Earnings call transcript: Ion Beam Applications sees 7% revenue rise in Q1 2025

Ion Beam Applications SA (IBAB), a leader in proton therapy systems with a market capitalization of €382.41 million, reported record revenue for the first quarter of 2025, marking a 7% increase year-on-year. The company returned to profitability with a net result of €9.3 million, while its stock saw a decline of 7.34% following the announcement. This movement comes as the company outlines strategic changes and future growth expectations in a competitive market. InvestingPro analysis indicates a "GOOD" overall financial health score of 2.87, suggesting solid fundamentals despite market fluctuations.

Key Takeaways

• Record revenue of €498 million, a 7% increase year-on-year.
• Net profit returned, reaching €9.3 million.
• Stock declined by 7.34% post-earnings announcement.
• Proposed dividend of €0.24 per share.
• Strategic restructuring into three entities to enhance focus.

Company Performance

Ion Beam Applications reported a strong financial performance with a notable 7% increase in revenue compared to the previous year, reaching €498 million, building on an impressive 25.66% revenue growth in the last twelve months. The company also returned to profitability, achieving a net result of €9.3 million. The restructuring into three distinct entities—IBA Clinical, IBA Technologies, and IBA Corporates—is aimed at streamlining operations and focusing on growth areas such as proton therapy and radiopharma solutions. InvestingPro has identified several additional growth indicators and financial metrics that subscribers can access, including detailed analysis of the company’s operating efficiency and market position.

Financial Highlights

• Revenue: €498 million, up 7% year-on-year.
• Net profit: €9.3 million, returning to profitability.
• Gross margin improvement: 4.5%.
• Group EBIT increased by 170%.

Market Reaction

Despite the positive financial results, Ion Beam Applications’ stock fell by 7.34%, closing at €13.08. This decline may reflect investor concerns over market uncertainties and the conservative growth guidance provided by the company. The stock’s performance is within its 52-week range, which spans from €10.7 to €15.14. According to InvestingPro data, analysts maintain a bullish consensus on the stock, with price targets ranging from €15.73 to €21.70, suggesting potential upside. The company’s Fair Value analysis indicates the stock may be currently undervalued.

Outlook & Guidance

The company has set ambitious goals for the future, expecting an EBIT of at least €25 million in 2025 and targeting a 10% EBIT margin by 2028. Ion Beam Applications aims for a midterm revenue growth of 5-7% CAGR from 2024 to 2028, with a focus on profitable growth and selective investments in new ventures like the Pantera joint venture for Actinium-225 production. For a comprehensive understanding of IBAB’s growth potential and financial outlook, investors can access the detailed Pro Research Report, available exclusively on InvestingPro, which provides in-depth analysis of the company’s strategic initiatives and growth metrics.

Executive Commentary

"We are at an inflection point," stated CEO Olivier Legrain, emphasizing the company’s strategic shifts and growth potential. He highlighted the importance of making clinical data available to payers, which could enhance the reimbursement landscape for proton therapy.

Risks and Challenges

• Global economic uncertainties may impact growth projections.
• Competitive pressures from companies like Mevion and Hitachi.
• The need for continuous innovation in proton therapy technology.
• Dependence on favorable reimbursement policies for radiation therapy.
• Potential supply chain disruptions affecting production and delivery.

Q&A

During the earnings call, analysts inquired about the company’s research and development investments, particularly in market access for proton therapy. The management explained their conservative growth guidance, attributing it to global uncertainties but expressing confidence in new ventures and partnerships, such as those involving Astatine-211.

Full transcript - Ion Beam Applications SA (IBAB) Q4 2024:

Thomas Evanage, Head of Investor Relations, IBA: Hello, and welcome to IBE’s full year twenty twenty four results conference call. I am Thomas Evanage, Head of Investor Relations of IBEA. As usual, you will find this presentation on the Investor Relations page of our website. A question and answer session will follow the formal presentation. Note that this call is being recorded.

Moving to the next page, let me draw your attention to the company’s usual disclaimer of forward looking statements. In addition, you will have noticed that we have changed the application of Fireflies 15 working recognition of third party equipment sales, leading to an increase of our reported revenues and cost of goods sold and a decrease of our gross margin and rebates margin in percentage. Full year ’24 numbers reflect this new method of reporting and full year ’23 numbers have been restating our economy. I will now hand over to Olivier Legrain, chief executive officer of IB.

Olivier Legrain, Chief Executive Officer, IBA: You very much, Thomas. Good afternoon, everybody. Here is a summary of what we will cover today. We’ll start with the highlight of 2024, and then we’ll take you through the business review of our activities and our financial results for 2024. As we accelerate our transformation journey to improve execution at a new level, we are adapting the reporting of our financial performance.

We’ll cover this element as well as other methodology changes in the fourth section of the presentation. We’ll finally conclude by providing our updated outlook and guidance. Starting with the highlights, today we are proud to announce a record revenue of almost €500,000,000.04 98,000,000, up 7% on 2023 with a good gross margin improvement up 4.5% year on year thanks to a favorable product mix. Credit increased significantly year on year to €17,000,000 linked to well executed backlog conversion with a strong contribution for other accelerators. Overall we return to profitability in 2024 reporting a net result of €9,300,000 an 18,000,000 improvement versus last year.

The proposed dividend of $0.24 a share reflects the strength of this year’s performance and our confidence in the company prospect. Let’s now have a look at our business highlights. On the left hand side of this slide, you’ll see that backlog is stable at the record high level of €1,500,000,000 20 20 4 saw an excellent order intake of €321,000,000 driven by the sale of 33 other accelerator systems. Five, Proton Therapy Systems were sold. We are pleased by the accelerated momentum in the proton therapy commercial activities as from the second half of twenty twenty four.

A few other elements are worth mentioning. IBA continues to invest in the future as illustrated by our joint venture, Pantera, which secures important funding for its next step towards large scale Actinium two twenty five production. This is a good example of our approach to capital light investment in selected fields of activities where IBA can be relevant in terms of technologies and market access. As previously announced, we are transforming our internal structure across three entities with dedicated and enhanced focus on execution. We will provide more details later in the presentation.

This transformation is underpinned by our view that IBA is at an inflection point. The company has experienced strong growth over the past years with other accelerator multiplying their top line and profit while proton therapy experienced strong growth. Alongside the high backlog and predictable proton therapy service revenues from our growing installed base. This provides a solid foundation for sustainable profitability onwards. In that context, we will share with you an updated midterms of look and initiate a short term guidance for 2025.

Let’s now take a closer look at the second half of the year. Building on a solid H1, the second half executed an acceleration of the positive momentum driven by backlog conversion across all business units. As a result, Rebitton sales reached 5.8% in the second half. Overall it was good to see a much more balanced first and second half weighing compared to last year. Here, we present a breakdown of revenue and rebate progression across our three current segments.

Retail group revenue was particularly driven by other accelerators with revenue increased by 18% to €194,000,000. Photon therapy remained stable with revenue of $242,000,000 reflecting steady growth in services offset by a slight decline in equipments. Prohibitory revenue remained flat year on year at €66,000,000 despite some market headwinds. Group EBIT increased by 170% driven by the particularly strong performance from other accelerators. You note the decline in dosimetry EBIT linked to the late closing of the Hapkel acquisition impacted expected synergies, some challenges in the Chinese markets and delays in converting the proton therapy related backlog.

Moving on to backlog, this remains at an all time high of 1,500,000,000.0 offering significant visibility into future revenue over the next years. I’m pleased at the progress made in accelerating the conversion of this backlog during 2024. Of this equipment backlog stands €497,000,000 for proton therapy representing 37 projects and $247,000,000 Euro for other accelerators. So this backlog includes the revenues of our long term Photon Therapy operation and maintenance contract until their maturity. While the other business units have shorter term services contract not included in the RID.

Note that this proton therapy service backlog does not yet include any revenues from the operation and maintenance of our 10 systems in Spain as the contract are being discussed with each individual hospital. I would also note that the apparent stability of the backlog over the last three years can be a bit misleading given the installed base has been growing. The underlying reason is that the backlog decreases as contracts are executed year on year, while contract renewals provide for one of those during the year of their signature. Five contracts are up for renewal during 2025. As a reminder, order intake present new systems sold in the period, meaning contract signed and first payment received from the customer.

We maintained solid order intake momentum in 2024, increasing 11% from €288,000,000 to $321,000,000. You will remember that the performance in 2022 was related to the boost from 10 proton therapy systems signed in Spain. The strongest equipment order intake is in order accelerator which recorded 43% increase. Cotton therapy saw a slowdown in 2024, but its contraction in the second half continuing in the start of 2025. We will provide more commentary on this in the Proton Therapy review.

Those inventory remains stable with order intake at €66,000,000. The book to bill ratio which is a ratio of equipment order intake to revenues remain close to one as order intake did cover most of the conversion of the existing backlog. As already announced in our first half twenty twenty four result, IDEA is certified as a big corporation with an improved score of 114, placing the company in the top 10% over 9,500 globally. This amongst other initiatives highlight the company commitment to advance sustainability as a key differentiator to attract talent, secure contract, maintain robust supply chain and more generally mitigate execution risk. Let’s now take a deeper look at the performance of each business unit starting with hot on therapy.

Service revenue grew by 7% supported by your expanding installed base, while equipment revenues declined by 4% due to the cycle of backlog conversion. Remit increased by 2,000,000 new holes during the period driven by improved gross margin. We continue however to see impact on profitability on delivery of older lower margin projects, like the 10 room order Protis one in Spain, as well as a few large scale Protis plus project in China. The economics of more recent contract confirm IBA’s leadership position in the market. Said contracts will gradually positively impact the proton therapy P and L as all the projects are delivered.

In addition as we will explain later in the context of the new segment approach, several costs will be relocated from proton therapy to other activities. Therefore the rebate for 2024 will become a loss of €12,000,000 rather than a loss of €21,000,000 as presented in this table. As well as executing on the sizable backlog, we remain focused on targeted investment into the future of proton therapy to to remain at the forefront of this market. In 2024, we continue to advance key strategic initiatives aimed at strengthening our Photon Therapy business. We saw steady progress in backlog conversion with 37 project under construction of all installation.

Our service business expanded further reported by renewed customer contract and improved improved site performance. Our installed base of 44 centers generating revenues is expected to approximately double over the next four to five years. Clinical evidence supporting proton therapy continues to build with a notable phase three study from MD Anderson Cancer Center, demonstrating radio side effect in head and neck cancer treatment with proton therapy versus conventional radiation therapy. I also take the opportunity here to tell you that the follow-up of this study is showing actually an increase of survival rate in favor of proton therapy, which in my opinion is a big game changer for proton therapy in the future. Innovation remains a focus with the launch of Adaptive Insights 2.3 in 2024, as well as working closely with clinical partners to progress research in dynamic arc and conformal flash.

We continue to expand the global footprint of our proton therapy solutions of the intake in ’24 reached €106,000,000 with three protease one contract secured in The US, including a repeat order of two protease one by our long standing customer and partner Penn Medicine. We also secured a new order in India where IBM maintained its very strong position having already installed two proton therapy system in the country, one in Chennai and one in Mumbai. In addition, there was a new procurement contract for the protease blood system in China through our partnership with CGN. We are in active discussion with a range of potential customers with particular interest from The US and several prospects in Asia. With 44 active sites now generating service revenues worldwide, we remain committed to driving further expansion and adoption of our proton therapy technology.

IVIA continues to lead the market in proton therapy. In ’24 we have secured 56% of all new proton therapy system sales, and we maintain a more than 40% market share of all operational proton therapy rooms globally. Let’s turn to next to dosimetry. Net sales in dosimetry reached 66,000,000 reflecting stable performance despite economic and market challenges in particular in China. A clock was maintained at €42,000,000.

The decline in heavy tolls related to a number of factors delayed acquisitions in energy from Adgal due to the closing timeline, lower share of high margin sales in China and reduction in proton therapy related business due to project timing. Order intake for those EMEA remained solid at EUR66 million reflecting sustained global demand. During 2024, we have continued to focus on reinforcing our quality assurance leadership as underlined by the acquisition of RadCal Corporation in March. This acquisition has significantly enhanced our product change and geographical footprint in the QS space. In the year ahead, we look forward to making the most of our broadened portfolio and expanded international presence in quality assurance.

On this slide, we have laid out our global reach and the breadth of our products. With the RadCale acquisition and other investment, we now have access to supply chain across North America, Europe, India and China. Further strengthening our position globally. We launched RadCal’s T3 standalone multimeter in July and we look forward to further launches in the next future. I will now hand over to Henri de Rambre, the QT CEO, who will take us through the performance of our radiopharmaceutical and industrial business currently under the other accelerator banner.

Henri, the stage is yours.

Henri de Rambre, CEO, IBA: Many thanks, Olivier. We are obviously very pleased with the strength of the other accelerator order intake in the period with 33 accelerator solds. Net sales reached a record high of €194,200,000, an 18% increase year on year supported by strong backlog conversion and demand across industrial and radiopharma applications. Service revenues remained stable at €34,800,000 despite the 7,000,000 impact from the discontinuation of the Dynamitron product line following a strategic review of the industrial portfolio of activities. Adjusting for this underlying growth was 25 percentage points.

Repeat improved 63% year on year to 34,700,000.0. On the strategic initiatives, starting with radiopharma first, we continue to strengthen our leadership in the targeted alpha therapies. In October, the European Commission approved the Accelerate.eu project co led by IBA, which is looking at the development of a value chain for Rastatin two hundred and eleven. Post period end, we signed a memorandum of understanding with Framatome for the development of an Astatine two hundred and eleven production network in Europe and in The US. We consider this investment under the new segment, new venture.

In our core business, Radiopharma has seen excellent levels of activities, most notably the strategic agreement with Jibilant Radiopharma in The US for five cycle cube to support the expansion of their network. Our industrial solution business unit delivered a strong revenue increase driven by the execution of backlog conversion. Strong appetite from our customer and prospect has confirmed the relevance of a value proposition of safer and efficient sterilization solution driving your intrinsic momentum in this activity. Alongside this, interest is increasing in some newer application with landmark sales related to polymer enhancement as well as the treatment of phytosanitary products with Benebion in Mexico. Finally, the team continues to explore other applications for the HODOTRAN, including the launch of the PFAS blaster project, targeting the treatment of forever chemicals in wastewater and carbon filters.

For those familiar with IBA earning calls, you note that that we have a new section. We thought it would be helpful to layout our work and collaborations in cutting edge technologies under new ventures, which would become even more visible under our new segment report. To start with, we are incredibly proud of the success of Pantera, our joint venture with SCKCM dedicated to the production of alpha meter Actinium two twenty five. In Q3, Pantera successfully closed a 93 series a, 93,000,000 series a round led by EQT valuing the company at approximately, €200,000,000 post money resulting ultimately in a 31% stake for IBA. Small batch production, thanks to the partnership with TerraPower Isotope, is expected to start by mid twenty twenty five for a capacity reservation agreement was signed with Bayer and other undisclosed partner.

Construction of Pantera’s large scale production facility is expected to begin later in the year, ensuring long term production capacity. We remain very excited about the Actinium two twenty five opportunity and Panthera given the isotopes importance in next generation cancer treatment. In addition, IB invested in MI2 Factory, a German startup specializing in advanced semiconductor processing using an ion beam technology. IBA will support MI2 in advancing towards an industrial grade solution and will provide updates as key milestones are being reached. Then, and as already outlined in the radiopharma solution sections, we have signed an MOU with Framatome for the development of an Astatine two hundred and eleven production network, which will lead, eventually to the incorporation of a new venture.

Finally, an update on our private public partnership, Normandy Ardon Therapy. You may recall its purpose is to develop a first carbon ion therapy system aiming at further advancing radiation therapy, including for radiation resistant tumors. Assembly and installation are underway with the first beam being expected by late twenty twenty six, early ’20 ’20 ’7. I now take you through our financial results in more details. As said before, there was a significant improvement in our gross margin as compared to 2023, which was driven by the higher proportion of revenues from other accelerator alongside a margin improvement in proton therapy.

The 16% increase in OPEX reflects the continued investment in the future growth of the business. You can see in the chart on the right, how the year on year evolution of opex is broken down. Research and development makes up the majority of the increase in opex as we accelerate projects including imaging dynamic arc, conformal flash and development of cyclone icon. We are also making selected strategic investments to support the future growth of the business mainly in sales and marketing, digitalization and infrastructure. The next slide shows the other item impacting our bottom line.

As mentioned, Pantera raised €93,000,000 as part of a Series A round during the year. As a result of this, IBA has recognized an $11,600,000 revaluation gain through the PNM. Separately, the contribution from Pantera as consolidated under the equity method is a loss of 2,100,000.0 since the company continued its R and D investment and business development efforts. Also impacting the bottom line were some one off projects. The main two large ones are our 4,200,000.0 investment in the upgrade of our ERP system continuing over 2025 with a same order of magnitude as to as 2024, as well as the transformation of the organization to support profitable growth for 1,800,000.0.

Alongside this, Argentina has had more than 100% inflation throughout 2024 applying in the hyperinflation accounting under IFRS. The margin of the Buenas Air PT installation contract is somewhat preserved yet against this impact in financial results. Negative impact can still be expected until the completion of the local installation works by 2026, though with a reduced magnitude as per current expectations. I will now hand over to Thomas, who will comment on our cash and financial position.

Thomas Evanage, Head of Investor Relations, IBA: Thank you, Henri. You will see on this slide the evolution of our cash position, which continue to be temporarily impacted by the working capital cycle. Actually, instead of conditions, we have a cash light for working capital light operating model as milestone payments collected from customers to the daily time cover all expenses during the execution of any single contracts. However, as you know, we had to deviate from that policy in the framework of the Spanish Ministry of Health contracts as usually backhanded payment terms were predetermined to tender. The impact on working capital position will gradually reverse, thanks to the delivery of the first systems in Spain starting at the end of this year and then strongly accelerating over 2026 as deliveries trigger large milestone payments.

Alongside this, there was CapEx in line with previous year, Thanks to the acquisition of Rodcal investment into Pantera. We also paid off close to 5,000,000 of debts to financial institutions and real estate leasing in line with the amortization schedule. All the financing cash flows relates mostly to movements in IFRS 16 lease liabilities. With 72,200,000.0 gross cash at the end of the period, our balance sheet remains strong. Moving then to the net financial position, you will see it remains positive at $33,000,000 and actually improved from June 2024, which was around $22,000,000 This reflecting our well executed cash control and collections in the second half.

Additionally, we have untapped access to 60,000,000 of credit lines. Now moving to a new segment reporting related to company transformation, which would be effective from financial year 2025. So you will see then, that as part of our forthcoming reporting period of time, we’ll be following the same format. As we previously communicated, IB has transformed its organizational structure to enable INAH’s focus and accountability, allowing us to more effectively meet market demands. As of financial year 2025, IB will be organized into three entities.

IBA clinical, comprising proton therapy and zoosimetry business units. IBA technologies, comprising the radiopharma solution, industrial solutions business units, as well as engineering and supply chain. And then IB corporates, which will deal with IB new ventures and investments and act as the corporate center. These entities will then be three distinct reporting segments. This slide highlights the stream and changes that impact financials.

First, the creation of IVA corporates will isolate OpEx costs, such as IT infrastructure, legal, tax, and others that are linked to the group rather than to individual business units. Looking at how this would impact 2024 if you were reporting this way, we would see a 5,000,000 OPEX left for IB corporates previously allocated across the business units. Also, all cooperative initiatives such as Pantera, MI2, and normal diendron therapy will be allocated to the corporate P and L. Second, let’s focus on shared overhead allocation. These costs are indirect production costs.

For example, inventories management, sourcing activities, or planning that used to be allocated to the business units in function of productive hours. This approach impacted proton therapy. We started to bear disproportionate share of costs due to the weight of proton therapy services while the other activities were growing. Our improved allocation methodology will better reflect actual consumption of resources, resulting in a 7,000,000 shift of cost from proton therapy as part of abClinical to IB Technologies. Finally, as IB Technologies will be in charge of all engineering and supply chain activities for accelerator based businesses, there will be a revenue and also margin transfer from proton therapy to IB Technologies.

More concretely, this results in 29,000,000 revenue transfer and associated arms length profitability. This slide shows how the 2024 numbers would look, we stated into these new formats, with IB clinical representing approximately 60% of total revenues and IB technology is the remaining 40%. You will see more specifically that the proton therapy rebates improves to a loss of 12,100,000.0 from 21,500,000,000.0 under the new formats, better reflecting the intrinsic improving profitability of the business after a more adequate allocation of costs. I now pass back to Olivier to run through our updated guidance and shed light on our upcoming Capital Markets.

Olivier Legrain, Chief Executive Officer, IBA: Thank you very much, Thomas. As we have highlighted in this presentation, IDEA is at an inflection point. Overarching our guidance in our focus is our focus on delivering more sustainable profitability after a very high growth periods over the past years. The time is now to invest in research and development to ensure that IBA will accelerate our leadership and expanding the use of its technology in its market. And this is true for all our business unit, hot on therapy, nuclear medicine and industrial application.

While also prudently factoring the uncertainty in the world in general and in our markets in particular. We are therefore updating our mid term outlook and today initiating a short term guidance. Given our high backlog and our confidence in our execution capabilities, we expect EBIT to reach at least 25,000,000 Euro in 2025. This will be driven by a positive EBIT contribution from Proton Therapy after a 12,000,000 negative contribution in 2024 under the new segment reporting. We have also updated our midterm twenty twenty fourtwenty twenty eight outlook.

We are expecting normalized front loaded revenue growth of five to seven CAGR over twenty four to twenty eight following a high growth period driven by the Spanish Proton Therapy Project Order and Post COVID industry and solutions of the intake. We are progressing towards reaching around 10% rebate margin yet recognize the movements in our underlying market and the need to be prudent in our guidance. Such an outlook is well supported by the eye backlog and notably proton therapy services contributing to growing and recurring income. We are also committing that our operational expenses shall represent a maximum of 30% of annual sales. Leveraging on our success with Pantera, IBA will continue to selectively invest into capital light venture to support additional growth, Antira once again being the first example.

As outlined on the previous slide, the four main drivers supporting our midterm outlook are the following. Operating leverage from the scale up of our auto and terrapping store days, expecting to more or less double over the next four to five years, reinforced by the growth of our underlying markets. An improvement of our proton therapy service gross margin, thanks to investment in cost efficiency initiatives. The normalization of our margins in proton therapy thanks to improved market dynamics. And finally a focus on OpEx control limited to 30% of sales while continuing investment in sales and marketing and in particular in research and development.

These elements will be further detailed and explained during our Capital Market Day. As we recently announced, we are super excited to be hosting a Capital Market Day on April 7. At this event, we will be sharing a deeper insight into amongst others our strategy, profitability drivers, business segments, dynamics and other growth opportunities. This will enable an open dialogue with our senior leadership team on the strategic priorities for each businesses. We will also be giving more detail on our clear roadmap to profitable growth with a disciplined execution plan.

We look forward to seeing as many of you as possible at the event. Please do get in contact if you need information. You will see on the left here some further key dates for the financial calendar for the remainder of the June. Thank you for listening to the presentation. We will now go to q and a.

Thomas Evanage, Head of Investor Relations, IBA: Thank you, Olivier. If you would like to ask a question, please use the raise hand function on Teams platform, unmute yourself, and state your name and company.

David Wegman, Analyst, ING: David Wegman from ING. First question on proton therapy and the proton therapy losses, which were still quite significant in 2024. Was it mostly a question of executing, let’s say, loss making or low profitability equipment orders? Or and also a question of operating leverage? And then, yes, already anticipating maybe a bit on the CMD is what you expect from PT in terms of margin by 2028, trying there.

Then on other accelerator, so you achieved still a very high margin of 18% EBIT. So yes, what is basically sustainable here? Should we expect a kind of normalization also maybe because of lower top line growth or even maybe a bit of a decline? Then maybe I’m limit myself at three questions for now. Why are you dropping the 2026 guidance?

So was there going to be a bit of an accident there? So what kind of miss should we have been expecting? What went wrong basically or was it more of a phasing timing thing? Thank you.

Olivier Legrain, Chief Executive Officer, IBA: Okay. So I will take the the proton therapy part. The the, you know, no surprise on the loss. They were expecting as we are, you know, basically executing on another strategic plan. And it’s indeed linked to conventional backlog of order intake that was taken in a more competitive environment.

I would like to stress here that we have never taken another with negative gross margin. So full order that we have in the backlog are with positive gross margin, but the one that was taken in the more competitive market landscape were at a lower gross margin. And it’s indeed the execution of this order intake with lower gross margin as well as the investment to basically ramp up the it’s the investment to hamper is the investment into service productivity, is the investment in the competitive positioning of the product that we are executing at the same time that we deliver this backlog with lower margins. This is why we feel now it’s a time to give specific guidance on Phototherapy and basically disclose that 2024 was the last loss making year for Phototherapy as we are going to both enjoy an operating leverage both on the service side and equipment side with a more favorable backlog conversion mix when it comes to gross margin of the previous order intake. So as we are unfolding this, you can expect basically for Donte happy in terms of gross margin to slowly go back to let’s say a similar gross margin than in the rest of the business.

So you know normalizing towards what we see in other accelerator at the 2028 horizon. I will maybe leave the floor to Henri to speak about other accelerator and take back the mic to speak about the new guidance.

Henri de Rambre, CEO, IBA: So David, if I got your question correctly, you asked a bit how you should think about the IBA technologies margins going forward. So 2024 with regards to gross margin for me are within range of what you should be able to expect, in the longer run. And if I look at HIBIT margin evolution, as said before, we we are going to invest selectively in a few things from an R and D point of view, development of next generation of machines, some investments in in chemistry, but on a normalized basis, I think the the the rebate margin you have observed for IBA technologies in 2024 are within range of normal margin for that activity.

Olivier Legrain, Chief Executive Officer, IBA: Coming back to your question on the guidance, David, basically, our trajectory broadly remains unchanged. We are including in our guidance the need to invest in research and development to actually consolidate our future growth trajectory. And yes and build upon the dynamic in the market. This is true for proton therapy and I want to come back to this clinical study of MD Anderson showing significant positive survival rate for proton therapy. We believe this is a major news.

And therefore, as we were looking at our proton therapy strategic plan while preserving a return to a positive rebate in proton therapy, we have decided to invest slightly more in the research and development. Not so much on the product side but more on the market access side as we believe the time has come for Proton therapy to claim a more fair share of the treatment of cancer where we now can demonstrate with a level one clinical evidence that we can make a difference. So we believe this is a smart money invested into the potential of proton therapy. So slightly more investment in research and development for proton therapy in our new guidance and the same for nuclear medicine. As you have seen we have fantastic opportunities in the therapeutic space.

With Panthera and Astartin to 11 while our new guidance is taking into account a slightly increase a slight increase in research and development to make sure that we can capitalize on this fantastic opportunity. So there is no accident, there is no miss in the updated guidance. There is a very conscious decision to capitalize on what we see as potential game changer for IBA both in nuclear medicine and in proton therapy. When it comes to growth we also wanted to be mindful of the first of all we are coming out of a very strong growth period at a moment where the world has changed with more uncertainty. So we wanted to be more prudent with our guidance when it comes to top line growth, hence, the updates in our midterm outlook.

David Wegman, Analyst, ING: Thanks very much. And a very quick follow-up exactly on that. So on the 5% to 7% sales CAGR, it’s clear that you will have normally a big bump in sales from the Ortega contract, I would say 2025, ’20 ’20 ’6. How should we understand best the growth potential of IBA after the Ortega delivery? And being I mean, I’m aware that you will always probably have this bump, etcetera.

But if we look beyond so past Ortega deliveries, how should we be thinking about top line growth? Is it low single digit? Is it a decline? Thank you.

Olivier Legrain, Chief Executive Officer, IBA: It’s actually the five to seven guidance that we have given.

David Wegman, Analyst, ING: Okay. Okay. Now I’m not I was referring to the trajectory, let’s say, in the in the meantime, but but okay. Fine. Understood.

Laura Roba, Analyst, Degrove Pedercamp: Good afternoon. Laura Roba from Degrove Pedercamp. Thank you for taking my question. First of all, is there any impact of the new reporting system on the postponement of your 10% rebid margin guidance? Second, would you say that your 20,000,000 rebids guidance for 2025 is conservative?

And I might have a follow-up. Thank you.

Thomas Evanage, Head of Investor Relations, IBA: I can take the the first question indeed. Hi, Laura. So your first question was, whether there was an impact from the new reporting methodology, on the the updated guidance. I would say the impact is only minor. Olivier has explained indeed which were the main drivers for revisiting, the guidance.

Of course, as you have noted, the new IFRS 15 revenue recognition approach leads us to a slightly, slight impacts in terms of margins, including Revit margin. But I would say it’s minor as compared to, drivers mentioned by Olivier. It’s a few 0.234% impact on rapid as such.

Henri de Rambre, CEO, IBA: And and on the 25,000,000, pivot for 2025, we said at least in in the sense of we, focus on exceeding that 25,000,000 in 2025. We we just felt it was useful for you to, have an anchor point or a starting point for 2025.

Laura Roba, Analyst, Degrove Pedercamp: Okay. Thank you. And then just a just a follow-up, how confident, are you that you will reach this 10%, EBIT margin in 2028? Because as I understand, so the impact is mainly coming from these additional r and d investment. But does it mean that if you if you wouldn’t do this investment, you would reach, this margin sooner?

Olivier Legrain, Chief Executive Officer, IBA: That’s correct. So and this is maybe one of the reason also we give a guidance on the OpEx, because, there is different way to reach 10%. It’s either coming from the top line and the quality of the deal we are going to have if our investments are correctly, let’s say, done. And if not, we can always correct the trajectory with the reduction of cost. Should the investment not be relevant anymore.

So we are confident enough, let’s say, to give it as a guidance.

Laura Roba, Analyst, Degrove Pedercamp: Okay. Thank you.

Richard, Analyst, Portech Capital: Hi. This is Richard on Portech Capital in Germany. Thank you for taking my question. I would like to follow-up on the guidance you put out for 2025 of EUR 25,000,000. When I look at your rabbit level this year in proton therapy, this was at minus 12,000,000 under the new reporting methodology.

So if you achieve profitability there as you expect, this alone should lift you up by at least 12,000,000 in 2025 and this alone should lift you above the 2020 sorry, the €25,000,000 you guided to. So should we expect the other areas like other accelerators and so on to decrease in Revit this year? Or how should we expect this rather conservative €25,000,000 guidance in light of this?

Henri de Rambre, CEO, IBA: So thank you, Richard, for the question. As a as a as we have, spelled out, indeed, 25,000,000 seems to be a minimum. That’s the reason why we have phrased it as an at least. We we wanted to give you an anchor point. I think your reading is correct.

Proton therapy would return to a positive, repeat in the course of the year for IBM Technologies as we have discussed it. We consider 2024 to be a particularly difficult comparable year on year. And as we have highlighted, there in IBA technologies, there will be a few investments in research and development combined with a slightly lower overall activity in terms of backlog conversion. So that we expect a slight pinch in IBA technologies as compared to 2024. That is a very high comparable and a very modest increase in overall corporate cost.

So that that’s a bit how we see it, but I I like the way you read the 25,000,000 as being an at least number that, we work hard to, beat. I hope that clarifies.

Richard, Analyst, Portech Capital: Yeah. That was helpful. Thank you very much.

Henri de Rambre, CEO, IBA: Of course. Next questions?

Carlos Moreno, Analyst, Premier MIT: Hi, Carlos Moreno from Premier MIT. I just want to ask you a bit on the top line of the 5% to 7%. You know, the, On one hand, you’re very kind of bullish, new data are going to invest. Proton therapy should gain share, you said, and there’s more old people, more cancer. On one hand, you talk a bullish story on proton therapy, plus there are a number of growth drivers for the other accelerator business, which has been growing much quicker.

5% to 7%, is that a very conservative kind of medium term growth rate for the business? It’s not like the base numbers are, you know, you’re selling a lot of protein therapy machines today, you’re selling a kind of modest amount. I appreciate there’s this kind of big Spanish contract going through, but is 5% to 7% a kind of conservative number?

Olivier Legrain, Chief Executive Officer, IBA: I think 5% to 7% is, you know, what we believe, reasonable estimation in a long cycle business is in an uncertain world. Let’s put it that way. So it’s a number we are comfortable with. Is it conservative? Is it not?

Difficult to say. But as we take this guidance very seriously, we want to come with something that we believe we can achieve or beat.

Henri de Rambre, CEO, IBA: So worldwide GDP growth is expected at 3.5%. We guide on something that is probably twice as much with the high on the high end. We say it’s front end loaded back to the question of David because with backlog conversion, we sort of have a pointed idea of how much we are going to convert. We know we are going in the first days of the guidance first years of the guidance. We are going to come out at a high point.

With the business cycles that we have, it’s it’s it’s it’s hard to be audacious beyond a a time horizon of two or three years. So I’ll let you judge and make your own assessment of what would be the right underlying growth dynamic, but we thought again that saying that five to 7% content loaded was probably the most accurate, and fairest way to describe what would we would see as solid ground.

Carlos Moreno, Analyst, Premier MIT: Yeah. I can see what you’re trying to do. You’re you’re you’re really trying to kind of be I think you are trying to be conservative, both on the margin outlook and on the top line outlook. But would I be right to say over that medium term, you’d still expect the non proton therapy business to grow quicker? So if it’s five to seven, it’s less for proton therapy, more for the other business.

And that isn’t that much growth for proton therapy if you start to take more share of that treatment space.

Henri de Rambre, CEO, IBA: Yeah. Maybe I’ll let you comment on proton therapy. I can comment on the other activities. We’ll be talking about MD Anderson.

Olivier Legrain, Chief Executive Officer, IBA: Yeah. I think I think, you know, on proton therapy, I I know, you know, and I’m always hesitating to say for sure, but as we have alluded in our presentation, we know we have sold, you know, 76 plus system and 40 of them are today generating service revenue. And we will convert them over the period and the review here. So I know the service business will grow significantly. The question is indeed in a long cycle business such as phototherapy.

With a very good news like the one we have highlighted and by the way more clinical data will come. We are reasonably confident that we will see more deals in proton therapy than less deal in proton therapy over the next five years compared to the last five years. We see a very dynamic environment with a number of tenders that will conclude in 2025 and some of them we have no sign let’s say that our market shares would be very different than the one we have experienced in 2024. So I believe the deal flow in 2025 will be quite good and it started quite well in ’25 with the announcement of two of this one in India. So I expect the the I expect I expect to see more deals, let’s say, over the next five years and over the last five years.

So to see some growth in phototherapy as well. So phototherapy will continue to grow fueled by service, which is almost certain because it’s sold contract that are currently under installation and will convert into service business in the period under review. And we are reasonably confident that we’ve seen more deal over the next five years once again in an uncertain world. More uncertain world than when we gift our guidance in 2022. So, yeah.

So totally happy we’ll go for sure and contribute therefore to the five to 7% host of the group.

Mathias, Analyst, Unknown: Right. Thank you.

Henri de Rambre, CEO, IBA: And and maybe just to complement because, last element, and I will be super sure. First, we are well aware that in terms of value creation, margin will prevail overgrowth, and therefore, we would want to be in a position of strength as to be able to protect our margins as we negotiate deals. That’s one for me key element that I want you to be aware of. Another element of our guidance that we have not been asked question about yet, but that matters in terms of growth momentum are our new ventures that are taken separately and with a lot of ifs and with a lot of required prudence could be acting as a as a massive growth accelerator or multiplier otherwise. So I hope you appreciate some kind of a dual logic here, which is to say material activity focus on prudent development, focus on protecting the economics of IBA, continue to win investment into the future, next to a capitalized growth engines that can be Pantera, Astartin two hundred and eleven partnership or MI two to list a few.

Carlos Moreno, Analyst, Premier MIT: That that’s great. I I still I still I suppose everything’s growing. I I understand you’re gonna be prudent, but if we you know, it it just seems that that guidance doesn’t really presume much for a proton therapy equipment. And I would’ve I would’ve yeah, but you’re you’re hopeful there. Yeah.

Okay. Yeah. I get I get the gist.

Olivier Legrain, Chief Executive Officer, IBA: Stay tuned on the news flow. I I would say it’s

Richard, Analyst, Portech Capital: Yes, this is Richard Buschbeck again from Woonsack Capital in Germany. And I have one question on your competitive environment. So you showed the slides showing that you sold five systems last year and maybe on which I suppose is the only serious competitor to think about right now sold four systems which kind of is a I think a new record for them. So do you see these guys taking share? Do you compete against them in tenders?

So what can you tell us about the pressure you feel from your competitors right now?

Olivier Legrain, Chief Executive Officer, IBA: So I think as a competitive landscape, we have indeed Medellin and Hitachi. So that’s the two, let’s say credible competitors we have out there. We are not losing market share to Mevillion. I think we have a product, a more mature product, a more versatile product, superior product by any means. I think maybe on focus is really on China, where they are they have been able to sell.

You mentioned four unit in my view, Mavion sold two units last year. One in The US and one in China. That’s it. So that’s basically a competitive landscape. I think I think we are able to win in front of Mavion and we are able to win with a significant premium.

Richard, Analyst, Portech Capital: Okay. Because the the slide shows 56% share for IBA and 44% for Mavion and I interpreted this as five to four systems. Because you sold five last year, right?

Henri de Rambre, CEO, IBA: Yes. Yeah.

Thomas Evanage, Head of Investor Relations, IBA: To complement maybe what you mean is that we it’s difficult to have confirmation what really is an order for Mavion.

Olivier Legrain, Chief Executive Officer, IBA: I mean, the difference between Mavion and us is we are a listed company. So as I said, we recognize an order. Is it difficult, let’s say, to read the noise, and and the signal? When you are not a listed company, every term sheet, every, every, letter of intent, everything is a is a deal. Whereas for us, you know, I have many signed term sheet without down payment and, I don’t consider them as a deal.

So Mhmm.

Richard, Analyst, Portech Capital: Okay. Thank you very much.

Henri de Rambre, CEO, IBA: Other questions? I see many digital hands raised. Who is next?

David Wegman, Analyst, ING: Is it my turn, actually, because I’m second, I think?

Henri de Rambre, CEO, IBA: You are second, but the number one is not speaking.

David Wegman, Analyst, ING: Okay. Okay. Okay. Sorry. So David Wiegman again from from ING.

Just so we coming back in, I was a little bit confused on the I understand there will be L and D investment or step up, in 2025, maybe 2026. I first understood that it was a step up in in, PT to invest in R and D, but more focused on the access, the market access. I’m not sure to have fully understood that. And then I kind of understood that the in another answer that the investment was actually in IBA technology.

Olivier Legrain, Chief Executive Officer, IBA: Got it.

David Wegman, Analyst, ING: So, yeah, if if you can

Henri de Rambre, CEO, IBA: Thank you.

David Wegman, Analyst, ING: It goes. That? Okay.

Olivier Legrain, Chief Executive Officer, IBA: Historically, IBA has always made a lot of investment into the product. But now as clinical data becomes available, you know, we need to, we need, you know, in partnership with our customer to basically compile all these data and make it available to the payers. So the payers can understand that the clinical value of proton therapy is actually superior for a number of indication, hence improve the reimbursement landscape for phototherapy, which will propel the demand for phototherapy. So historically, we have not invested a lot into that space. And strategically, and because of the tailwind that we see in the clinical evidence generation in phototherapy, we believe it’s the time for us to get involved somehow into this which is reflected in the investment we’ve put in our guidance.

Henri de Rambre, CEO, IBA: And the

Olivier Legrain, Chief Executive Officer, IBA: second part is I was mentioning nuclear medicine and maybe I will let the I will let the floor to Henry.

Henri de Rambre, CEO, IBA: No. No. And and and again, we we are all aware that we talk about, you know, 1% of rebate margin is between 5 and 6,000,000, so it’s these are small amounts for idea technologies. It’s it’s two to three. So so these are relatively, still modest amount,

Thomas Evanage, Head of Investor Relations, IBA: but

Henri de Rambre, CEO, IBA: it’s true, David, that, you know, especially for Agiopharma solution, there is huge development in the diagnostic field where IB has the chance again to capture a fair share of the value it generates on its equipment. So in the next eighteen months or so, we are going to invest wisely and carefully to be to be to make sure we have, the place we deserve in that market that shows immense potential, for the company. Next to that, there are some smaller investments, to keep our our equipment, ahead of the game and, minor investment as I’ve explained in the field of wastewater treatment that again shows massive potential otherwise. So these are the few elements that indeed, will keep us busy with regards to research and development in the coming, eighteen months or so.

David Wegman, Analyst, ING: Okay. And okay. Now very clear. Super interesting. And and and when you said, like, the margin of 18% was sustainable, so it’s to be understood, with 2025 being a bit of an an exception with a pinch you said on the margin.

Henri de Rambre, CEO, IBA: Okay. So if if you if you ask me to comment specifically on 2024 margins again, so what I’ve said is that it’s a it’s a normal high or it’s a normal plus year with very strong development in that year, and an impact an impact of certain investments in r and d to be expected in the course of 2025, which is what I’ve called the pinch. Obviously, you should expect from us that those investments are going to yield results and that we are going to come back up quickly to what you would say is a normal margin for that activity.

David Wegman, Analyst, ING: Okay very clear. Thanks for the clarification.

Henri de Rambre, CEO, IBA: That’s why we’re here. Mathias?

Mathias, Analyst, Unknown: Yes, hi can you hear me?

Henri de Rambre, CEO, IBA: Yeah, perfectly. Thank you.

Mathias, Analyst, Unknown: Thank you for taking my questions. I just want to come back on the guidance. If I look at the new midterm guidance and I compare it to the old one and also what you said just yet, Olivier, It seems that you downgrade your revenue growth for 2025 from, I would say, 15% to 7% plus. So I just try to understand why are you going to grow slower in 2025? What are the main drivers of that?

Olivier Legrain, Chief Executive Officer, IBA: As we are giving you the guidance, I think we, we say it will be front loaded. So, we didn’t say 25% will grow 5% to 7%.

Mathias, Analyst, Unknown: Yeah. Okay. But if you grow 26%, twenty eight %, five %, seven %, it seems that the 5%, seven % is really very conservative. Okay. Maybe then on the clinical evidence building in protein therapy, can you maybe just re explain what’s the dynamic here?

How will this increase your addressable market? And will this also have an impact on reimbursement? And have there been any relevant changes in that recently?

Olivier Legrain, Chief Executive Officer, IBA: That’s why I’m not sure I get the question. Can you repeat, please?

Henri de Rambre, CEO, IBA: It’s The clinical evidence going to influence the overall addressable market, I think, might as I

Olivier Legrain, Chief Executive Officer, IBA: I think indeed, and we can circulate the the the the India Anderson study. What is the India Anderson study telling me at least? It’s one of the first randomized clinical trials, you know, that was conducted on at the neck. What it has shown is a non inferiority of auto therapy but a dramatic impact on the side effect, which, by the way, has always been the claim of auto therapy. But what is even more exciting is that when they follow a patient we see an increase of survival rate with a proton therapy arm which we believe will lead to indeed you know insurance company cannot ignore it.

So we see the overall landscape and the overall reception of proton therapy if they are backed up by clinical data such as the one of MD Anderson starting to be, how can I say that, difficult for the insurance company to ignore?

Richard, Analyst, Portech Capital: And and and

Olivier Legrain, Chief Executive Officer, IBA: by the way, it’s a number that is always, you know, stick on my mind is that the overall radiation therapy spending in oncology represent 5% of the total spending in The US and in Europe to treat fifty percent of the patient. So I believe not only proton therapy but also the overall radiation therapy space needs to go and claim for the fair share of the value we bring to the patients. And with clinical studies like the one of MD Anderson, I believe we have very strong scientific and clinical demonstrations to do that. It will take time, it will take more than one study and but more will come. We we we see another five to 10 clinical study that will be you know published within the next five years.

With this flow of clinical evidence we believe we can influence the reimbursement certainly in major addiction like in Europe and to justify better reimbursement for proton therapy for a number of mitigation and improving the penetration of proton therapy and the adoption of proton therapy and creating business opportunity for us.

Mathias, Analyst, Unknown: Us. All right, thank you. And maybe one last question. On free cash flow for next year, what can we expect in terms of CapEx and working capital? Do you need further working capital investments or is your presently peak working capital?

Thomas Evanage, Head of Investor Relations, IBA: Okay. Hi, Matias. Thomas speaking. So your question is on twenty twenty five prospects in terms of free cash flow, most specifically impact of CapEx and working capital. On the CapEx fronts, what you can expect is something that is in line with the past years.

We have no specific investments to to reports. We’ve already commented on some other elements, investment wise impacting the the P and L, most notably the ERP system. Then regarding working capital, actually, as you know, we have, in principle, a working capital light type of model where we have advanced payments from customers covering our expenses on our contracts. You know as well that the key driver in the current working capital cycle is the Spanish contracts from the 10 that we won end of twenty twenty two. And indeed, it’s a large order, 10 systems, meaning we progressed throughout manufacturing and procurement for those systems over ’23, ’20 ’4 and we’re the first deliveries at the end of this year, ’25.

It being understood that deliveries are the key drivers for next milestone payments, collections. It means that indeed you can expect some impacts over 2025, until the time we start deliveries. But then 2026, you’ll see a very marked acceleration in deliveries, hence in payment collections, hence as well, a prompt reversal of the working capital situations. All in all, when you look at 2025, we’ll continue having some impacts from these contracts. What is important to mention as well is that these are very well anticipated.

Those were known when you won the tender and was also the reason why we adequately sized our credit lines, which we may not use at the end of last year. So intent is still to use these lines from time to time as needs be as we have shorter term working capital movements that needs to be to be addressed.

Henri de Rambre, CEO, IBA: And we have otherwise, as you should expect, strong cash discipline, which was demonstrated in the course of last year, and we will continue those efforts onwards. Great. Thank you. Of course. Any other questions?

Atas, I see your hand is still raised, but I guess you’re covered.

Mathias, Analyst, Unknown: I’m covered, yes. Thank you.

Olivier Legrain, Chief Executive Officer, IBA: Well then, if there is no more questions

Carlos Moreno, Analyst, Premier MIT: I might ask one more question, if that’s okay. The I I presume that, the Capital Markets Day will be webcast, or is it just physical?

Henri de Rambre, CEO, IBA: It’s webcasted and physical. We would, of course, love to welcome you here in our premises. But if you can’t join us in person, it will be what Garced, of course. Thank you.

Olivier Legrain, Chief Executive Officer, IBA: Of course. Alright. Well, in this case, thank you very much. And on behalf of everyone at ID, I would like to thank you for your continued interest and support of the company. We look forward to seeing you at our upcoming Capital Markets Days in person or, to webcast.

And looking forward to update you on our progress over the year. Thank you very much and speak to you soon. Bye bye.

Thomas Evanage, Head of Investor Relations, IBA: Thank you. Thank you.

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