Good afternoon. This is the Conference Operator. Welcome and thank you for joining the GVS F irst Half 2025 Results web call. All participants are in listen-only mode, and after the presentation, there will be a Q&A session. At this time, I would like to turn the conference over to Massimo Scagliarini, CEO. Please go ahead, sir.
Thank you very much. Good afternoon and good morning to everybody, and welcome to the first half results presentation of the GVS Group. A quick highlight on the number. The title for this slide is related to the second quarter of this year because we reached our record EBITDA since 2021. I would like to remember that in 2021, we were still under the effect of the COVID pandemic. It's a very nice sign of the track that we are following and a confirmation of the discipline that we have in improving our profitability. Healthcare life science, + 2.2%. We are a little bit disappointed by this result. Besides being a positive growth, and this is really good, we are a little bit disappointed. This is because we have been affected by a disruption in production by Haemonetics that has stopped production for nearly one month.
This has impacted our sales in the second quarter. Plus, we have a legacy of two big customers of Haemotronic in the hemodialysis sector where we do some third-party work. Besides this not being a very profitable business, it is super volatile and is affecting our revenue, but not profit because, as I said, it's not impacting this side. Guido will give you more details later on these topics. Just to add another point, we are working on our strategic plan for the next three years, and we will address also this point in our strategic plan. Safety, a nice + 8.6%. Very positive, accelerating in the second quarter, and a nice view for the second half. Adjusted EBITDA 25.1%, so 90 basis points versus 2024. Again, with a wonderful second quarter of 26.2%, 120 basis points versus Q2 2024. We are moving in the right direction in terms of profitability.
Adjusted net income, + 16.2% versus previous year, EUR 26.2 million, increasing the margin from 12% to 12.1% versus 10.5% of the first half of last year. Net financial position, EUR 268 million, with a leverage ratio after merger and acquisition of 2.4%. Now, some more detail. In reality, I have already spent a lot of words in the first slide. Again, healthcare life science + 2.2%. In reality, and again, Guido will give you some more input on this, but if I extract just the old core business of MedTech, we have a growth that is, correct me, Guido, is more than 5% on the MedTech, just in this area. This, why I mentioned this, because it's a very nice sign that the market is finally moving in the right direction. We're very positive on this. Energy mobility, - 8.5%. I will not spend comment on this.
Everybody knows the status of the market. I will move to the Safety where we have the 8.6% that I mentioned before with an acceleration on the second quarter and a nice view for the second half. Adjusted EBITDA + 4.1% at EUR 54.2 million with a 25.1% margin for the first half. Net financial position EUR 268 million with a leverage ratio of 2.4% after the M&A activity. Now, I will give the speech to Guido for some other details.
Let's move now to slide number four to commence the evolution of sales in the first half of 2025. Compared to the first half of 2024, the revenues are up 1.7% excluding the FX impact. We had a net cutting FX impact of approximately 1.4% or EUR 2.9 million, and it has been more than compensated by growth both in volumes, EUR 0.9 million or 0.4%, and at EUR 2.8 million equal to 1.3% growth in price. If you go to the following slide, let's see and comment on the various trends of different divisions, starting from Healthcare and Life Science. Healthcare and Life Science reported a 2.2% growth excluding FX. As Massimo mentioned, it is worth highlighting two different factors that impacted the performance of the division in the first half of the year. The first is transfusion medicine.
Massimo already anticipated that we had a one-month block in Haemonetics plant production. Due to this stop, we lost approximately one month of revenues in the quarter, so approximately EUR 4 million of impact. This created a sizable order backlog that we plan to reabsorb in the second half of the year as our order portfolio remains very solid. In addition to that, the completion of the transfer of the production machinery from Haemonetics Tijuana plant to our plant in Mexico that is expected to be completed by Q3 2025 will help to stabilize this situation. Moving to MedTech, we have this - 1.5% performance excluding FX. As Massimo mentioned, this is affected by a sharp decline of our specific business. This is a contract manufacturing of hemodialysis lines that we have in place with two large U.S. customers. It's a legacy from a Haemotronic acquisition.
This business is low margin, is not strategic for us, and has experienced a very high volatility in the last 18 months. In the first half of 2025, the volumes are down approximately 30% compared to the first half of 2024. This translates into a negative impact of EUR 5 million. Net of these impacts, the MedTech division is growing 3.5% in the first half. There is a 5% difference that is linked to this dialysis business. That means that our core high-margin MedTech business, so the filters, the components, is growing nicely. It's an important message that we want to highlight in this presentation. Please also note that in full year 2024, we had already a negative impact of this dialysis business. There was approximately EUR 5 million in the year, so 3% impact versus 2023. It was again related to this business, to these two customers.
This decline in revenue is not linked to a specific dynamics of the underlying sector because U.S. dialysis volumes, if you also look at the reporting of the listed players, are flattish, basically. This effect is rather a very client-specific dynamic because both customers have internal production capacity, and our contract manufacturing only covers the quantity that they don't produce internally. We consider this business not core. We are now assessing, as Massimo said, in the context of the new strategic plan, how we want to handle this business going forward. Moving to Safety now, a very strong performance, in particular in the second quarter. We had a strong acceleration in the second quarter of the sales. Excluding the effects in the second quarter, we reported a +13.8% growth in revenue from the 3.1% of the first quarter.
We expect this trend to continue in the second part of the year, while the Energy & Mobility basically had the same trend we recorded in the first half and is down on the first quarter and is down in the first half 8.5%. I now leave the floor to Marco to comment the EBITDA.
Thank you, Guido. Hello, everybody. Three slides on the financials now. The first one is on the adjusted EBITDA. EBITDA in the first half of 2024 was EUR 52 million. Now we are at EUR 54.2 million. We are improving by EUR 2.2 million. The main reason being net price. We increased pricing by 1.3% year- on- year, and the amount is EUR 2.8 million. FX is negative, slightly negative, EUR 0.5 million. It is driven by the trend of the dollar, which fell down by 1% year- on- year against the euro. A slight negative impact is also generated by the Chinese currency going down by 2% against the euro. As for the volumes, volume mix all in all is around zero. Guido already told us a lot about that. On the right side of the slide, other is EUR 0.1 million, so negligible. The impact of the change in the tariffs is there.
The impact has been EUR 350,000 in the first half. In the meantime, we have increased pricing to offset that. Starting from 1st July we increased pricing in order to compensate an assumed tariff increase of 10%. In July, the impact of the tariff was zero. If we assume now from August, August, 15% tariff, this would translate into a deterioration of our EBITDA of EUR 400,000 in the second half, which means in the end the same impact as in the first half. The impact of the tariffs is not so significant thanks to the further pricing we are implementing in the second part of the year. As for the EBITDA margin, already highlighted by Massimo, we are increasing by 90 basis points year- over- year, already set by Massimo, the strongest quarter since Q4 2021.
Let me say also that in Q1 2025, so last quarter, the EBITDA margin was 24.1%. In the second quarter of the current year, we are improving versus the first quarter, the EBITDA margin by 210 basis points. Now I move to the next slide. On the right side of the slide, the adjusted net income, which is excluding the FX impact related to the intercompany loans in dollars, which funded the M&A activity over the past few years. In absolute terms from EUR 22.5 million last year to EUR 26.2 million. In the end, just to keep it short, the adjusted net income on net revenues is roughly 12%, which means that we convert into ordinary cash 12% of our revenues. My third slide is on the net financial position. Last year we closed with EUR 219.8 million, let's say around EUR 220 million.
We went to EUR 275 million at the end of Q1, and now we are improving versus Q1 by EUR 7 million. Now we are at EUR 268 million. You see that on the bottom part of the slide, there are two rectangles. The first is highlighting the extraordinary impact generated by M&A, the acquisition at mid-January, EUR 49.4 million, and the extraordinary CapEx EUR 5.6 million, which are the extraordinary investments for the new plants in the U.K. and China. If we set aside the extraordinary effects that we have generated in the first half, around EUR 7 million ordinary cash, this is less than we did last year because last year, over the first six months, we generated EUR 15 million. Why from EUR 15 million we went to EUR 7 million? You see net working capital deterioration in the first six months, EUR 17.5 million. Let me explain that.
Around EUR 4 million is due to the fact that we have anticipated the payment of the variable pay from July to June. So it's EUR 4 million, and we are recovering all that in the second half. EUR 8 million is due to the stock not related to the acquisition. It's related to the old perimeter, EUR 8 million, and I bet that we are recovering that by October. The remaining around EUR 4 million is due to receivables, and our target is to recover around 50% of that in the second half of the year. Just to say that the negative impact of the working capital is temporary. We are going to recover almost everything in the second half of the year, which translates into an ordinary cash generated in the second half of around EUR 40 million.
The EUR 40 million we are going to generate in the second part of the year is not including the impact of the buyback, which is expected not higher than EUR 20 million. It's going to be between EUR 10 million and EUR 20 million. The EUR 40 million I mentioned is not including extraordinary CapEx for the last portion of the investments for the move into the new plants in the U.K. and China, and CapEx also related to the acquisition we made at the beginning of the year. We are confirming, excluding the buyback, a leverage ratio of around 2 at the end of the year. Now I give the floor to Massimo for the conclusions.
Thank you.
Okay. A quick outlook to what will happen in the second half. As we mentioned, EUR 350,000, roughly what we paid in the first half for the tariff impact. In reality, we have already negotiated the price increase with all our customers. We are expecting to recover this in the second half. This will also help the revenue because a price increase will improve the first line. Whole Blood, very nice order portfolio. We need to be quick in transferring all the production from Haemonetics facility to our facility so that we will be in full control of the production and we can accelerate and recover what we have lost in the first half. We are seeing the transfer to be completed by Q3 in 2025. On the guidance, nothing specific.
We confirm the mid-high single-digit growth versus the previous year because we are expecting to recover a nice ramp-up in the second half in the Whole Blood, plus we have the price increase in all the MedTech that is impacted by the tariffs. We have the adjusted EBITDA still confirmed at 150-2 50 basis points, including tariffs, and the leverage ratio around 2.2%, including the impact of the buyback that we activated one month ago. I believe that this is all, and now we can move to the Q&A to give you more detail on any questions you might have on the first half. Thank you.
Thank you. We will now begin the question and answer session. To enter the Q4 questions, please click on the Q&A icon on the left side of your screen. When announced, please click continue on the pop-up window. If you are connected in audio only, please press star and one on your telephone. The first question is from Matteo Bonizzoni of Kepler Cheuvreux. Please go ahead.
Good afternoon. I have two simple questions, let's say. One is, we know that you don't disclose the delta perimeter impact, but it's fair to assume that in the first half it has been around EUR 4 million. It's also fair to assume that in the full year it could be the net impact, including also the netting of the intra group sales, maybe in the region of EUR 20 million. This is useful for us just to calculate clearly the, let's say, let's call it organic growth. I would like to have as a second question a sort of feeling on the trading condition which you are experiencing in Q3. Clearly, you have done basically flat sales all in all in the first half, including forex and everything you have done, + 0.4%. Just to understand what kind of phasing we should expect for the acceleration in the second half.
Are you already seeing, including forex, including everything, including delta perimeter, an acceleration in the third quarter? Do you expect to see, or is it more back-end loaded in the fourth quarter? If I may also, we know that we should have a margin impact additional in the second half from the closing of the facility in Puerto Rico. We should, in the past, guide the two-up and at some point mid-year. I would like to have maybe an update on this, on how it's progressing, these items, let's say. Thank you very much.
Okay, I'll leave it with the first one.
Just in the first quick question, I think your numbers are relatively accurate. I think we can add a couple of more million as total impact for the full year. I think that you centered the point. In the second question, I don't know if you want.
Trading condition about in Q3? Do you?
As I mentioned before, there are different points that need to be evaluated. The first one is the conclusion of the transfer of all the machines and the starting of our production for what regards the blood division. This is going to happen in Q3 2025. We're expecting to see an acceleration already in Q3 and then full speed in Q4. For what regards the legacy of the dialysis, this is very volatile. It's difficult to predict how it's going. MedTech is running very nicely and is growing very nicely. Life Science is confirming all the results. Safety is also going quite nicely. The vision that we have for the second half already in Q3 is very positive. I believe that Energy & Mobility will remain roughly where it is now in terms of revenue.
We are positive already in Q3, but the blood, they might affect, let me say, the speed of Q3. It really depends on when we can close this. The closure of the Puerto Rico Facility is nearly done. We are still producing a few small things, but the plant, I would say, is completely empty. There are just two machines that are remaining in Puerto Rico. By Q3, that will be completely closed. That will bring more profit to the group because we will have less extra cost to managing this plant.
If I may, I want to add one point. How we built our guidance. We need just to replicate in the second half the Q2 performance as for the old perimeter. Very simple. On top of that, the Whole Blood needs to report EUR 4 million per month, which is what we have already done between February and May. The only difference between the second half and the first half is that we have lost January.
And June.
January because we signed the contract at the 14th or 15th of January. June because, okay, we have already explained the disruption. The guidance is not something external. It's just the second half, the second quarter in the end.
Thank you.
The next question is from Emanuele Gallazzi of Equita.
Good afternoon, everybody. Thank you for the presentation. I have just two quick questions. The first one is back on your tariff topic. You were mentioning an additional price increase. I think in the first quarter, you were guiding for something close to 1.5% price impact. Are you slightly ahead of this? Should we think about an additional price increase related to tariff? The second one is, when I look at the second quarter results, do they include the full recovery of the Monterrey mold issue in the first quarter? Even for the Safety, I think that in the first quarter, you were mentioning a shift in order. Do the second quarter results include this big order shifted from the first quarter to, I guess, the second quarter?
Okay.
We can start from the last one. On Safety, yes. We have recovered this, but on top, there was in general acceleration. The very good performance of Safety in the second quarter is not only linked to this recovery of order loss in the first, but it is really also an acceleration of the business. That is why we see, as Marco said, that this performance can be potentially replicated in the second part of the year.
The first question was about the tariffs and pricing. In the first half, pricing was 1.3%, very close to our budget. We have already implemented new pricing. The impact is around 30, 40 basis points on top of the 1.3%. This has been implemented to completely offset the impact of the new tariffs, expected equal to 10% for the goods from the EU to the U.S. This is what we expected. Now, you know we could assume 15%, so an extra 5%. Up to now, we have negotiated pricing to offset the 10%. Our commitment is to implement a further 30, 40 basis points. I cannot exclude on top further pricing. I hope I was clear.
Yeah. Maybe if I can follow up on your guidance because in the first half, you reached the 90 basis points margin expansion. If I look at the low end of the guidance, it clearly implies a material improvement in profitability in the second half, despite, let's say, the top line acceleration should be driven by the M&A contribution, which has a dilutive effect on the profitability side. You clearly mentioned the Puerto Rico, but can you help us understanding a little bit better the moving parts here to have this improvement?
Understood. May I spend a word? What is interesting to understand is that the first half, in terms of margin dilution for the blood division, was the more critical because we are paying Haemonetics for manufacturing the goods for us during the transition from their plant to our plant. What will happen in the second half is that we will start production. We will not pay any more Haemonetics to produce for us. That will bring a nice acceleration on the EBITDA margin.
Further info, let's say that last year in the second half, our EBITDA margin was around 24%. You probably remember that last year, the first half and the second half, we posted more or less the same EBITDA margin, something close to 24%. In Q3 and Q4, now we are telling you we are going to replicate the second quarter. It means that if I replicate the second quarter in the second half, I have a 26% adjusted EBITDA versus last year, which was around 24%. It means that by simply replicating the second quarter in the second half, I have an increase in the EBITDA of around 200 basis points not the 90 basis points that we posted in the first half. On top of that, Puerto Rico closure is giving us further 50 basis points.
Up to June, the difference between July and June, just closing Puerto Rico, it means that we are going to save around EUR 200,000 every month. These are the main topics. Of course, don't forget that it's very important for us to increase volumes. Now we are saying we are assuming to have volumes in Q3 and Q4 aligned with Q2 as for the old perimeter, which means that in the second half, we'll be seeing the second half higher volumes than in the first half. We are quite sensitive to higher volumes. You remember that if we increase volumes by 1%, we improve our EBITDA margin by 30 basis points Just to keep it very, very short, Emanuele, we need to confirm the second quarter performance in the second half.
Very clear. Thank you. Thank you very much.
I think there was a question regarding Monterrey.
yes.
The production disruption in Monterrey now is.
No, it's okay. Monterrey is running smoothly, and so no issue on this slide.
Thank you.
The next question is from Christian Hinderaker of Goldman Sachs.
Thanks everyone. Thanks for the presentation. I want to come back maybe just to start off with on the pricing comments. Appreciate that color in terms of the 30, 40 basis points that is, I guess, tariff-related. Can I just clarify, is that in the context of the group, and are you able to give a sense for what sort of price levels you're putting through on the perimeter of sales that it affects? I'll start there.
The price increase related to the tariff or the price increase related to the first half?
I think you're saying that the price increase of 30 basis points is relative to combined group sales, if I can clarify correctly, rather than 30 basis points increase in each product you sell in the U.S.
You are right. It was 1.3% ordinary pricing first half on top, around 30 basis points just to offset tariffs. You are right. The question is, so.
I want to just clarify this point.
The 30 basis points is applied on the overall group revenues.
No, it's applied on the.
More related to the sales that are hit by the tariff impacts.
Understood. Thank you. Maybe if I come back on the fourth quarter call last year, we talked a little bit about capital allocation. You've obviously had the extraordinary investments, so to say, in terms of the expansion of your U.K. China facilities. How do we think about capital allocation going into H2 and beyond across CapEx, but also, I guess, the buyback and dividends? Thank you.
Okay. You mean you would have to have a forecast of the amounts?
Yeah, I suppose the point raised in Q4 specifically was around scope to re-engage on the dividend. Since then, obviously, you've raised your leverage guide for the year and introduced the buyback as a sort of combined decision. Does that imply the dividend decision is maybe delayed? Just how do we think about the CapEx plans for the business more broadly?
There are at least two questions. I will answer on the external CapEx, and I will give you the first one for the dividends. For the external CapEx in the second half, you should expect EUR 4 million just to complete the move to the new plants in China and the U.K. EUR 4 million in the second half just for U.K. and China, and then we are done with the external CapEx for the new plants. On top of that, you can expect no more than EUR 3 million external CapEx for the acquisition because we are moving machinery from Haemonetics plant to our plant. External CapEx around EUR 7 million is a safe assumption for the second half. That's it. The question was also about buyback and dividend.
Yeah, the intention is still to release dividend by the end of the year. Of course, we will see how and how much and how during the course of the second half. Right now, we are still positive in distributing dividend by the end of the year.
And buyback.
Thank you.
The next question is from Alessandro Tortora of Mediobanca.
Yes, hi. Good afternoon to everybody. I have four or five questions. I think some cases are a follow-up. I will start with your Whole Blood business. I understood that now you basically solved the disruption you had in the past month. Can you comment a little bit on the, let's say, commercial opportunity you see here? Clearly, now you are, let's say, now adjusting your production internally. When you comment that you have a good portfolio, if we need, let's say, to look a little bit ahead, how do you see this business evolving? You mentioned that in theory, if everything goes fine, you could basically now release EUR 4 million sales per month. EUR 4 million sales times 12, let's say. Let's maybe take it out to a month, for holidays. The point is, can you give us an idea of, commercially speaking, how do you see this business?
Are you approaching new clients? What is the general feedback on Whole Blood? That's the first question. Thanks.
The feeling is super positive. Consider that this year, we are still impacted by the huge stock that Haemonetics has produced in all the customers. Our sales are really at the minimum level. All the customers are very positive. They're very happy that we enter and we revitalize this business. The products are confirmed as the best in class in this market. The view is super positive. My expectation for 2026 are very nice. We are already negotiating some potential big deal. We want to keep the focus in transferring everything and having the production under control. That is the most critical point because we've cut costs and will give us the possibility to speed up as we like in serving this market.
Okay, thanks. The second question is, you mentioned during the presentation the fact that we have this contract manufacturing, now a heritage from Haemotronic deal. The question is, first of all, how big is this business today for you? You mentioned a decline of EUR 5 million last year and again now another decline in this first half. Can you give us an idea of the size of this business today?
Yeah. In the first half of 2025, it's counted for EUR 12 million, and it's down like 30% from the first quarter or first half of 2024 when it was EUR 17 million.
Yeah, the point is that these lines are quite expensive, each single line, and the fluctuation in quantity is affecting the revenue, quite impacting the revenue in a quite big manner. In terms of marginality, they are null, so not really important for us. This is why you might see this fluctuation in revenue, but you see that we keep improving our profit quarter after quarter because these revenues are really not important in the sense of the profit and the margin of the company. That's why we're working on it in our strategic plan to see what to do and how to manage this inheritance that we had from this acquisition.
Okay. Thanks. Just a follow-up also on this, your strategic action you are, let's say, assessing for next year. Are there any thoughts you can, let's say, do also on the energy mobility business? I remember that in the past, we discussed about, let's say, I don't know, any possible option, okay, for this business for you?
Yeah, we are working also on this. These are the two big points that we are analyzing in our strategic plan. We are evaluating all the options and all the possibilities. I believe we will have something published by the beginning of next year, where we will tell you what we want to do with this too.
Okay. Thanks. The last question is on the health effect. As Guido mentioned, this is almost 14% organic growth in Q2. When you say you expect, let's say, a kind of continuation of this trend in the second part, are you referring to the high single-digit first half trend or this low double-digit, and on top of this indication? Considering the acceleration you had, but also now your confidence in having a second half pretty strong, can you give us an idea of the underlying trends? Is it still only the U.S. market? Is it a matter of new products or maybe also other countries on top of the U.S. contributing to this trend? Thanks.
Consider that we have launched the full-face mask basically at the beginning of the year. It's full speed in the second half. Plus, we have one mask that has been designed to be worn in the Asian country, and we are expecting to have a nice return from this product. Apart from the budget itself, there are nice new entries into the business that are keeping us excited. I will anyway stay on the high single-digit growth as forecasted.
Okay. Thanks for all the answers.
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Excellent. Thank you very much to everybody for participating in our presentation. See you at the next quarter and have a nice summer to everybody.
Thank you.
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