Hello and welcome to IBA's Full Year 2024 Results Conference Call. I am Thomas Pevenage, Head of Investor Relations of IBA. As usual, you will find this presentation on the Investor Relations page of our website. The 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 IFRS 15 for revenue 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 REBIT margin in percentage. Full Year 2024 numbers reflect this new method of reporting, and Full Year 2023 numbers have been restated accordingly. I will now hand over to Olivier Legrain, Chief Executive Officer of IBA.
Thank 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 result 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 EUR 500 million, EUR 498 million, up 7% on 2023, with a good gross margin improvement of 4.5% year on year, thanks to a favorable product mix.
REBIT increased significantly year on year to EUR 17 million, linked to well-executed backlog conversion, with a strong contribution from other accelerators. Overall, we returned to profitability in 2024, reporting a net result of EUR 9.3 million, an EUR 18 million improvement versus last year. The proposed dividend of EUR 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 highlight. On the left-hand side of this slide, you'll see that backlog is stable at a record high level of EUR 1.5 billion. 2024 saw an excellent order intake of EUR 321 million, 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 2024. A few other elements are worth mentioning.
IBA continues to invest in the future, as illustrated by our joint venture, Pantera, which secured important funding for its next step towards large-scale actinium-225 production. This is a good example of our approach to capitalize 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 accelerators 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 install base. This provides a solid foundation for sustainable profitability onwards.
In that context, we will share with you an updated midterms outlook 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, REBIT on 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 REBIT progression across our three current segments. Record group revenue was particularly driven by Other Accelerators, with revenue increased by 18% to EUR 194 million. Proton Therapy remained stable, sorry, with revenue of EUR 242 million, reflecting steady growth in services offset by a slight decline in equipment sales.
Dosimetry revenue remained flat year on year at EUR 66 million, despite some market headwinds. Group REBIT increased by 170%, driven by the particularly strong performance from other accelerators. You'll note a decline in dosimetry REBIT linked to the late closing of the RAPCAL acquisition, which impacted expected synergies, some challenges in the Chinese market, and delays in converting the proton therapy-related backlog. Moving on to backlog, this remains at an all-time high of EUR 1.5 billion, 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, EUR 497 million is for proton therapy, representing 37 projects, and EUR 247 million for other accelerators. Service backlog includes the revenues of our long-term proton therapy operation and maintenance contract until their maturity, while the other business units have shorter-term services contracts not included there.
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 contracts 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 install 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 represents 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 EUR 288 million to EUR 321 million.
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 other accelerators, which recorded a 43% increase. Proton therapy saw a slowdown in 2024, but had strong traction in the second half, continuing in the start of 2025. We will provide more commentary on this in the proton therapy review. Dosimetry remained stable, with order intake at EUR 66 million. The book-to-bill ratio, which is a ratio of equipment order intake to revenues, remained close to one, as order intake did cover most of the conversion of the existing backlog. As already announced in our first half 2024 result, IBA recertified as a B Corporation with an improved score of 114, placing the company in the top 10% over 9,500 B Corp globally.
This, amongst other initiatives, highlights the company's commitment to advance sustainability as a key differentiator to attract talent, secure contracts, maintain a 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 proton therapy. The service revenue grew by 7%, supported by our expanding install base, while equipment revenues declined by 4% due to the cycle of backlog conversion. REBIT increased by EUR 2 million during the period, driven by improved gross margin. We continue, however, to see impact on profitability from delivery of older, lower-margin projects, like the 10-room order Proteus One in Spain, as well as a few large-scale Proteus Plus projects in China. The economics of more recent contracts confirm IBA's leadership position in the market. Said contracts will gradually positively impact the proton therapy P&L as older projects are delivered.
In addition, as we will explain later in the context of the new segment approach, several costs will be reallocated from proton therapy to other activities. Therefore, the REBIT for 2024 will become a loss of EUR 12 million rather than a loss of EUR 21 million 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 remain at the forefront of this market. In 2024, we continue to advance key strategic initiatives aimed at strengthening our proton therapy business. We saw steady progress in backlog conversion with 37 projects under construction of our installation. Our service business expanded further, supported by renewed customer contracts and improved site performance. Our install 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 III study from MD Anderson Cancer Center demonstrating reduced side effects 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 Adapt Insight 2.3 in 2024, as well as working closely with clinical partners to progress research in dynamic arc and conformalFLASH . We continue to expand the global footprint of our proton therapy solutions.
Order intake in 2024 reached EUR 106 million, with three Proteus One contracts secured in the U.S., including a repeat order for two Proteus One by our longstanding customer and partner, Penn Medicine. We also secured a new order in India, where IBA maintained its very strong position, having already installed two proton therapy systems in the country, one in Chennai and one in Mumbai. In addition, there was a new procurement contract for a Proteus Plus system in China through our partnership with CGN. We are in active discussion with a range of potential customers with particular interest from the U.S. 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 technologies. IBA continues to lead the market in proton therapy.
In 2024, 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 next to dosimetry. Net sales in dosimetry reached EUR 66 million, reflecting stable performance despite economic and market challenges, in particular in China. Backlog was maintained at EUR 42 million. The decline in REBIT was related to a number of factors: delayed acquisition synergy from RAPCAL due to the closing timeline, a lower share of high-margin sales in China, and reduction in proton therapy-related business due to project timing. Order intake for dosimetry remained solid at EUR 66 million, reflecting sustained global demand. During 2024, we have continued to focus on reinforcing our quality assurance leadership, as underlined by the acquisition of RAPCAL Corporation in March. This acquisition has significantly enhanced our product range and geographical footprint in the QA 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 RAPCAL acquisition and other investment, we now have access to a supply chain across North America, Europe, India, and China, further strengthening our position globally. We launched RAPCAL'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 Romrée, the Deputy 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.
Many thanks, Olivier. We are obviously very pleased with the strength of the Other Accelerator order intake in the period, with 33 accelerators sold.
Net sales reached a record high of EUR 194.2 million, an 18% increase year on year, supported by strong backlog conversion and demand across industrial and radiopharma applications. Service revenues remained stable at EUR 34.8 million, despite the EUR 7 million 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. REBIT improved 63% year on year to EUR 34.7 million. 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 astatine-211. Post-period end, we signed a memorandum of understanding with Framatome for the development of an astatine-211 production network in Europe and in the United States.
We considered 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 Jubilant Radiopharma in the US for five Cyclone KIUBE 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 our value proposition for safer and efficient sterilization solutions, driving our intrinsic momentum in this activity. Alongside this, interest is increasing in some newer applications 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 Rhodotron, 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'll note that we have a new section where we thought it would be helpful to lay out our work and collaborations in cutting-edge technologies under new ventures, which will 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 SCK CEN, dedicated to the production of alpha-emitter actinium-225. In Q3, Pantera successfully closed a EUR 93 million series A round led by EQT, valuing the company at approximately EUR 200 million 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-2025, where capacity reservation agreements were signed with Bayer and other undisclosed partners. 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-225 opportunity and Pantera, given the isotope's importance in next-generation cancer treatment. In addition, IBA 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 we will provide updates as key milestones are being reached. As already outlined in the radiopharma solution sections, we have signed an MoU with Framatome for the development of an astatine-211 production network, which will lead eventually to the incorporation of a new venture. Finally, an update on our public-private partnership, Normandie Ardent 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 2026, early 2027.
I'll now take you through our financial results in more detail. 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 accelerators, 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 KIUBE. 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 EUR 93 million as part of a series A round during the year. As a result of this, IBA has recognized an EUR 11.6 million revaluation gain through the P&L. Separately, the contribution from Pantera, as consolidated under the equity method, is a loss of EUR 2.1 million since the company continued its R&D investment and business development efforts. Also impacting the bottom line were some one-off projects. The main two large ones are our EUR 4.2 million investment in the upgrade of our ERP system, continuing over 2025, with the same order of magnitude as 2024, as well as the transformation of the organization to support profitable growth for EUR 1.8 million. Alongside this, Argentina has had more than 100% inflation throughout 2024. Applying hyperinflation accounting under IFRS 15, the margin of the Buenos Aires 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.
Thank you, Henri. You will see on this slide the evolution of our cash position, which continued to be temporarily impacted by the working capital cycle. Actually, in standard conditions, we have a cash-light or working capital-light operating model, as milestone payments collected from customers should at any time cover all expenses during the execution of any single contract. However, as you know, we had to deviate from that policy in the framework of the Spanish Ministry of Health contracts, as usually back-ended payment terms were predetermined in the tender.
The impact on the 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 the previous year, thanks to the acquisition of RAPCAL and investment into Pantera. We also paid off close to EUR 5 million of debts to financial institutions and real estate leasing in line with their amortization schedule. Other financing cash flows were linked mostly to movements in IFRS 16 lease liabilities. With EUR 72.2 million 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 EUR 33 million and actually improved from the end of June 2024, which was around EUR 22 million.
This reflects our well-executed cash control and collections in the second half. Additionally, we have untapped access to EUR 60 million of credit lines. Now moving to a new segment reporting related to company transformation, which will be effective from financial year 2025. You will see then that as part of our forthcoming reporting period of time, we'll be following the same formats. As we previously communicated, IBA has transformed its organizational structure to enable enhanced focus and accountability, allowing us to more effectively meet market demands. As of financial year 2025, IBA will be organized into three entities: IBA Clinical, comprising proton therapy and dosimetry business units; IBA Technologies, comprising the radiopharma solution and industrial solutions business units, as well as engineering and supply chain; and then IBA Corporate, which will deal with IBA new ventures and investments and act as the corporate center.
These entities will then be three distinct reporting segments. This slide highlights the three main changes that impact financials. First, the creation of IBA Corporate 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 we were reporting this way, we would see a EUR 5 million OPEX left for IBA Corporate previously allocated across the business units. Also, all corporate-led initiatives, such as Pantera, MI2, and Normandie Ardent Therapy, will be allocated to the corporate P&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, which started to bear a 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 EUR 7 million shift of costs from proton therapy as part of IBA Clinical to IBA Technologies. Finally, as IBA 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 IBA Technologies. More concretely, this results in a EUR 29 million revenue transfer and associated arm's-length profitability. This slide shows how the 2024 numbers would look restated into these new formats, with IBA Clinical representing approximately 60% of total revenues and IBA Technologies the remaining 40%.
You will see more specifically that the proton therapy REBIT improved to a loss of EUR 12.1 million from EUR 21.5 million 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 goals.
Thank you very much, Thomas. As we have highlighted in this presentation, IBA is at an inflection point. Overarching our guidance in our focus is our focus on delivering more sustainable profitability after 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 expand the use of its technology in its market, and this is true for all our business units, proton therapy, nuclear medicine, and industrial applications, while also prudently factoring the uncertainty in the world in general and in our market in particular. We are therefore updating our midterm outlook and today initiating a short-term guidance. Given our high backlog and our confidence in our execution capabilities, we expect REBIT to reach at least EUR 25 million in 2025. This will be driven by a positive REBIT contribution from proton therapy after a EUR 12 million negative contribution in 2024 under the new segment reporting. We have also updated our midterm 2024-2028 outlook.
We are expecting normalized front-loaded revenue growth of EUR 5 million-EUR 7 million KGAR over 2024 to 2028, following a high growth period driven by the Spanish proton therapy project order and post-COVID industrial solutions order intake. We are progressing towards reaching around 10% REBIT 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 high 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 ventures to support additional growth, Pantera 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 proton therapy install base, 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; a 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 segment dynamics, and other growth opportunities. This will enable an open dialogue with our senior leadership team on the strategic priorities for each business. 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 more information. You will see on the left here some further key dates for the financial calendar for the remainder of the year. Thank you for listening to the presentation. We will now move to Q&A.
Thank you, Olivier. If you would like to ask a question, please use the raise hand function on the Teams platform, unmute yourself, and state your name and company. Thank you.
Yes, hello, good afternoon everyone, and thanks for taking my question, David Wetherbee 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, and also a question of operating leverage? Yeah, already anticipating maybe a bit on the CMD is what you expect from PT in terms of margin by 2028, trying there. On other accelerator, you achieved still a very high margin of 18% EBIT. 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? Maybe I'll limit myself at three questions for now. Why are you dropping the 2026 guidance?
Was there going to be a bit of an accident there? What kind of miss should we have been expecting? What went wrong basically, or is it more of a phasing timing thing? Thank you.
Okay, I will take the proton therapy part. No surprise on the loss. They were expecting as we are basically executing on a strategic plan, and it is indeed linked to a conversion of backlog of order that was taken in a more competitive environment. I would like to stress here that we have never taken an order with negative gross margin.
All orders that we have in the backlog are with positive gross margin, but the ones that were taken in a 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 investment to ramp up 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 time to give specific guidance on proton therapy and basically disclose that 2024 was the last loss-making year for proton therapy 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. As we are unfolding this, you can expect basically proton therapy in terms of gross margin to slowly go back to, let's say, a similar gross margin than in the rest of the business. 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.
David, if I got your question correctly, you asked a bit how you should think about the IBA Technologies margins going forward. 2024 with regards to gross margin for me are within range of what you should be able to expect in the longer run. If I look at rebate margin evolution, as said before, we are going to invest selectively in a few things from an R&D point of view, development of next generation of machines, some investments in chemistry, but on a normalized basis, I think the rebate margin you have observed for IBA Technologies in 2024 are within range of normal margin for that activity.
Coming back to your question on the guidance, David, basically our trajectory broadly remains unchanged.
We have included in our guidance the need to invest in research and development to actually consolidate our future growth trajectory 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 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.
We believe this is smart money invested into the potential of proton therapy. 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 Pantera and astatine-211, while our new guidance is taking into account a slight increase, a slight increase in research and development to make sure that we can capitalize on this fantastic opportunity. 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. We wanted to be more prudent with our guidance when it comes to top-line growth, hence the update in our midterm outlook.
Thanks very much. A very quick follow-up exactly on that. On the 5-7% sales carrier, it's clear that you will have normally a big bump in sales from the Ortega contract, I would say 2025, 2026. Should we understand best the growth potential of IBA after the Ortega delivery? I mean, I'm aware that you will always probably have this bump, etc., 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? Yeah, thank you.
It's in the 5-7% guidance that we have given.
Okay. Okay, no, I was referring to the trajectory, let's say, in the meantime, but okay, fine. Understood.
Good afternoon, Laura Roba from the Degroof Petercam . Thank you for taking my question. First of all, is there any impact of the new reporting system on the postponement of your 10% REBIT margin guidance? Second, would you say that your €20 million REBIT guidance for 2025 is conservative? And I might have a follow-up. Thank you.
I can take the first question indeed. Hi, Laura. The first question was whether there was an impact on the new reporting methodology on 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 slight impacts in terms of margins, including REBIT margin, but I would say it's minor as compared to drivers mentioned by Olivier. It's a few 0.234% impact on REBIT as such.
On the €25 million REBIT for 2025, we said at least in the sense of, we focus on exceeding that €25 million in 2025. We just felt it was useful for you to have an anchor point or a starting point for 2025.
Okay, thank you. Just to follow up, how confident are you that you will reach this 10% REBIT margin in 2028? Because as I understand, the impact is mainly coming from these additional R&D investments, but does it mean that if you wouldn't do these investments, you would reach this margin sooner?
That's correct.
This is maybe one of the reasons also we give a guidance on the OpEx because there is a different way to reach 10%. It is 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. If not, we can always correct the trajectory with a reduction of costs should the investment not be relevant anymore. We are confident enough, let's say, to give it as a guidance.
Okay, thank you.
Hi, this is Richard on Protect 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 million. When I look at your REBIT level this year in proton therapy, this was at minus EUR 12 million under the new reporting methodology.
If you achieve profitability there, as you expect, this alone should lift you up by at least EUR 12 million in 2025. This alone should lift you above the EUR 25 million you guided to. Should we expect the other areas, like other accelerators and so on, to decrease in REBIT this year? How should we expect this rather conservative EUR 25 million guidance in light of this?
Thank you, Richard, for the question. As we have spelled out, indeed, EUR 25 million seems to be a minimum. That is the reason why we have phrased it as an at least. We wanted to give you an anchor point. I think your reading is correct. Proton therapy would return to a positive REBIT in the course of the year.
For IBA Technologies, as we have discussed it, we consider 2024 to be a particularly difficult comparable year on year. As we have highlighted 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. 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. That is a bit how we see it. I like the way you read the 25 million as being an at least number that we work hard to beat. I hope that clarifies.
Yeah, that was helpful. Thank you very much.
No, of course. Next questions.
Hi, Carlos Moreno from Premier Miton. I just want to ask you a bit on the top line of the 5-7.
On one hand, you're very kind of bullish, new data, going to invest, proton therapy should gain share, you said. There are 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. 5-7%, is that a very conservative kind of medium-term growth rate for the business? It's not like the base numbers are you're selling a lot of proton 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 5-7% a kind of conservative number?
I think 5-7% is what we believe a reasonable estimation in a long-cycle business in an uncertain world. Let's put it that way.
It is a number we are comfortable with. Is it conservative? Is it not? Difficult to say. As we take this guidance very seriously, we want to come with something that we believe we can achieve or beat.
Worldwide GDP growth is expected at 3.5%. We guide on something that is probably twice as much on the high end. We say it is 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 is hard to be audacious beyond a time horizon of two or three years.
I'll let you judge and make your own assessment of what would be the right underlying growth dynamic. We thought, again, that saying that 5-7% front-end loaded was probably the most accurate and fairest way to describe what we would see as solid ground.
Yeah, I can see what you're trying to do. 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. Would I be right to say over that medium term, you'd still expect the non-proton therapy business to grow quicker? If it's 5-7%, it's less for proton therapy, more for the other business. That isn't that much growth for proton therapy if you start to take more share of that treatment space.
Olivier, I'll let you comment on proton therapy.
I can comment on the other activities.
You'll be talking about MD Anderson.
Yeah, I think on proton therapy, I know and I'm always hesitating to say for sure. As we have alluded in our presentation, we know we have sold 76-plus systems, and 40 of them are today generating service revenue. We will convert them over the period of the review here. I know the service business will grow significantly. The question is indeed, in a long-cycle business such as proton therapy, with the 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 deals 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. Some of them, we have no sign, let's say, that our market share should be very different than the one we have experienced in 2024. I believe the deal flow in 2025 will be quite good. It started quite well in 2025 with the announcement of two of these ones in India. I expect to see more deals, let's say, over the next five years and over the last five years, to see some growth in proton therapy as well. Proton therapy will continue to grow, fueled by service, which is almost certain because it's sold contracts that are currently under installation and will convert into service business in the period under review.
We are reasonably confident that we've seen more deals over the next five years, once again, in an uncertain world, more uncertain world than when we gave our guidance in 2022. Proton therapy will grow for sure and contribute, therefore, to the 5-7 % growth of the group.
All right. Thank you.
Maybe just to complement, because last element, and I will be super short, first, we are well aware that in terms of value creation, margin will prevail over growth. Therefore, we would want to be in a position of strength as to be able to protect our margins as we negotiate deals. That is one for me, key element that I want you to be aware of.
Another element of our guidance that we have not been asked questions 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 massive growth accelerator or multiplier otherwise. I hope you appreciate some kind of a dual logic here, which is to say mature activity, focus on prudent development, focus on protecting the economics of IBA, continue to invest into the future next to capitalized growth engines that can be Pantera, Astatine-211 partnership, or MI2, to list a few.
That's great. I suppose everything's growing. I understand you're going to be prudent, but it just seems that that guidance doesn't really presume much for proton therapy equipment. I would have, yeah, but you're hopeful there. Yeah. Okay. Yeah.
I get the gist.
It's stay tuned on the news flow. I would say it's the. Other questions?
Yes, this is Richard Buschbeck again from Tech Capital in Germany. I have one question on your competitive environment. You showed this slide showing that you sold five systems last year and Mevion, which I suppose is the only serious competitor to think about right now, sold four systems, which kind of is, I think, a new record for them. Do you see these guys taking share? Do you compete against them in tenders? What can you tell us about the pressure you feel from your competitors right now?
I think as a competitive landscape, we have indeed Mevion and Hitachi. That's the two, let's say, credible competitors we have out there. We are not losing market share to Mevion.
I think we have a product, a more mature product, a more versatile product, superior product by any means. I think Mevion's focus is really on China, where they have been able to sell. You mentioned four units. In my view, Mevion sold two units last year, one in the U.S. and one in China. That's it. So that's basically a competitive landscape. I think we are able to win in front of Mevion, and we are able to win with a significant premium.
Okay. Because the slide shows 56% share for IBA and 44% for Mevion. And I interpreted this as five to four systems because you sold five last year, right?
Yes. Yeah. To complement, maybe what you mean is that it's difficult to have confirmation of what really is an order from Mevion.
I mean, the difference between Mevion and us is we are a listed company.
As I sa id, we recognize an order. It's difficult, let's say, to read the noise and the signal. When you're not a listed company, every term sheet, every letter of intent, everything is a deal. Whereas for us, I have many signed term sheets without down payment, and I don't consider them as a deal.
Thank you very much.
Other questions. I see many digital hands raised. Who's next?
Is it my turn, actually? Because I'm second, I think.
You are second, but the number one is not speaking.
Sorry. David Vagman again from R&G. Just sorry. Coming back, and I was a little bit confused on the I understand there will be R&D investment or a step-up in 2025, maybe 2026.
I first understood that it was a step-up in PT to invest in R&D, but more focused on the access, the market access. I'm not sure to have fully understood that. I kind of understood that in another answer, that the investment was actually in IBA technology.
Correct. If you can. It goes. Okay. Proton therapy, historically, IBA has always made a lot of investment into the product. Now, as clinical data becomes available, we need to, in partnership with our customer, basically compile all this 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 indications, hence improve the reimbursement landscape for proton therapy, which will propel the demand for proton therapy. Historically, we have not invested a lot into that space.
Strategically, and because of the tailwind that we see in the clinical evidence generation in proton therapy, 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. The second part is I was mentioning nuclear medicine, and maybe I will let the floor to Henri.
No, no. Again, we are all aware that we talk about 1% of REBIT margin is between €5 million-€6 million. These are small amounts. For IBA technologies, it's €2 million-€3 million. These are relatively still modest amounts. It's true, David, that especially for radiopharma solutions, there is huge development in the theranostic field where IBA has the chance, again, to capture a fairer share of the value it generates on its equipment.
In the next 18 months or so, we are going to invest wisely and carefully 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 equipment ahead of the game and minor investment, as I've explained, in the field of wastewater treatment that, again, shows massive potential otherwise.
These are the few elements that indeed will keep us busy with regards to research and development in the coming 18 months or so.
Okay. Okay. No, very clear. Super interesting. When you said the margin of 18% was sustainable, it is to be understood with 2025 being a bit of an exception with a pinch, you said, on the margin.
Correct.
If you ask me to comment specifically on 2024 margins again, what I've said is that it's a normal high or it's a normal plus year with very strong development in that year and an impact of certain investments in R&D to be expected in the course of 2025, which creates 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.
Okay. Very clear. Thanks for the clarification.
That's why we're here. Matthias.
Yes. Hi. Can you hear me?
Yeah, perfectly. Thank you.
Thank you. 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. I just try to understand why are you going to grow slower in 2025? What are the main drivers of that?
As we are giving in the guidance, I think we say it will be front-loaded. Within, say, 2025, we will grow 5-7%.
Yeah. Okay. If you grow 2026-2028, 5-7%, it seems that the 5-7% is really fairly conservative. Okay. Maybe on the clinical evidence building in proton therapy, can you maybe just re-explain what is the dynamic here? How will this increase your addressable market? Will this also have an impact on reimbursement?
Have there been any relevant changes in that recently?
I'm not sure I get the question. Can you repeat, please?
Is the clinical evidence going to influence the overall addressable market, I think?
Yeah. I think indeed. We can circulate the MD Anderson study. What is the MD Anderson study telling me? It is one of the first randomized clinical trials that was conducted on head and neck. What it has shown is a non-inferiority of proton therapy, but a dramatic impact on the side effect, which, by the way, has always been the claim of proton therapy. 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 insurance companies cannot ignore it.
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 insurance companies to ignore. By the way, a number that is always sticking on my mind is that the overall radiation therapy spending in oncology represents 5% of the total spending in the U.S. and in Europe to treat 50% of the patient. 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. 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, but more will come. We see another 5-10 clinical studies that will be published within the next five years. With this flow of clinical evidence, we believe we can influence the reimbursement, certainly major reduction like in Europe and in the U.S., and to justify a better reimbursement for proton therapy for a number of indications, hence improving the penetration of proton therapy and the adoption of proton therapy and creating business opportunity for us.
All right. Thank you. 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?
Okay. Hi, Mathias. Thomas speaking.
Your question is on 2025 prospects in terms of free cash flow, more specifically impact of CapEx and working capital. On the CapEx front, what you can expect is something that is in line with the past years. We have no specific investments to report. We have already commented on some other elements investment-wise impacting the P&L, most notably the ERP system. 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 tender we won end of 2022. Indeed, it is a large order, 10 systems, meaning we progressed throughout manufacturing and procurement for those systems over 2023, 2024.
With the first deliveries at the end of this year, 2025, it being understood that deliveries are the key drivers for next milestone payment collections. It means that indeed you can expect some impacts over 2025 until the time you start deliveries. 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 situation. 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 we won the tender. It was also the reason why we adequately sized our credit lines, which we mainly used at the end of last year.
The intent is still to use these lines from time to time as needs be as we have shorter-term working capital movements that need to be addressed.
We have otherwise, as you should expect, strong cash discipline, which was demonstrated in the course of last year. We will continue those efforts onwards.
Okay. Thank you.
Of course. Any other questions? Matthias, I see your hand is still raised, but I guess you are covered.
I'm covered, yes. Thank you.
If there are no more questions,
I might ask one more question if that's okay. I presume the capital markets day will be webcast, or is it just physical?
It's webcasted and physical. We would, of course, love to welcome you here in our premises. If you can't join us in person, it will be webcasted, of course.
Thank you.
All right.
Thank you very much. On behalf of everyone at IBA, 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 market days in person or through webcast. We look forward to update you on our progress over the year. Thank you very much. Speak to you soon. Bye-bye.
Thank you.
Thank you.