Earnings call transcript: GBS Group Q1 2025 misses EPS forecast, stock dips

GBS Group reported its first-quarter 2025 financial results, revealing a slight miss on earnings per share (EPS) against market expectations. The company posted an EPS of €0.06, falling short of the forecasted €0.07. Revenue reached €103.39 million, also below the anticipated €111.31 million. Following the announcement, GBS Group’s stock experienced a decline of 4.92%, reflecting investor concerns over the earnings miss and revenue shortfall. According to InvestingPro analysis, the company appears undervalued at current levels, with 8 key insights available to subscribers, including impressive gross profit margins and strong financial health metrics.

Key Takeaways

• GBS Group’s Q1 2025 EPS of €0.06 missed the forecasted €0.07.
• Revenue came in at €103.39 million, below the expected €111.31 million.
• Stock price fell by 4.92% post-announcement.
• The company confirmed its full-year guidance despite the Q1 miss.
• Strategic acquisitions and market expansion are ongoing.

Company Performance

GBS Group exhibited a modest increase in sales for Q1 2025, reaching €107 million, marking a 3.2% year-over-year growth. The company’s EBITDA rose by 6.1% to €25.8 million, with an EBITDA margin improvement of 70 basis points to 24.1%. Net income surged by 21% to €12 million, reflecting a stronger net income margin of 11.2%, up from 9.5% in the previous year. InvestingPro data shows the company maintains impressive gross profit margins of 55.62% and operates with a moderate debt-to-equity ratio of 0.72, indicating solid operational efficiency.

Financial Highlights

• Revenue: €107 million (+3.2% YoY)
• EBITDA: €25.8 million (+6.1% YoY)
• Net Income: €12 million (+21% YoY)
• EBITDA Margin: 24.1% (improved by 70 bps)
• Net Financial Position: €275 million
• Leverage Ratio: 2.5 (targeting below 2 by year-end)

Earnings vs. Forecast

GBS Group’s EPS of €0.06 fell short of the €0.07 forecast, representing a 14.3% miss. Revenue also did not meet expectations, at €103.39 million compared to the projected €111.31 million. This shortfall contrasts with the company’s historical performance, where it has typically met or exceeded earnings forecasts.

Market Reaction

Following the earnings release, GBS Group’s stock price declined by 4.92%, with the last close valued at €4.47. This drop positions the stock closer to its 52-week low of €3.83, indicating a cautious market sentiment. The decline is attributed to the earnings miss and revenue shortfall, despite a generally stable broader market. InvestingPro analysis suggests the stock may be undervalued, with additional metrics and detailed valuation analysis available in the Pro Research Report, one of 1,400+ comprehensive company analyses available to subscribers.

Outlook & Guidance

GBS Group has reaffirmed its full-year guidance, anticipating mid-high single-digit growth. The company is targeting an EBITDA margin improvement of 150-250 basis points and aims to reduce its leverage ratio below 2.0 by year-end. The acquisition of Haemonetics is expected to contribute an additional €30 million in sales.

Executive Commentary

CEO Massimo Scagliarini expressed optimism, stating, "We are moving in the right direction," highlighting the company’s strategic initiatives. CFO Marco emphasized, "Our job is to decrease the working capital," underscoring a focus on financial efficiency. Scagliarini also noted, "We are gaining speed," reflecting confidence in future growth.

Risks and Challenges

• Production delays: A €2 million sales impact due to Monterrey plant issues.
• Tariff impacts: Potential risks from changing trade policies.
• Regulatory hurdles: Ongoing approval processes for US market expansion.
• Market volatility: Fluctuations in the automotive sector affecting the Mobility segment.
• Leverage ratio: Challenge to meet the target of below 2.0 by year-end.

Q&A

During the earnings call, analysts inquired about the company’s like-for-like growth calculations and strategies to recover from production delays. Executives also addressed potential tariff impacts and confirmed progress in regulatory approvals, providing clarity on future operational strategies.

Full transcript - Gvs SpA (GVS) Q1 2025:

Conference Operator: Good afternoon. This is the conference operator. Welcome, and thank you for joining the GBS First Quarter twenty twenty five Results Webcast. All participants are in a listen only mode. And after the presentation, there will be a Q and A session.

At this time, I would like to turn the conference over to Massimo Scagliarini, CEO. Please go ahead, sir.

Massimo Scagliarini, CEO, GBS Group: Thank you very much. Afternoon and good morning to everybody, and welcome to the first quarter presentation of the GBS Group. So a quick snapshot on the number. First quarter sales at 107,000,000 plus 3.2% versus the previous year. In reality, the this number is definitely higher.

We had an exceptional event in Monterrey that delayed 2,000,000 sales, plus Borias start only in February when we were expecting this in January. But then later on, Rui and Marco will give you more detail. But definitely, this plus 3.2% expected more aggressive, but we are already recovering this. And so apart from this exceptional issue on the second quarter, we are definitely already on the on the right on the right path. A nice growing of the EBITDA plus 6.1% versus the previous year, but I believe now you’re merely use it to this.

We do our work very and we keep working in the right direction. We are, with the margin in the first quarter, ’20 ’4 point ’1 percent, so we improved 70 bps. Of course, you know that the job is not finished here. By the end of the year, we are expecting another important step. Nice improvement in the net income also, plus 21%, zero point six versus the previous year.

We reached €12,000,000 and we bring the marginality to 11.2% from 9.5% of the last year. So again, we are working in the right way to keep improving our profit and our sales. Net financial position at $275,000,000, and this bring our leverage 2.5, of course, post merger and acquisition. Let’s see now some other detail. So as you can see, let’s get in life science at 6.1, but in reality, definitely higher if we consider the exceptional condition that I just mentioned to you before.

Suffering on the energy mobility, but this is the actual situation. We believe we can improve something during the year, but it’s really day by day type of prediction. Safety, 4.9%, not the 9% that we were expecting. But again, we are back on trend on the second quarter. So definitely very confident to keep the result as we expect.

EBITDA from 24,300,000.0 to 25,800,000.0 plus 61% and a very nice 24.1% versus the previous year 23.4%. So the 70% BPS improvement. Net financial position, I believe here is very clear that we closed the year with a leverage of 2.1%. Then we had in January the M and A of the Boreas project, and this bring us to the 2.5. Again, our target is to be under two by the end of the year, and we are definitely in the right path to reach this result.

Now I will leave the speech to Guido that will give you some more detail and insight for this first quarter.

Guido, Executive, GBS Group: Thank you. Good morning, and good afternoon to everyone. So let’s comment now the analysis of the sales. So the 3.2% yearly growth, reported growth is impacted policy impacted 900,000.0 by positive effects, and that resulting in a growth excluding FX of 2.3%. This is a mix between the volume, 1,000,000 of volume effect and EUR 1,500,000.0 of net price effect.

Now here, it’s important to stress that as Massimo said, this number has been affected by two extraordinary event. The first one is that the hemolytic experiment that we acquired, as we were expecting, just contributed for two out of the three months of the quarter simply because the closing occurred in mid January. And then we had a couple of weeks just to preparation and, you know, put the the integrated perimeter at full speed. So that that result in a contribution on a two third the full contribution in the quarter by the pneumonetics perimeter. And the second is linked to production delay that we have in our plant, Mexican plant of Monterrey.

This amount for approximately €2,000,000 of sales that we are confident to recover across across the year. So now moving to the next slide, you see the contribution by division and by subdivision. It’s the first time we report with the new new subdivision of the SCRM life science. So the tech, the transgeometric and life science. Just as a company in the medtech division, subdivision includes the former business of liquid and air and gas plus the business of the membrane that was previously included in the laboratory segment.

And except the the business of STT, STT was really including the liquid now is part of the transfusion medicine together with the newly acquired business of hemonics hemonics. And finally, the life science part, the remaining life science part is equal to the former laboratory segment less the member that has been transferred to the medtech. The rationale has been already commented last during last call, but, basically, we want to reflect what is the final channel, final end channel, same channel of this division with the med tech that is dedicated to the professional b to b customer, the life science that is a consumer laboratory consumable that’s sold to more b to c type of sales, and finally, the transfusion medicine that will include everything that’s related to blood transfusion worldwide. Now let’s comment on the on the performance. So let’s start from the tech.

It is the the the must put the contributor largest contributor for EscharExci. And the 1.7 the decrease of 1.7% is entirely linked to this production delay I mentioned before in the motorway. Otherwise, we would have expected a growth in in of the division. The Transfusion Medellin is, of course, positively impacted by the delta perimeter due to the M and A impact. And then in terms of life science, please know that going forward, given the life science is a time business in the to the rest of the division, we will have some volatility across the quarter.

However, when we’re gonna see it on a yearly basis, of course, this quarter is spikes that we expect that they will stabilize. Safety is up almost 5%. Also, that case, Massimo mentioned that the reason our as an order that came just across the two quarter that will be reflected in the second quarter. In the second quarter, we see very positive trend to this business. So we expect that on first half basis, the high single digit growth will confirmed while the mobility is still suffering from the weaker automotive market dynamics.

And now I’ll leave the floor to Marco.

Marco, CFO, GBS Group: Okay. Thanks, Guido. Hello, everybody. Let’s start with the EBITDA variance analysis q two versus q one twenty five versus last year, q one last year. We already said that the EBITDA margin went up by 70 bps.

I I want to add that we went up by 70 bps, not with standing the dilutive impact of the acquisition. The impact of the acquisition has been negative in terms of EBITDA margin by around 70 bps, which means that if you look at the same perimeter of last year, we improved the performance by around 140 bps. So the the EBITDA margin without bonus would have been 24.8. Then let’s look at the variance analysis of EBITDA in absolute terms. We are up from 24.3 to 25.8.

So more or less 1,500,000, of which half a million is coming from Boris and 1,000,000 is coming from the old perimeter. The dilutive impact of Boris is shown by the 0.8 negative mix impact. As for pricing, I want to highlight that as for pricing, we are perfectly aligned aligned with last year performance and with our guidance, which means that we are increasing pricing year over year by around 1.5%. Now let’s go to the next chart. So the I I I want to focus on the right side of this slide.

So the adjusted net income excluding the FX impact, which is mainly a non cash item related to The U. S. Dollars to the loans in US dollars from GUS SP to the control companies, which funded the acquisitions. You see that we are going from 9,900,000.0 to 12,000,000, 20 1 point 6 percent increase. And as a percentage of revenues, we go from 9.5 to 11.2.

The improvement is mainly related to the improvement of EBITDA, but it’s also generated a portion around half a million is generated by lower interest paid to the banks. As you know, we are deleveraging, so we have a positive impact also on the financial charges. As for the adjusting net income that you look on the left side, you see the the figures are impacted by the the effects, which was highly positive last year in 2024, positive of 4,000,000, and then this year, 5.7. But if you want to have a fair approximation of the trend or the business, you should look at the right side of the of the slide. And as I already said several times, this figure gives you a a very good approximation of our ability to generate cash.

So more or less 12,000,000 a quarter. It’s around 4,000,000 by month. And now cash. So let’s go to the net financial net financial position. You see, net financial position, we closed the year with 220, roughly, 219.8.

Then we made the acquisition. The impact on the financial position or the acquisition is around 55,000,000. If you make the sum of the two of the net financial position at the December and of the m and a, you end up with 274.5. So this is the, let’s say, the net financial position at the end of the restated after the acquisition. And it’s not by chance that we end up with the net financial position at the end of the quarter, which is roughly, again, $2.75, which means that our net financial position was flat during the first quarter because we generated more or less €22,000,000 from the operating business.

But our stock went up by around 12,000,000. This is the stock, nonborrower stock. You see Delta Networking Care is mainly that stock. So we generated cash. The cash was absorbed by the increase in the stock.

And this is something which you already saw last year and the year before. Last year in the first quarter, our net financial position was €2,000,000 worse than the end of the previous year, and we have more or less the same impact this year, which means that we are perfectly aligned for as for the net financial position with our guidance. So we confirm that the leverage ratio at the end of the year is gonna be lower than two, which means that we are starting to generate cash already in the second quarter. We expect more or less the €10,000,000 of cash generated in the second quarter. And now back to Massimo.

Yes.

Massimo Scagliarini, CEO, GBS Group: So we thought that was important to give you some update on the tariff even if every day is changing. So I would say that today, everybody is less stressed by the tariffs. But, nevertheless, for us, tariff, as we have mentioned many time, represents an opportunity. And this because we have a very nice consolidated production footprint in The US. So tariff will allow us to grow our business in US.

The tariff actually in place in in place, so what is existing right now, if we don’t do anything is related just to a very small amount of product that we sent from Italy to US, and we’ll account 50 BPS on the whole year. But, again, if we don’t do anything, we don’t increase price, we don’t move machine into The US. Okay? And we are still at the window. Right now, as you have seen, tariffs are already in, but our EBITDA is moving in the right direction and is improving day after day.

Just to make it clear to everybody because we received a lot of question, Mexico is not impacted. Our type of production is not impacted by tariff for the USMCA compliant products. So we are not affected by tariffs in Mexico. Guidance, fully conferred. We are moving in the right direction, mid high single digit.

Again, I know that the two exceptional event that we had in the in this quarter might have surprised you, but that have already been recovered in the second quarter, and this is our visibility. Adjusted EBITDA, again, improvement of 150 bps, two fifty bps and leverage ratio below two point. I believe we have finished. So we are more than happy to move the Q and A to the Q and A session.

Conference Operator: Thank you. We will now begin the question and answer session. The first question is from Ana Frontini of Berenberg. Please go ahead.

Ana Frontini, Analyst, Berenberg: Hi, good afternoon. I have only one question because I think there was some lost in translation here. Can you please clarify how much of that growth, the 3.2% is actually like for like and how much is linked to M and A? And also, please, if you can touch on the topic of the intercompany change related to M and A, please.

Massimo Scagliarini, CEO, GBS Group: Okay. I I I think I already spent few words. But, Guido, do you want to give him some more Marco, I don’t know. Okay.

Marco, CFO, GBS Group: Anna, thanks for the question. Calculating the like for like growth rate can be misleading is misleading. I will explain you why. You remember that last year, GBS was selling blood filters to Ammonetics. Ammonetics was buying the blood filters from GBS and making and selling the whole blood sets, which which means that in order to calculate the like for like growth rate, I should adjust 2025 sales by doing two things.

I should remove the sales to third parties generated in 2025 by the acquisition, But I should add the back the intercompancies of the bulk filters. Honestly, if you ask me and if you measure me through the like for like growth rate, I I’m very happy about that because it means that if I’m bad at managing my working capital, which means if I increase the intercompancies of a block field from one division of GBS to another division, the division we have just acquired on GBS, I have a very good increase in the like for like use rate. But honestly, our job is to decrease the working capital. Our job is to decrease the the the the stock. So we want to decrease the intercompany sales of blood filters.

So if we do that, if we decrease our working capital, if we decrease our intercompany sales, we decrease also the like for like growth rate. So that’s why majority Massimo, they were not calculating and sharing the like for like. And they said, we gave you a guidance. The guidance says in terms of sales, mid high single digit, which is more or less 70%. And they said, we aligned with that guidance.

The only reason why we are not at 8% in the first quarter is due to due

Emmanuel Galazi, Analyst, Equita: to two Event.

Marco, CFO, GBS Group: Very precise events. The fact that the bores start in February and bores each month, the incremental sales from bores are €22,500,000.0, which is 2% growth. And then with the Masimo said also, we had a specific issue in a in a plant, in a Mexican plant, and we were not able to deliver 2,000,000 of orders, which we are going to deliver in the second quarter. ’2 million of orders now delivered is again 2%. So it means that due to two two specific events, instead of posting or reporting 7% of growth, we are reporting 3%.

But replacing that thinking, reasoning with the like for like growth is technically wrong. I hope I was clear, Anna. I know it’s quite complicated.

Ana Frontini, Analyst, Berenberg: Yes. Thank you very much. It was perfect.

Marco, CFO, GBS Group: You’re welcome.

Conference Operator: The next question is from Emmanuel Galazi of Equita.

Emmanuel Galazi, Analyst, Equita: Good afternoon, everybody. Thank you for the presentation. I have, let’s say, three questions. Well, the first one is on the Safety division, up mid single digit. You clearly mentioned and expected a reacceleration of the business starting from the second quarter.

Can you just discuss a little bit more about the first quarter dynamics? And how do you see the demand evolving starting from the second quarter? The second one is just a little bit more color on the exceptional event in Monterrey and just a clarification if you expect this €2,000,000 to be fully recovered in the second quarter. And the third one is a very quick one. Can you just remind us the euro dollar exchange rate embedded in your guidance?

Thank you.

Massimo Scagliarini, CEO, GBS Group: Okay. Safety again, it’s it’s not question of sales. The the the order book is full, and we are moving at the same speed of the last of the last year. So we are very happy. It’s just that one order for it when the customer has been delivered the first of the first day of the second quarter instead of the last day of the first quarter.

So that is only the the the difference. So no problem on the book on the order book, and that’s why we are so confident to recover other things in the second quarter. Monterrey, I we’ll give you more color. I don’t know how much you know about mold injection, but we had two mold broken, and these two components were critical for Reynosa for the delivery to the brown, and that delay the delivery to Reynosa. And so if you are missing the two component unit, cannot complete the full set, and that means that you cannot deliver the final final product.

The model have already been adjusted, and we are back, and we are recovering the delay. So it’s just a kind of a chain event that one small thing with a very low value have impacted something with a very high value. Of course, we have already launched the doubling of these specific modes so that we will not be back in this situation in the future. The last question for the FX is to you, Marco.

Marco, CFO, GBS Group: Yes. EBITDA guidance implies FX, euro dollars 1.1. As for the cash, you should anyway take into consideration that we have a hedged 75% of the US dollar money we cash in at and the hedge rate is 1.08. So we don’t expect any significant impact on the cash generated.

Christian Indraker, Analyst, Goldman Sachs: Thank you. You’re welcome.

Conference Operator: The next question is from Matteo Bonizzoni of Kepler Cheuvreux.

Matteo Bonizzoni, Analyst, Kepler Cheuvreux: Yes, thank you. I have two questions. Can you provide a flavor on the revenues evolution over maybe April and maybe expectation for May, if you want? And can you confirm that net of Infra Group Elimination, let’s say, you should have a delta perimeter impact on terms of revenues for full year in the range of €30,000,000 30 million plus, let’s say?

Marco, CFO, GBS Group: Can I deal with that?

Massimo Scagliarini, CEO, GBS Group: I lost the first question, Jose.

Guido, Executive, GBS Group: The revenues in April and May.

Matteo Bonizzoni, Analyst, Kepler Cheuvreux: A trading update for the first part of the quarter, just to understand the direction in terms of sales after this 3.2% bridging this 3.2% to the guidance for the year now requires as you say an acceleration which will be gradual just to if you want, to to elaborate on on the on the start of the second quarter?

Massimo Scagliarini, CEO, GBS Group: Well, April is already gone. May is nearly gone, and I would not have been so optimistic in presenting you this first quarter if I am not solid that we are moving in the right in the right direction. I don’t know if we you

Guido, Executive, GBS Group: want to add anything. We can just say that so far, we are aligned to our guidelines in terms of this first half and and first month and a half. That was still forty five days, of course, a lot to be done.

Massimo Scagliarini, CEO, GBS Group: Yes.

Emmanuel Galazi, Analyst, Equita: But the

Marco, CFO, GBS Group: The second question was about the incremental sales coming from Boris. We said between 25 and 30,000,000 on a yearly basis, which means 2.5 per month. That’s why we said before, we lost one month sale 2%. We we lost 2,500,000.0 of million euros of product sales due to the delay of the first invoice. So two two point five times 12 is 30,000,000.

Guido, Executive, GBS Group: And and just to avoid answer of that, we have referred several times to bore us when we talk about humanities whole block business. This is just because internally, this is called project bore us.

Massimo Scagliarini, CEO, GBS Group: You’re right. For You’re right. Just to You’re right.

Guido, Executive, GBS Group: Create confusion. Project bore us means that a

Massimo Scagliarini, CEO, GBS Group: humanities Stable matrix. Is definitely it’s something that we do apologize.

Guido, Executive, GBS Group: Yeah. But at least everyone is on the same page.

Massimo Scagliarini, CEO, GBS Group: So yes. Yes. Yes. Yes.

Matteo Bonizzoni, Analyst, Kepler Cheuvreux: Thank you.

Conference Operator: The next question is from Christian Indraker of Goldman Sachs.

Christian Indraker, Analyst, Goldman Sachs: Yes, good afternoon all and thanks for the opportunity. My first one is maybe tackling the organic question a bit differently and apologies if you just covered it. But what was the Haemonetics revenue contribution in the quarter? And how do we think about that? I think you’d said €37,000,000 for the full year with an H2 weighting.

I guess, specifically, what I’m looking for is in our M and A line, what is incremental this year that wasn’t in place last year in terms of the perimeter? And maybe that’s the Boris, but

Marco, CFO, GBS Group: The question is, sales generated by the new acquisitions this year, February plus March, ’10 million. Okay? That’s just sales of the blood cells to third parties. And this 10,000,000 is not including the intercompany sales of blood filters. So 10,000,000 is $20.25.

Last year, we sold blood filters, which are now intercompany. I do not remember last year intercompany last year sales of blood filters. If you want, we can give you the answer after the call.

Christian Indraker, Analyst, Goldman Sachs: Thank you. No, that’s clear. That’s all from me. Thank you. Thank you.

Conference Operator: The next question is from Izako Brambilla of Mediobanca.

Emmanuel Galazi, Analyst, Equita: Hi, good afternoon everybody. Just a quick follow-up on my side. This is on second quarter. Considering all your answers above, is it fair to to expect the second quarter top line growth to fall within the range of full year guidance? Just a clarification on that.

So mid to high single digit growth on a reported basis.

Marco, CFO, GBS Group: Yeah. I

Guido, Executive, GBS Group: would say yes. And, of course, we don’t have to put BGB to where the exchange rate will go. Okay? Because of the the as you know, in the first month, we had a negative impact of the exchange rate. So depending on the exchange.

But on x effects, of course, we are fully aligned with our guidance. Then, of course, the effects depending on how it would evolve in the next forty five days can change the report, but not today.

Massimo Scagliarini, CEO, GBS Group: Consider just to give you some color. In term of the transfusion medicine for The US market, we had to certify ourself in every US state before that we could could start selling the product in every state, and that have required time. We are mentioning that we have lost the January, but even in February, we were not full speed. So there are a lot of activity, regulatory activity that, of course, are affecting the initial the initial quarter. But we are gaining speed.

We have now all the certification, and and we are moving in the right in the right direction. In another aspect, was speaking with my general manager here for Italy the other days. And we were discussing because we will need eventually to return to the seven on seven production here in Italy. So, again, these are all positive positive signal from my point of view.

Emmanuel Galazi, Analyst, Equita: Understood. Thanks.

Conference Operator: The next question is a follow-up from Christian Indoraker of Goldman Sachs.

Christian Indraker, Analyst, Goldman Sachs: Thank you for fitting in a follow-up. I thought the tariff comments quite interesting. So I wanted to come back to those, if

Matteo Bonizzoni, Analyst, Kepler Cheuvreux: I

Christian Indraker, Analyst, Goldman Sachs: may. Can I just confirm that when you say assuming no remedial actions that, that implies as it stands, you’ve not taken any of those actions? I appreciate it’s a fluid environment. And then maybe just on that point with regard to the regulatory approvals in state, should we think of that as a bit of a defensive sort of positioning for your business? I suppose in January, February time, those approvals you might have been maybe facing less of a queue versus now if everyone’s rushing to get approvals given the tariff situation?

Okay.

Massimo Scagliarini, CEO, GBS Group: So in terms of tariffs, actual EBITDA of the first quarter reflect exactly our situation. So we don’t have done any type of activity. We have done price increasing as we were scheduling, but that in into the normal price increasing that we do every year. So this is exactly the situation. We don’t have that nothing special.

Also, because we want to see and to settle down a little bit the dust to understand what is the reality and what we are talking about. We are again, we are not too stressed because it’s not a big impact, and we are recovering EBITDA from other reorganization and other important points. So it’s not a stressing point for us in this moment. And we don’t see the tariffs that might affect in any way our guidance on the EBITDA. So that’s I believe, I gave you the picture.

Guido, Executive, GBS Group: I would just stress that, of course, remedial action, we are very clear in our mind what this remedial action should be can be as soon as they’re better to be. Course. And the the two things that you mentioned here, the price increase on the location, I think that are, of course, in our cards. So of course, we’re gonna decide when to activate them as soon as we have the full reach the full visibility on on the tariff scenario.

Massimo Scagliarini, CEO, GBS Group: And the second question, I lost it. You repeat?

Matteo Bonizzoni, Analyst, Kepler Cheuvreux: Sure. So you mentioned

Christian Indraker, Analyst, Goldman Sachs: a moment ago that you had a few weeks delay with regulatory approvals state by state. Presumably all of that was pre tariffs. If say there’s 100 other companies trying to seek set approvals next month all at once, might that take them longer, right, was sort of how I’m thinking about it.

Massimo Scagliarini, CEO, GBS Group: No. No. I don’t think so. This is a very standard approval if you are an healthcare company that you need to have if you want to sell in a single US state. So every US company health care US company that is selling The US market already have this state approval.

For us, it was new because we were not selling finished product on The US market directly, and so we had to go through this regulatory approval. So it’s it’s even not related to the like, the FDA. It’s a very specific pharmaceutical and medical device type of approval that every state give it to you. But you are if you are an existing healthcare company, you don’t need to require this because you already have

Guido, Executive, GBS Group: it. This is the fact due to the fact that it was an asset deal. So we were not buying a company. So if you buy a company, you the company you buy has already built this license in place. We were just buying product assets.

And and so we needed to reapply for all these licenses. It’s just an administrative type of work, but it takes quite some weeks of time. On the other side, the beauty and what we’ve already told several times is that of the beauty, the positive or the asset deal is that from operational side, we will be quicker with in extracting just synergies because we are not buying the call. I don’t know. A plan, we’re just integrating asset over with a flip coin that is some slowdown on the administrative side.

Massimo Scagliarini, CEO, GBS Group: But but just, again, to give you some color, exiting from the the the the government certification or the state certification, even an existing customer because, yes, nothing nothing was changing because Covina was still Covina, the plant where we produce solution, exactly the same. The process are exactly the same. The product are exactly the same. But for an existing customer, we were a new company because the name had changed it. So they had to go through all the approval for a new supplier.

And that even if everything was the same of before, but the name changed. And so we were obliged to go through all these approval, and this is what have slowed down the the the starting of of the sales. But, again, all this is already on on our back, so we are moving now quickly towards our objective.

Christian Indraker, Analyst, Goldman Sachs: Thank you all. Appreciate the color and the clarity.

Conference Operator: Gentlemen, there are no more questions registered at this time.

Massimo Scagliarini, CEO, GBS Group: Excellent. Thank you very much and see you at the next quarter presentation. Thank you. Thank you. Bye.

Bye.

Conference Operator: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your devices. Thank you.

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