not sitting still. And so we continue to invest in innovation and together with our key customers and partners, we continue to invest in developing the next gen

Analyst, KBC Securities: base. But except for, let’s say, the Chinese players and the one Japanese player that we know, are there other important names popping up? No, no, actually not. There is indeed competition popping up in China already

Unidentified Executive, Agfa: for quite some time. Some absolutely not successful, some a bit more successful, but not to the level of innovation certainty that we have. And also operationally, I think we certainly have a head start with our our plant and the new plant rebuilding. In terms of your second question on bottlenecks, our plant is still due for the start up sector this year. So there will be certain EBITDA market growth as it is today, there will be more capacity

Jernell Lam, CFO, Agfa: to invest.

Pascal Liguerais, CEO, Agfa: On our side. On our side. That’s for sure. Did we address your questions?

Analyst, KBC Securities: Yes, on this one.

Pascal Liguerais, CEO, Agfa: Maybe question on the phone. I know Laura is

Conference Operator: Indeed, indeed. We have a question coming from Laura Roba calling from Degroof Petercam. Please go ahead.

Laura Roba, Analyst, Degroof Petercam: Good morning. Thank you for taking my questions. I have two. First of all, coming back on Healthcare IT, based on your order book, do you have any visibility today on when this higher order intake will translate into higher sales? Are we talking two years, five years?

I don’t know. And then how should we look at CapEx evolution for this year?

Pascal Liguerais, CEO, Agfa: The CapEx evolution, you said? Okay.

Laura Roba, Analyst, Degroof Petercam: Yes, sure does.

Pascal Liguerais, CEO, Agfa: Yes, yes. On I believe on LSKAR IT, actually, we are planning for 2025 to see already an increase in sales, actually relatively modest due to what I was explaining in terms of going from a project model to a subscription model, but we will already be growing the top line, we believe in ’25. And again, it’s due to the fact that we have a high growth in order intake, even if we delay the revenue and margin recognition due to the subscription model. So yes, I mean, we’re expecting we will probably we will grow in ’25. And CapEx, CapEx this year was you’ve seen it $44,000,000 We expect about $10,000,000 less for $25,000,000

Laura Roba, Analyst, Degroof Petercam: Okay. Thank

Jernell Lam, CFO, Agfa: you.

Conference Operator: There are no further questions. So I will hand it back to the floor to conclude this conference. Thank you.

Pascal Liguerais, CEO, Agfa: Thanks very much. Thanks for attending the conference. And again, I want to repeat, our strategy is well in place, demonstrated by the successful run of our growth engines. I think we made the right choices and we are operating the businesses. We’ve been improving the way we’ve been operating these businesses and our performance.

And again, we are absolutely committed to address the situation we see on the film market to preserve the profitability of this business for Agta in the years to come through our transformation program. And here the execution is really starting after the successful agreement we have in place with our social partners. So So thanks very much, everyone, and have a good day.

Conference Operator: Thank you for joining today’s conference. You may now disconnect.

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