Earnings call transcript: Exosens Q4 2024 showcases strong growth

Exosens SAS reported a significant surge in its stock price, climbing 15.47% in pre-market trading following the release of its Q4 2024 earnings. The company, a leader in light amplification technology, posted robust financial results with a 35% year-over-year increase in total revenue, reaching €394 million. According to InvestingPro data, the stock’s impressive YTD return of 33.71% reflects strong investor confidence, though current valuations suggest the stock may be trading above its Fair Value. While Exosens announced a proposed dividend of €0.1 per share, marking a milestone in its financial strategy, it’s worth noting this would be its first dividend payment.

Key Takeaways

• Exosens reported a 35% increase in total revenue for Q4 2024.
• The company’s stock rose by 15.47% in pre-market trading.
• A proposed dividend of €0.1 per share was announced.
• Net profit increased by 66% year-over-year.
• Exosens is expanding its capacity in the US and Europe.

Company Performance

Exosens demonstrated strong performance in Q4 2024, exceeding its initial public offering guidance metrics. The company achieved total revenue of €394 million, reflecting a 35% increase from the previous year. This growth was driven by strong demand across its defense and detection/imaging segments. The company’s market leadership in light amplification and its strategic presence in over 70 countries contributed to its robust performance.

Financial Highlights

• Total (EPA:TTEF) Revenue: €394 million (+35% YoY)
• Organic Growth: 25%
• EBITDA: €118.5 million (30.1% margin)
• Net Profit: €30.7 million (+66% YoY)
• Free Cash Flow: €55 million (74% cash conversion ratio)
• Leverage Ratio: 1.2x (down from 3.3x)

Market Reaction

Following the earnings release, Exosens’ stock surged by 15.47% in pre-market trading, reflecting investor confidence in the company’s strong financial results and growth prospects. The stock’s price increase aligns with its strategic initiatives and positive market sentiment, especially given the company’s market-leading position in light amplification outside the US.

Outlook & Guidance

Looking forward, Exosens projects revenue growth in the high teens for 2025 compared to 2024, with EBITDA growth expected in the low 20s. InvestingPro analysts confirm this positive outlook, forecasting continued sales growth and profitability for the current year. The company aims to maintain a leverage ratio below 2x and continues to pursue selective mergers and acquisitions to expand its technological capabilities and market reach. Discover detailed growth projections and analyst consensus targets through InvestingPro’s comprehensive research reports, available for over 1,400 US equities.

Executive Commentary

CEO Koen Boi remarked, "2024 was a remarkable year for us," highlighting the company’s strong financial performance and strategic advancements. Jerome Soretier, from the management team, emphasized Exosens’ identity as a "technology platform," underscoring its commitment to innovation and market leadership.

Risks and Challenges

• Geopolitical tensions could impact market stability and demand.
• Supply chain disruptions may affect production and delivery timelines.
• The competitive landscape in technology and defense sectors poses ongoing challenges.
• Regulatory changes in key markets could influence operational strategies.
• Dependence on specialized minerals could be affected by export restrictions.

Q&A

During the earnings call, analysts inquired about Exosens’ entry into the US market and the potential impact of geopolitical events on business opportunities. The management expressed confidence in translating defense market growth into significant orders and noted minimal impact from Chinese mineral export restrictions.

Exosens’ Q4 2024 performance highlights its strategic positioning and robust financial health, setting a positive tone for the coming year.

Full transcript - Exosens SAS (EXENS) Q4 2024:

Laurent Fakci, Head of Investor Relations, Exoxtans: Good morning, everyone, and thank you for joining us today. I’m Laurent Fakci Head of Investor Relations at Exoxtans. And I’m joined today by Jerome Soretier, our CEO, Equine Bois de Bey, our CFO, who will present you Exoxtans’ full year 2024 results and outlook. This presentation will be followed by a Q and A session, so we can take your questions. I will now hand over to Quinn Boyd.

Koen Boi, CEO, Exoxtans: Thank you, Laurent. Good morning, everyone, and thank you for joining us today. 2024 was a remarkable year for us. And in our first year as a public company, we over performed most of our IPO guidance. First on revenue, we targeted around 30% total growth, including acquisition.

We achieved 35%. And we targeted the high teens organic growth, and we delivered 25%. Adjusted EBITDA, we targeted at least EUR 115,000,000. We delivered EUR 118,500,000.0. And EBITDA margin slightly above twenty twenty three level at 2529.5%.

And we delivered a 3130.1%, which is the first year where we crossed the 30% line, by the way. On adjusted EBIT, we targeted between 2425%, which we delivered. And finally, on the leverage ratio, we aimed for a ratio of 1.6 times at year end and we reached 1.2 times. So I will now hand over to Gerald, who will recall who we are and what we do and the trends that we see in our market. And I will continue with more insights on our financial performance.

Laurent Fakci, Head of Investor Relations, Exoxtans: Thank you, Koen Boi. Good morning, everyone. Let me first start to recall what we do at Exosense. At Exosense, so we provide innovative sensing solutions in the universe of photonics that contribute to a safer world either in protection or in prevention. We protect people, we protect soldiers, we protect infrastructure, we protect in fact, all assets in our societies.

On the other side, we prevent quality issues, we prevent contaminations, we prevent wasting resources again in our societies. In fact, to do that, we make use of physical and chemical phenomena that are invisible to the human eye to create sensing data information useful to our OEM and our end users. So we reveal the invisible, which is our motto. In a nutshell, ExoSENSE is a global leader in amplification, detection and imaging. We have strong positions in initiatives with positions as number one or two.

We are active in four high value added, fast growing verticals: defense, industrial control, life science and nuclear. We are global as our customers are in different locations, in different industry, they are where they are. We have a history of serving over 70 countries. We focus in fact rather on applications rather than geographies as technology is used globally. We are a highly technological company with around 7.7% of our revenues invested in R and D, A long history of technological edge over two thirty inventions or patents patent families, let’s say, in our history, of which still 80 are still active.

And finally, on the financial side, we achieved 2024 reaching EUR $394,000,000 of revenues, which is a growth of 35% over last year and EBITDA in the range of 30%. Next (LON:NXT) slide. So our markets are fast growing with high end technological applications, life critical applications underpinned by a very strong secular growth. So our business is 72% in defense, 12% in life sciences, thirteen percent in just for control and nuclear with more than 3% is still a very interactive and growing and active area in our portfolio. Defense is our largest market.

We have been benefiting obviously from increased budgets, But we also have short acquisition cycle products, which allow us to transform the defense budget quickly into products at a relatively fast pace. Industrial controls, where we provide sensors that are critical to quality control, industrial efficiency, basically where we create fundamental data usable then in software, in artificial intelligence, developed by our customers for the applications. Life sciences is more driven by drug discovery, environmental protection, acceleration of research and nuclear obviously is pulled by the renewal of nuclear industry, generally speaking, but more importantly by the pool of increased energy needs in the frame of decarbonation of energy sources. So Ecosense is definitely present on markets with structural long term growth drivers with very strong positions in these. So we are a technology platform.

We provide sensors, photonic sensors over the whole spectrum, over whole spectrum of light or particles. Not many cover this whole spectrum apart from Teledyne as we explained in the past. In these different bandwidth, we either select, develop internally or acquire technologies via selective M and A. Not having the same strength in-depth in each band, which is obvious, but we can complement that accordingly. And the in house developments, but also the acquisitions have enlarged our portfolio of products in a different bandwidth in a very complementary, cross functional and cross selling manner.

Technology is our core. We developed the common technological bricks to earn them in a way that makes them specific to each application, covering the spectrum, allowing cross selling opportunities, allowing cross fertilization of technologies, together serving better customers with a wider portfolio for their own applications.

Koen Boi, CEO, Exoxtans: So our main source of growth is technology. It differentiates us in our market and it gives us the ability to win and to create a virtuous cycle of technology and growth. Innovation is in our DNA, and we have invested consistently between 78% of our sales in R and D. We have 85 PhDs out of one sorry, out of 1,500 permanent employees, which gives you an idea of the level of technology in the company. And a great proof of the importance of innovation in our company is the number of patents, subsidized until now, over two thirty of which ACR active.

We also leverage a global system of cutting edge partners to foster innovation in the various fields of research that we have. For example, raw materials with UPSL in Switzerland, Artificial Intelligence with a French startup called St. Pete, nuclear with DEA or infrared with University of Leven, hyperspectral with University of Leven, to name a few. So combining our efforts and the innovation partnership in our ecosystem, we have succeeded in launching new products on a regular basis. And as a result, 60% of our revenue comes from products that we have launched since 2016.

The second fuel for growth is M and A. We closed four acquisitions in 2023. We announced four acquisitions last year. And we want to continue in the same pace in the future as we want to be a platform to consolidate technology. We are very selective in our M and A process with three main criteria.

First is technology, second is go to market And the third one is synergy. Let’s look at the first one, technology. If you recall the full spectrum of light and particles that Jerome shown earlier, we are present in almost all of the spectrum. There is some spectrum where we are stronger than others. For example, we were not present in a Muir bandwidth.

And instead of developing it internally, we acquired first TelOps and then Nuxant, which was announced but not yet closed. So this technology is very suitable for gas detection and surveillance market. We could also add lasers or X rays where we’re not freezing and add adjacencies in the markets that we address. Two, go to market. We look for targets which are our position in fast growing markets and that will help us enlarge our commercial reach and increase our market share.

This is a typical case of Centronics that help us double our market share in nuclear and natural detection when also enlarging our commercial reach within the semiconductors, the geogamolar radiometry market and accelerating in the SMR market for nuclear detections. Three, synergies. We will look for five point players that will bring us synergies. As an example, Zenix brought us this weird technology that we didn’t have. And we were both present for Toni and PENIX in the rear.

And we could combine our product roadmap in this technology and accelerating. And we also could bring them our operational excellence methodology and processes when we decided to combine and rationalize all camera assembly sites. Another example of synergies with Ermul, we have enhanced our innovation capabilities by LNG cross fertilization. And for example, Elmo and Tunstalline’s team for mass spectrometry, we have been able to design new we have able to develop new design in for our Tier one customer. How do we think about sustainability?

We always have two objectives in mind when we think about sustainability. First is achieve sustainable development goals as we are a signatory of the United Nations Global Compact. And two, sustainability should contribute to the company performance and create value. Our E and G target should meet both objectives to be sustained over time. With this in mind, to ensure that we address the right issues and define the right strategy, we performed a double materiality metrics two years ago, and we updated it with the CSRD framework in 2024.

So our strategy is organized in four pillars. Our first pillar, partnership with CSR commitments, is about how we select and engage with our suppliers from a sustainability perspective. Our second pillar looks at people, how will we ensure their well-being and development when ensuring that we have a diverse workforce as it is a demonstrated enabler for conformance. Our third pillar targets our environmental impact. And our fourth pillar is on governance and ethics within our organization.

In each of these pillars, we have defined targets in the medium term. Last year in September, we obtained the silver Ecoveridis medal and we aim for the gold medal this year.

Laurent Fakci, Head of Investor Relations, Exoxtans: So let’s talk a bit perhaps about the our market dynamics. So to start with, in amplification and especially in light amplification, we are undisputed leader with 71% market share excluding The United States and around, we estimate, 42% including it. This segment represented $280,000,000 of revenues in FY ’20 ’20 ’4. And it has seen and it is seeing higher than initially expected at IPO growth. We see it growing on the medium term in the range of 8% to 10% carryover per annum.

So we are proven on the battlefield on its market and we are the only sizable non ITAR player, our two main competitors being U. S. Based. So in 2024, the next page, yes, in 2024, we conducted businesses with our customers. We reconnected businesses.

We won new businesses and we achieved some major wins. We named here a few. Ocar is a major contract that was announced late in the year. I think Quinn Boy will probably talk a little bit more about it a little bit later. But we also had significant wins or developments or further contracts or awards or business with Finland, with France, with Poland, with UK, with Australian.

This is only, of course, a few and we actually achieved many others armies. 2024 also marked the acquisition of NBLS. So it’s not closed yet, by the way. It is expected to close in H1 twenty twenty five. It’s manufacture of night vision devices, 65 people built in Madrid in Spain.

And within VLS, we aim at reinforcing our presence in Spain, in Latin America, in certain countries in Asia, and developing and using a strong optical and system competence to develop innovative systems combining image intensifiers and imaging sensors from our Detection Imaging segment at some point in time. Our defense markets are benefiting from very strong tailwinds like geopolitical environment is telling us every day and as everyone can witness. The target set a few years ago by NATO countries was 2% and many countries did increase their spending until that point, which has been reflected in our activity. But as we see today, the NATO target is being upgraded to more at least to a three percent -ish or more, that will come in the next days. Of course, countries are still planning for that, are still preparing for that.

It’s not fully official or this is taken, but the trend is there. And so we see defense budget continue to grow in the foreseeable future. We are well positioned to benefit from this increase. In a way, we already see it partially in the fact that we are seeing a stronger market than we thought initially that IPO. And we are and remain the partner of choice of NATO countries because we have shown the ability to ramp up to increase our output and to have the technological edge that the modern armies are looking for in order to be the first to see be the first to see.

Nitrogen itself or image intensifiers is expected is enjoying very strong perspectives. First, we have short cycles, short commercial cycles, but also short production cycles. I mean, we can get significant we can feel significant quantities of equipment in only a few months or a few quarters as opposed to years for larger platforms. So we are quick and so the transformation of defense budget into real equipment in the field is quick, pushing for increasing, let’s say, the speed at which the contracts can be executed. Second is Night Vision is today really a key tactical advantage on the field.

It has been able, it has been demonstrated in the latest identity conflict that it is essential to be operating at night. And the last identity configs are putting some emphasis on the land forces where all soldiers now are targeted to be equipped. This is a change of the trend, which is pushing even further the equipment rate targeted by the countries for the night vision forces. In fact, as a matter of fact, we the low investment over the last decade is also pushing for an increased investment in night vision. And at a relatively low cost, you can have or let’s say, reasonable cost, you can have very massive effect.

For the cost of let’s say around two fighters, two fighter aircraft, you can equip the whole division, 12,000 people fully equipped on the ground. So combat at night, quick cycles, massive effects, kick tactical advantage will continue fueling our strong market dynamics and that’s where we are uniquely positioned to serve.

Koen Boi, CEO, Exoxtans: Our main product identification is the image intensifier tube. It looks like a small tube made of plastics, as you can see on the right in the chart, but actually contains an awful lot of technology in place, which are difficult to master and replicate. Only few players can do it after ten years of investment in experience. There are more than four sixty production steps to manufacture it. And we have more than forty years of experience manufacturing these two.

So our component is integrated into night vision goggles to allow the soldiers to see in the dark. And we estimate that around 70% of the global performance comes from O2. So the night vision goggles are the eyes of the soldiers and we are the engine of the device. We have 71% market share outside of The U. S.

And we are therefore delivering our light amplification products in most of the countries already in the world. So let me give you some specifics on three countries here. At the bottom, Germany and Belgium with the OCA contract that we initially signed in July 2021 and then extended with the second option at the end of twenty twenty two. And now with the third option that we announced in December 2023. The bulk of option three is to be delivered in 2026.

And so far, we have delivered 50,000 devices based on 16 millimeter format where we are the sole provider in the world. Third country I would like to give you some specifics is U. S. U. S.

It represents 45% of the world market. Today in this market, we do not address Department of Defense with the night vision tubes. But we sell to Tier two customers like police forces, coast guard and natural leisure market for hunters. It is a very dynamic market with local capacity constraints. So we have decided to set up a new factory in The U.

S. For night vision goggles for two reasons. First, we have capacity in Europe so that our Europe factories only focus on Europe and countries that require Agustri products. And two, manufacture tubes for The U. S.

Market, where we envision opportunities at the forefront effort of modernizing the forces with the return of high density conflicts. We were not able to address these needs until now. And of course, it will be it will take time to develop this market. Between 2021 and 2024, we almost doubled our usable capacity through our output as our output more than doubled since 2020. We executed major stops major steps over 2023 and the remaining one in 2024.

And we have now completed the first capacity plan. In light of the recent even higher demand in our market, we have decided to launch a new capacity increase. So we will invest around EUR 20,000,000 over the two years. All layouts and design of equipment will be ours. We will set up a new factory in The U.

S, where we already have a factory for our detection business, leveraging internal synergy. The plan is to be ready by the first half of twenty twenty seven. We will also invest in Europe, rethink our factories layout to create space, invest in new equipment where we see bottlenecks and improve our processes and efficiency to increase capacity. With this additional investment, we will increase our capacity by 25% over 25%, twenty six % from where it is today?

Laurent Fakci, Head of Investor Relations, Exoxtans: As innovation remains our core, we continue to develop new technologies and new products. We are continuing to develop our five gs, which is next generation image intensifier for night vision. It yields significant performance improvements over the current four gs, fully in line with the need of the armies and of the end users to be the first to see. As a matter of fact, superior performance allows us to see further, hence see before being seen, hence being able to act or react as a first before the opponent. Special forces have already tested the product.

They are confirming this is a product they are looking for. They want to have as a next generation one, sorry. And we will launch commercially the five gs in September 2025, while it remains available for testing and qualification purposes at our OEMs already. So we did spend some time on our Amplification segment, yet our Detection Imaging segment is also enjoying very strong positions. We had sales of about EUR 118,000,000 in 2024 in this segment.

We are leader in our initiatives that are fast growing and we see the range of growth in the range of 7% to 9% per annum in the medium term. The underlying market dynamics already explained, but they are confirming and reinforcing the need for high end specific technologies specific to the applications coming from the photonics and from the photonic universe. So we have a global presence on these markets. We focus to serve our customers by the most adequate technology, by being designed in new machines, serving exactly the purpose of the customers and so serving allowing our OEMs to fulfill their own mission with the end users. So we leverage here our portfolio of technologies across the spectrum to foster synergies both at the commercial and at the technological levels in the different verticals.

These verticals in particular, so four of them all four of them are present in this segment, all with strong underlying growth. And with the exception of nuclear, large total addressable market. Nuclear being more modest in size, but where we have a very strong position. So the drivers for this market are indeed for life sciences, the acceleration of drug and vaccine discovery, the new materials or environmental regulation. For nuclear, as already mentioned, emerging small modular reactor SMR ecosystem and more generally, the resurgence of nuclear projects due to the rising demand in electricity.

Three, for industrial control, it’s driven by robotics, by factory automation, by usual control, all of that put together and bundled under the use of advanced software, artificial intelligence in the industrial production system. And last, defense is a smaller part of our Detection Imaging segment, but is showing a very strong trend in the current geopolitical influence. So FY 2024 was a year of significant design wins that were achieved in many areas. We mentioned here only a few of them. But as examples, in mass spectrometry, we reached the ramp up phase for major instruments at Biomiriyu or at Danaher (NYSE:DHR), which in fact more than compensated the flattish market following slowdown in certain areas like China.

In nuclear, we started the development with several SMRs, both in Europe and The U. S. We’re developing specific neutron sensors, working on high temperature sensors, high temperature meaning above 400 or four fifty degrees that we are mastering. In imaging, we saw strong momentum in defense with hand salt or with fine metal as well as significant tailwinds in hyperspectral that also here to more than compensate stabilized softness in industrial markets. So I think we wanted to highlight something that we often are integrated on what does artificial intelligence mean for InsoSense.

In fact, artificial intelligence is a tailwind for us in two aspects. If we talk about B2B, we provide we create the data that is needed that is required by the artificial intelligence developed by our customers to actually perform their duty and serve the end users. So we create the data that is used by artificial intelligence. In B2C, the direction is coming from a different angle. It’s more that B2C and the emergence of artificial intelligence is driving in fact increased needs for data centers so that millions of people can use it every day.

And these data centers require increased levels of energy where fostering and nurturing in fact the increase in the Poipon project and the emergence of the SMR in this world. We serve these markets and we support the development of these energy needs that are in fact induced by artificial intelligence. So we see the development of artificial intelligence not as a threat, but really as a strong tailwind for our activities because we produce data that are the core of this development in this emergence. So I think Quidbo will now tell you how our recent acquisitions accelerated the growth in the Detection and Imaging segment.

Koen Boi, CEO, Exoxtans: Thank you, Jean. We like to say that we have a decentralized yet military approach when it comes to the integration of our acquisition. Our integration playbook includes seven work streams, four for support functions that you see at the bottom of the slide, finance, IT, HR and legal and three operational functions, work streams, sales and marketing, R and D and operations. Support functions integrations playbook is straightforward and we implement that consistently for all our acquisitions. For operational work stream playbook, we define working groups combining teams of the acquired company and ExoSense business unit team to execute the integration plan, define common focus goals and deliver synergies.

For sales and marketing work group, this results in alignment and go to market, cross selling opportunity development and mergers of teams. For R and D, it is about alignment of R and D roadmap and harmonizing the product portfolio. And for operations, it is about simplification and optimization. The integration is fully completed for all acquisitions in imaging, for Zenix, Telox and Alartec and for Detection, Enworld. And it is well underway for Central Lake in Nuclear, which was acquired more recently.

Let’s focus now on our full year 2024 performance. As I highlighted at the beginning, we achieved very strong full year results, exceeding our IPO guidance, but also at the top of the range of sales and EBITDA that we gave early January. On revenue, we guided towards the range of EUR $390,000,000 to EUR $395,000,000 revenue and we delivered EUR $394,000,000. On profitability, we said in January that we would be between EUR 116,000,000 and EUR 118,000,000, representing an EBITDA margin of around 30%. So we achieved EUR 118,500,000.0, slightly above our range with an EBITDA margin of 30.1%.

On cash flow, we generated EUR 55,000,000, which is a significant improvement versus last year. And this represents a cash conversion ratio of 74%. This is an improvement versus both EUR 22,000,000 and EUR 23, which were up 69%. We have completed the investment phase the first investment phase that we initiated in 2022, ’20 ’20 ’3 and at year end of this last year. We have anticipated a new investment phase to meet the higher demand.

And as a consequence, we are slightly under the guidance at 75% for this year. Our leverage ratio, we significantly deleverage after the IPO And with the cash generated from operations, which is a leverage ratio of 1.2 times our EBITDA at year end. And this is below the 1.6 times EBITDA that we guided at the time of the IPO. In 2024, so we delivered both growth and margin expansion. We continued to grow at a significant pace at plus 35% and plus 25% on a like for like basis.

And as a reminder to the comparable scope of last year, we have to exclude six months of Photovid, Germany and Ermoo, which were acquired mid year of 2023 and nine months of revenue of tail offs, which was acquired in October 2023. And we also need to exclude the 2024 acquisitions, Centroinc for five months, that we have a contribution for five months and it takes for four months to be on the comparative scope with full year 2023. So over 2021 and 2024, we have more than doubled our revenue. And this demonstrates, first, our ability to increase capacity and sees all opportunities in a very fast growing defense market. And this translates into the plus $70,000,000 revenue that you see in the notification.

This also demonstrates our ability to execute our bolt on M and A strategy, and this translates into the plus $35,000,000 increase in revenue and D and I as we focused our M and A efforts in this segment. On adjusted gross margin, we achieved a plus 45% growth. This reflects the volume increases and the margin expansion as you will see in the next slide. So amplification addresses mainly defense market and its growth is purely organic. In this market, we delivered a 34% growth, which is mainly volume driven with a fixed and price and mix effect accounting for mid single digit.

While we delivered significant volumes, we also managed to increase our gross margin by two eighty one basis points, of which roughly 60% is from favorable product mix price and 40% from yield improvement. And this demonstrates our operational excellence as we maintain quality, while we have increased our production significantly over the past few years. D and I address is mainly industrial and commercial markets. We grew 42%, taking into account the impact of our acquisition. On a like for like basis, it is a 7% growth.

That is an improvement versus H1, which was a low single digit. And if you recall from our half year earnings call, we’ve consolidated our camera assembly stats during Q1 and Q2, and this has disorganized our supply chain, but it’s behind us now. What is so impacted us is the softness of the Chinese market and that impacts the machine vision market. This is still the case today. But it is more than offset by growth that we see and the market share gains that we had in our scientific cameras and electronic microscopy, so in the cameras in defense and surveillance market.

So we grew volumes, but we also managed to increase our gross margin by two ninety two basis points. Half of this increase is due to a negative one off of last year, while we scrapped sold some old inventory. So excluding the one off, we improved our gross margin by 160 basis points, thanks to favorable product mix, improved yields and the benefits of our synergy. We delivered second class EBITDA margin of 7.1% and EBIT margin of 24.2% that reflects our strong positioning in the market with a high level of technology and industrial Naha. While we deliver growth and margin expansion, we also control our cost structure.

So we benefit from our scale the scale effects. And this resulted in a 60 basis point improvement in EBITDA margin and a plus 150 basis point in EBIT margin. In terms of net profit, on the next slide, we delivered EUR 30,700,000.0 net profit, which is a significant improvement versus last year, plus 66%. Three points here that I would like to mention. In 2024, our K and L includes significant one offs due to the IPO.

Close to SEK 4,000,000 operational costs that we put in other expenses, so EUR 3,900,000.0 that you see. And in our financial results, we had as of close to EUR 13,000,000,000 of costs relating to the refinancing of our debt, out of which EUR 8,000,000 is noncash. This is close to EUR 17,000,000 negative one off expenses that we won’t have in the future that impacted our profit before tax this year. Second point is we restructured our debt and we divided the cost by two. As you can see in the second half financial cost of EUR 5,500,000.0.

Third, our income tax increased significantly compared to last year as we increased our profitability. Please note that in 2023, the EUR 1,800,000.0 income tax charges includes the activation of historical deferred tax losses. I will skip Slide thirty five and thirty six as we run short of time. And I focus directly on the slide on cash generation. Slide 37.

Here again, 2024 was a very strong year where we managed to deliver profitable growth and generate cash. Over the period, we achieved almost EUR 55,000,000 free cash flow generation, which is more than double the one of last year of 2023. And this is in spite of the IPO cost that I mentioned earlier. We also control our working capital requirements and control our CapEx, while we deliver substantial growth. Cash conversion ratio increases to 74% up to the 69% as we normalize our CapEx spending.

We are below our year end expectation of 75%, as I mentioned earlier, as we have accelerated at year end as we launch our new investment space to meet the higher demand. As we IPO, we refinanced our debt with a new term loan that is maturing in 2029. We decreased our leverage ratio from 3.3 times our EBITDA to 1.2 times. And with a strong cash generation from operations, the refinancing at the IPO, we’re including the EUR $250,000,000 term loan fee and EUR 100,000,000 of SEK that is not drawn at year end, we have a very strong balance sheet to fund our organic growth and our M and A bolt on strategy. So given our strong financial performance and strong cash generation, our Board of Directors decided during its meeting on February 28 to propose a payment of EUR 0.1 cash dividend per share for fiscal year 2024.

It is representing a payout ratio of 16%, slightly above the IPO guidance, where we say the payout ratio of 20%, twenty five % with a half year sub dividend paid in 2025.

Laurent Fakci, Head of Investor Relations, Exoxtans: So concerning the future, concerning our 2025 outlook, we expect continued sustained growth with revenues growing high teens versus 2024, while we expect our EBITDA to grow low 20s versus 2024. Again, so this implies indeed that we expect a mild improvement in our EBITDA rate as a percentage of our revenues. Until 2026, we expect the twenty four-twenty six EBITDA average growth rate CAGR to be in the high teens. On CapEx, as announced, we are reviewing our CapEx plan to include the capacity expansion of about EUR 20,000,000 in Europe and in The U. S.

Over the twenty twenty five, twenty twenty six period. And consequently, we now expect a cash conversion ratio, which whose definition did not change, to be in the 70%, seventy five % range. Finally, we will continue our selective M and A strategy, while maintaining a leverage ratio of below about two. So I have to conclude this presentation and these results. 2024 has been a very strong year.

We are well positioned as a technology platform in defense, in industrial control, in life sciences, in nuclear, we will continue benefiting from strong tailwinds. And so we expect the best for 2025. Thank you for your attention. And so we are now ready to take your questions concerning this presentation, these results.

Conference Moderator: Thank you. We will take our first questions from Alexander Pytak from Bernstein. Your line is open. Please go ahead.

Alexander Pytak, Analyst, Bernstein: Yes, good morning and thank you for taking my question. I have three. So the first one is regarding your investment into U. S. Based manufacturing capacity for image intensifier tubes.

Is this a sign of confidence that you can enter The U. S. Market at scale and compete in U. S. DoD supply?

And if you could explain to us what are the mechanics around ITAR restrictions? Would that mean that your U. S. Operations would then be also restricted or not? The second question would be just maintenance regarding your top line guidance.

Does this include just the announced acquisitions or does it include also acquisitions that are yet to be announced between now and year end? And then the third one is just a question on net leverage, which came out at 1.2 times, so well below your IPO indication, I think it was 1.6 times. Is this because you made less acquisitions than you thought you would or because of your better operating performance? Thanks very much.

Laurent Fakci, Head of Investor Relations, Exoxtans: Thank you for your questions. So first, concerning our investment in The U. S. The operation in The U. S, as soon as production is done on The U.

S. Ground is an ITAR production. So indeed, we will the restrictions concerning the ITAR restrictions will exist for this production outside from The U. S. Our decision to invest into The U.

S. Is a sign of confidence that we can be more present and be successful in this market. But building the manufacturing capacity and building the business will take time, but we are there for the longer term. And so we want to make this investment as a sign of confidence that the market is there, the market is growing and we can we have a role to play there, preferably very good and strong role. Koenig, perhaps for the other questions?

Koen Boi, CEO, Exoxtans: Yes. On the top line guidance, it includes only announced acquisitions and not acquisitions which are to come. And your third question on the leverage ratio, below our guidance, one of the reason is the fact that out of the four acquisitions that we announced, two have not been closed yet. So if we have been able to close them before year end, we would have been at 1.6x the EBITDA. And at the same time, it’s true that we generated very strong cash flow at year end.

So it’s a combination of both.

Alexander Pytak, Analyst, Bernstein: That’s right. Thank you very much.

Conference Moderator: Thank you. We’re now taking our next questions from David Perry from JPMorgan. Your line is open. Please go ahead.

David Perry, Analyst, JPMorgan: Hello, Jerome. Hello, Grunvoy. Congrats on a good first year. I just had one quite simple high level question, please. You gave your guidance in January.

You raised the medium term guidance, but a lot has happened since January in the world. So what kind of defense spending backdrop were you assuming when you gave that guidance in January? And in light of some of the dramatic things that were said yesterday at the Defense Summit. What is the potential that you can achieve these days?

Laurent Fakci, Head of Investor Relations, Exoxtans: Thank you. Thank you for your question. Indeed, a lot is happening, but it’s happening every day. So we are constantly reevaluating our, let’s say, our activity moving forward, but we are still also waiting for more stability and in understanding what is going to happen. Obviously, when we gave our guidance in January, we were expecting we were seeing and already seeing that the market is stronger than what we expected IPO.

This is what drove our mid term guidance, which we are maintaining. Of course, we will have that evolve according to what we see coming from the market as a result of the constant moves that are currently being that are constantly happening. So the situation is moving, and we will have to and we will revisit in due course our guidance if we need to or when we see we have to as a result of the geopolitical trends that are now developing under everyone’s eyes.

David Perry, Analyst, JPMorgan: Okay. So maybe if I can just follow-up. I mean, are you could you just comment sort of qualitatively on the customer engagement you’re having, the kind of request for proposals? And any indications you’ve had there at all?

Laurent Fakci, Head of Investor Relations, Exoxtans: Well, so the request for proposals, the demand we are seeing from the market is increasing, but is increasing, let’s say, as a pay that is different than the daily announcements we see in the situation that is still evolving. This is what we call the stronger market. With time, new programs evolve, defense budgets will increase. They will transform into additional orders requirements. But obviously, we have the translation of the current trend into actual programs has not fully or as not fully started.

So it will come with time, but that makes us at least much more confident on the medium term of maintained difference budget growth. We are not seeing that on a daily basis because the news are in fact moving too fast for the to cope with the budget and administrative constraints in placing orders. But the programs are developing and they will translate into additional activity in the future for sure.

David Perry, Analyst, JPMorgan: Thank you very much and good luck.

Conference Moderator: Thank you. We are now taking our next questions from Aurelien Sivignon from ODDO BHF. Your line is open. Please go ahead.

Aurelien Sivignon, Analyst, ODDO BHF: Hi, good morning. Thank you for taking my question. I’ve got three. First, maybe regarding again a follow-up on the new investment capacities in The U. S.

Can you give us more color on which product will you be producing there? I mean, either four gs or five gs tubes? And what will be exactly the capacity there by H1 twenty seven? Then on the IT division, organic growth has been much better last year in H2 rather than H1. I was wondering if you were expecting a similar trend this year or should we expect growth to be more linear in 2025?

And lastly, I had a quick housekeeping question on the tax rate. Do you intend to activate again these tax losses in 2025 to get maybe closer to the 18% that was initially targeted, I believe? Thank you.

Laurent Fakci, Head of Investor Relations, Exoxtans: Thank you. So concerning our investments in The U. S, it’s our capacity increase is expected to be altogether around 25% for our investments following our investments both in Europe and in The U. S. We do not communicate specifically on the capacity that will result from this U.

S. It will be set up so that starting 2027, we have a fully installed capacity beginning 2027. ’20 ’5 percent overall of our current portfolio is already a nice step, but we of course, we will reevaluate this moving forward depending on the market evolution. We need to do that because the market is much higher than expected. So this is what we are focusing on now.

Koen Boi, CEO, Exoxtans: On your second question, our organic growth for DNI, yes indeed, we expect the H2 that will be higher than H1 as we have experienced as we experienced last year. Your third question on tax rate. As what we see today is our profitability is higher than what we anticipated. And we continue to grow at a higher pace that and we generate more profit than we anticipated. As a consequence, we have already activated all our historical deferred tax losses, and there are no more tax losses to activate.

Yes, we are consuming deferred tax losses that we have. So in terms of cash tax payout for 2024, it was a 19% tax rate.

Conference Moderator: Okay. Thank you very much. Thank you. We are now taking our next questions from Hendrik Stossmick from Stifel. Your line is open.

Please go ahead.

Alexander Pytak, Analyst, Bernstein: Hello. Thank you for taking my question. I was wondering whether the latest announced export restrictions from China regarding certain minerals has any impact on your operations? Thank you.

Laurent Fakci, Head of Investor Relations, Exoxtans: So we are consuming certain materials, but compared to the let’s say to the general market demand, what we consume is extremely small. So the volumes are extremely small and we procure our materials that already transformed from European or U. S. Suppliers depending on the application in the area. We the quantities we consume are more in the range of grams rather than grams or kilograms rather than tons or anything else.

So it’s more quantity anyway. So we do not expect a direct impact of these restrictions on our business.

Alexander Pytak, Analyst, Bernstein: Thank you very much.

Conference Moderator: Thank you. We are taking our next questions from Laurent Giliber from BNPXN. Your line is open. Please go ahead.

Laurent Giliber, Analyst, BNPXN: Yes. Good morning, Jerome. Good morning, Konboy. So I have three questions. So the first one regards your go to market in The U.

S. Which kind of clients are you going to target? Yes, we do refer to the law enforcement, let’s say, people or army because I guess that if you want to tackle the army, you need to have enough scale to be able to support. So that’s one question. So when you refer to the growth of the market going forward from 8%

Laurent Fakci, Head of Investor Relations, Exoxtans: to 10%, does it include

Laurent Giliber, Analyst, BNPXN: The U. S. Market or not? And last point, regarding DNI, where do you see the growth the highest growth segments into 2025? Thank you.

Laurent Fakci, Head of Investor Relations, Exoxtans: So concerning the demand in The U. S. Market in amplification. So U. S.

Market is a vast market with many different programs and operations and a lot of local OEM partners. We intend to globally serve this market also through OEM partners like we are doing in other areas, but also on certain occasions directly with DoD. That is there is not a single way to go to market in that way. Generally speaking, it’s important to say, yes, we are investing in The U. S, but also in Europe to increase our capacity because we see that the armies that are not ordering at the pay they should or they want will come very late.

And so they will the scarcity of the supply will impact their acquisition programs. Okay. So overall, the 8%, ten % growth that we expect that is a general trend for this market, not specifically targeted at a specific region. Concerning D and I, our areas for growth are in fact are all the different areas. I mentioned and we mentioned that the trends are very strong in the light trends.

2024 was not exactly as we expected with some softness in the first in certain markets. We compensated that by design in. We are designing in the programs. And when our customers do well, we do even better because we replace older machines with new machines sorry. Older machines are replaced by new machines in which our detectors are present and so that benefit from this ramp up.

This is true for machine, for instrument, but also in industrial control. And we expect that in 2025, the destocking in certain areas, the softness in certain areas as will have stabilized at a lower level or will restart increasing depending, for example, in semiconductor, we expect that by the end of the year, there will be a restart to a certain extent of the investment. So we expect these areas as being growth areas, but generally speaking, our markets have benefit from these very strong underlying trends.

Laurent Giliber, Analyst, BNPXN: Thank you.

Conference Moderator: Thank you. It appears there are no further questions. So I will now hand you back to Laurent Foxy for any additional or closing remarks. Please go ahead, sir.

Laurent Fakci, Head of Investor Relations, Exoxtans: Thank you. Thank you again for joining this call. We are we remain at your disposal should you have any further questions. And we look forward to meeting some of you during our workshop in the coming weeks and wish you a very good day. Thank you.

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

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